Verizon Ordered to Pay Royalties in Video-On-Demand Case




Verizon Communications Inc. must pay
as much as $11 million in royalties every month to continue
providing its FiOS TV customers with video-on-demand services
that were found to infringe a California company’s patents.

The royalties will be paid to ActiveVideo Networks Inc.,
based on a rate of $2.74 for every FiOS television subscriber
starting Dec. 1. Verizon has until May 23 to design a way to get
around the ActiveVideo’s patented technology or it must stop
using the inventions, U.S. District Judge Raymond Jackson in
Norfolk, Virginia, said in an opinion issued today.

The closely held San Jose, California-based company said it
licenses its technology to Cablevision Systems Corp. (CVC) for
CloudTV, which competes with Verizon in the New York area.

“It is only right that Verizon, having been found to
infringe our patents, should be prevented from competing with
us,” Jeff Miller, chief executive of ActiveVideo, said in an e-
mailed statement.

ActiveVideo won a $115 million verdict in August after a
jury determined that Verizon was infringing the company’s
patents. The judgment has since grown to $139.1 million.

“ActiveVideo thinks that if Verizon ceased infringing,
Cablevision’s market share would increase and its subscriber
base for CloudTV would also increase,” Jackson wrote. “It is
true that both parties will suffer hardship in this case, but
the greater hardships lie with ActiveVideo.”

New York-based Verizon reported adding 131,000 new FiOS
television subscribers in the third quarter for a total of 4
million FiOS TV subscribers.

Verizon, which said it has been working on alternative
technology since March, urged the judge not to impose any limits
on the FiOS service, arguing that it doesn’t compete directly
with ActiveVideo. Verizon, the second-largest U.S. phone
company, has said it plans to appeal the verdict.

The case is ActiveVideo Networks Inc. v. Verizon
Communications Inc. (VZ), 10cv248, U.S. District Court, Eastern
District of Virginia (Norfolk).

To contact the reporters on this story:
Susan Decker in Washington at
sdecker1@bloomberg.net;

To contact the editor responsible for this story:
Michael Shepard at
mshepard7@bloomberg.net

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Article source: http://www.bloomberg.com/news/2011-11-23/verizon-ordered-to-pay-royalties-in-video-on-demand-case.html

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