Investors reacted quickly. TiVo shares closed up $3.56, or 72 percent, to $8.50.
The U.S. Patent and Trademark Office granted one patent originally filed in July 1998 by TiVo for a "Multimedia Timewarping System," giving the Alviso, Calif., company the official nod as an early mover in the sector.
The other patents are for a design that allows the recording of one program while another is replayed; a method that allows viewers to pause, rewind or forward "live" television programming; and formats to convert digital and analog signals, the company said.
TiVo has several competitors with heavyweight backing, including Microsoft's UltimateTV and ReplayTV. ReplayTV no longer manufactures a device but licenses its technology to cable providers and other television-related companies, allowing them to offer digital video recording and video-on-demand services. AOL Time Warner, which has a stake in TiVo, also offers AOLTV, an interactive TV service.
After tremendous early buzz in the market for digital video recorders (DVRs), expectations have cooled along with consumers' willingness to burden their budgets with big-ticket, discretionary entertainment products. Still, the DVR market is likely to grow to 20 million customers by 2005, according to research firm The Yankee Group.
The broad patents granted to TiVo may have reprecussions for Microsoft's UltimateTV service, which has been touting DVR features to attract consumers to the service. The software giant's first attempt at the interactive television market with WebTV has largely been considered a flop. Email, the key feature in the first incarnation of WebTV, failed to grip the imagination of users. WebTV has about 1 million subscribers.
Microsoft's UltimateTV service is based on software from Microsoft TV, a division of Microsoft. UltimateTV is the service that is being used on DirecTV receivers with digital video recording as a core feature. Another key feature of the DirecTV receivers with UltimateTV service is the ability to record one show while watching another on a separate channel.
Staff writer Richard Shim contributed to this report.