TiVo and Rovi made big bets on software patents. They haven't worked out.
A five-year-old patent brawl between Netflix and Rovi (now TiVo) has reached a turning point, with the US Court of Appeals for the Federal Circuit upholding a major lower-court victory by Netflix.
The litigation between the two companies began in 2011, when Netflix sued to invalidate a batch of patents on Rovi's digital entertainment guides, for which Rovi had demanded Netflix pay licensing fees.
The patents described ways of navigating TV and other video content online. Even after Netflix lawyers bested Rovi at the International Trade Commission and then pounded all five patents out of existence at district court last year, Rovi said it would push forward with an appeal.
Now it's clear that Rovi's strategy to patent digital TV guides has hit a wall. Just a few days after Rovi's lawyers made their oral argument, a panel of judges at the Federal Circuit upheld (PDF) the lower court's decision in its entirety without comment.
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Rovi's patents covered very basic ways of organizing video content, including one on using "combination categories" like "sports dramas" or "romantic comedies." Another was on bookmarking shows across devices, which Rovi argued was a new idea when it filed its patent. "A novel abstract idea is still an abstract idea," US District Judge Phyllis Hamilton informed the company in her opinion, which has now been upheld.
Rovi sued and settled with other companies over its patents, including Amazon, Hulu, Toshiba, Sharp, and China-based Haier.
In April, Rovi acquired TiVo, another company that has turned its patents into a revenue stream. It soon took on TiVo's name. Executives of the merged company told investors they were going to focus more on licensing IP than building hardware. But even with TiVo's big litigation wins, the company couldn't ultimately stop itself from becoming an afterthought. The big bets that companies like TiVo and Rovi made on software patents aren't panning out, especially since the Supreme Court's Alice decision has made it substantially easier to invalidate patents that describe basic business processes.
Neither TiVo nor Netflix immediately responded to requests for comment on the decision.
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