Appeals court tells Verizon to pay up in ActiveVideo patent infringement case

A federal appeals court has reiterated a lower court's decision that Verizon (NYSE: VZ) should pay about $260 million to interactive TV vendor ActiveVideo Networks for infringing on its interactive TV and video-on-demand patents with its FiOS TV service. The court also said that the telco must pay future royalties to ActiveVideo as well.

Verizon did get one break from the second ruling. In his decision, Judge Raymond Jackson removed a lower court permanent injunction that had barred the telco from using ActiveVideo patents and reversed the lower court's infringement judgment on one ActiveVideo patent, while upholding three others, noting that he saw "no error in its post-verdict royalty calculation."

The decision on appeal should be the end of a case that started in 2010 when ActiveVideo sued Verizon over patents for interactive TV and video-on-demand that it said Verizon was using with its FiOS TV service. In 2011, a Virginia-based federal court ruled against Verizon FiOS on four patent infringements and ordered the carrier to pay $115 million in damages. At the same time, that court found ActiveVideo infringed on two Verizon patents. Last November a federal court in Virginia placed a permanent injunction on Verizon from using two of the patents starting May 23, 2012 and told Verizon to pay royalties. That's when Verizon appealed, the decision of which seems to be somewhat of an improvement over the earlier rulings but still, on balance, a loss for the telco.

Verizon offered no response to the ruling to any publication or on its Web site. ActiveVideo, whose biggest customer is Verizon competitor Cablevision (NYSE: CVC), issued a statement reported in Multichannel News saying it was "gratified" by the ruling.

While the appeals court ruled that Verizon's infringement harmed ActiveVideo, it determined that the district court "clearly erred" when determining that any market share Cablevision suffers to Verizon causes "irreparable harm" to ActiveVideo.

"Verizon and ActiveVideo do not compete," Judge Jackson wrote in his ruling, agreeing with Verizon that a Cablevision subscriber loss is "certainly not irreparable" for ActiveVideo. After all, the judge determined, "whether ActiveVideo receives this subscriber fee from Verizon or from Cablevision, it will be adequately compensated."

The harm from the infringement, the court's ruling stated, is that ActiveVideo is harmed when its licensee loses a sale and "every time the infringing service is sold," and thus "the harm to ActiveVideo due to Verizon's infringement is readily quantifiable. When Verizon pays ActiveVideo a per month royalty for each FiOS TV subscriber, then ActiveVideo is adequately compensated."

For more:
- read the decision
Multichannel News has this story

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