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Cablevision Infringed Verizon Patent, Trade Agency Says

A U.S. trade agency said it will let stand a judge’s finding that Cablevision Systems Corp. (CVC) infringed a patent owned by Verizon Communications Inc. and will consider banning imports of set-top boxes used by Cablevision.

Verizon filed the patent-infringement complaint last year at the U.S. International Trade Commission in Washington, seeking an order that would block imports of set-top boxes by Cablevision. The Bethpage, New York-based company was cleared by the judge of violating four other Verizon patents, and those findings also were upheld today.

The infringed Verizon patent relates to a method for accessing the Internet through a television set-top box. New York-based Verizon’s FiOS fiber-optic Internet and TV service competes with Cablevision and online video companies for customers in the New York market.

The claim asserted against Cablevision also is part of an unrelated civil dispute between Verizon and ActiveVideo Networks Inc. A trial judge in that case ruled in May that the claim was invalid. The ActiveVideo case is being tried in federal court in Norfolk, Virginia.

“This ruling is a significant win for Cablevision,” Jim Maiella, a spokesman for the company, said in an e-mail. “The ITC rejected four of Verizon’s five claims in the case, and the underlying patent in the fifth claim had already been invalidated by a Virginia court, which late last month rejected a motion by Verizon to reconsider that decision.”

Robert Varettoni, a spokesman for Verizon, said the company had no immediate comment.

Promoting FiOS

The commission said it is seeking input on whether to order a ban on imports of the set-top boxes for the violation of Verizon’s patent. The commission “must consider the effects of that remedy upon the public interest,” it said in a notice posted on its website today. It is scheduled to make a final decision on Sept. 20.

Verizon, the second-largest U.S. phone company, is adding new programming to promote FiOS. Sales from Verizon’s wireline business, which includes FiOS and the declining home-phone line business, fell 2.2 percent to $10.1 billion in the first quarter, the company said in April. Verizon is scheduled to report second-quarter earnings tomorrow.

Cablevision is seeking to cut spending on set-top boxes by incorporating video-recording technology in its network. The company’s first-quarter sales increased 9.7 percent to $1.92 billion, Cablevision said in May. It’s expected to report second-quarter earnings on Aug. 5.

Verizon also filed a civil suit against Cablevision, seeking cash compensation for the use of its inventions. That case, filed in federal court in Wilmington, Delaware, has been put on hold until the ITC completes its investigation.

The ITC case is In the Matter of Certain Digital Set-Top Boxes, 337-712, U.S. International Trade Commission (Washington). The related civil case is Verizon Communications Inc. (VZ) v. Cablevision Systems Corp., 10cv216, U.S. District Court for the District of Delaware (Wilmington).

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

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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