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AT&T to pay TiVo $215M to settle patent lawsuit

Shares in the DVR pioneer jump 15 percent in after-hours trading on the announcement.

AT&T has agreed to pay TiVo at least $215 million to settle a patent infringement lawsuit involving the digital video recorder pioneer.

Under the settlement, AT&T will pay TiVo more than that minimum amount, should AT&T's DVR subscriber base exceed certain levels, the companies said in a statement announcing the mutual licensing pact. The announcement sent TiVo shares up $1.38, or 15.5 percent, to $10.30 in after-hours trading.

TiVo sued AT&T in 2009 for damages, alleging infringements of TiVo patents Nos. 6,233,389 B1 (a "multimedia time-warping system"), 7,529,465 B2 (a "system for time-shifting multimedia content streams"), and 7,493,015 B1 (an "automatic-playback overshoot correction system").

TiVo CEO Tom Rogers said in a statement that he is pleased with the settlement.

"The combination of guaranteed payments and future additional fees paid to TiVo, in the event that AT&T's pay-TV business continues to grow in line with consensus analyst expectations, represents hard-earned compensation for our [intellectual property] enforcement efforts," Rogers said. "The settlement also provides us rights to innovate TiVo products and services under license from AT&T, and allows us to avoid significant legal expenses that we expect would have been incurred by us during and after trial."

The settlement with AT&T is the second TiVo has secured in the past 12 months. In May, Dish Network and EchoStar agreed to pay TiVo $500 million to settle a 7-year-old patent infringement case involving the same trio of DVR patents in the AT&T case.