TiVo Inc (Alviso, USA) will receive at least $250.4 million from Verizon Communications Inc (New York, USA) as part of a patent litigation settlement, the video recorder pioneer said on Monday, sending its shares up 5 percent.
TiVo has had to turn to litigation to generate revenue from licensing fees as the company has struggled to fight competition from low-cost rivals in recent years.
The settlement, which marks a big victory for TiVo, follows a similar deal it reached in January with AT&T Inc (Dallas, USA), which agreed to pay $215 million.
TiVo had also prevailed in a similar case against Dish Network Corp (Meridian, USA) and EchoStar Corp (Englewood, USA) in May 2011.
TiVo said on Monday that Verizon would initially pay $100 million in cash and recurring quarterly payments totaling $150.4 million through July 2018.
Besides the guaranteed compensation, Verizon will pay TiVo - whose brand is synonymous with digital video recorders - license fees on a monthly basis through July 2018 for each Verizon DVR subscriber above a certain agreed-upon number.
TiVo said it was also looking into forging a distribution agreement with a joint venture Verizon has set up with Coinstar Inc's Redbox (Bellevue, USA) to distribute video services over the Internet. Under such an agreement, the venture's video content could be made accessible to users of TiVo's retail DVR products.
If Verizon and TiVo pursue "certain commercial initiatives" by December 21, up to $29.4 million of the payments made by Verizon would be subject to a credit of an equal amount, TiVo said.
The companies also agreed to dismiss all pending litigation between them.
TiVo shares rose 5 percent to $10.04 in early trading, while Verizon was up 0.4 percent at $45.83.
(Reporting by Neha Alawadhi in Bangalore and Sinead Carew in New York; Editing by Joyjeet Das, Jeffrey Benkoe and Lisa Von Ahn)