Verizon really can’t catch a break in this ActiveVideo case. After a jury determined that they had infringed upon a handful of ActiveVideo’s patents, Verizon fought to have the court stay their monthly royalty payments. That motion was just recently shot down, and Verizon must start shelling out a few million dollars to ActiveVideo every month beginning on December 16.
What’s that? The case doesn’t ring any bells? Here’s a quick recap: ActiveVideo filed suit against Verizon in May 2010 citing the infringement of a handful of their television service-related patents. ActiveVideo licenses their CloudTV platform (which encompasses said patents) to partners like Cablevision, with whom Verizon competes in markets like New York.
In addition to being liable for millions of dollars in damages, Verizon has been ordered to pay ActiveVideo $2.74 for each one of their FiOS television subscribers, which means a total monthly payout as high as $11 million. There’s a timeline attached to these payments, too: Verizon will have to shell out those royalty payments until either one of two things happens.
Scenario A: Verizon figures out a way to retool their FiOS service in a way that doesn’t use ActiveVideo’s patents. Once they do that (and can prove it in court), there won’t be any need to pay royalties anymore.
Scenario B: In the unlikely case that Verizon can’t make things work, either technologically or in court, they continue to pay ActiveVideo until May of next year. At that point, Verizon will have to shut down their FiOS Video-on-Demand service entirely.
While Verizon’s top brass has probably whipped out the corporate checkbook already, the bigger question is how much work will it take to rid the FiOS service of ActiveVideo’s influence. Verizon’s got a few months to get cracking on the problem, but only time will tell if the new (and hopefully improved) FiOS can stand up to some intense legal scrutiny.