Rovi Corp. (ROVI) plunged the most since August after it lost a patent-infringement case against Amazon.com Inc. over interactive programming. Rovi pledged to pursue other claims against the online retailer.
Amazon.com’s Instant Video and IMDB Video didn’t infringe two patents owned by Rovi’s TV Guide for electronic program guides, the U.S. Court of Appeals for the Federal Circuit in Washington said in an opinion posted on its website. Rovi fell 12 percent to $20.50 in New York trading of 6.5 million shares, five times the three-month daily average.
Rovi, which licenses data for television guides, has agreements with companies like Sony Corp. and Google Inc. The Santa Clara, California-based company has had mixed results when companies balk at paying royalties on its technology. In November, it lost a case over Netflix Inc.’s software-development kits after a U.S. trade agency said other Rovi patents weren’t infringed.
“We believe that our portfolio is even more relevant to Amazon today and going-forward than when the present litigation began in early 2011,” Samir Armaly, head of intellectual property and licensing for Rovi, said in a statement. “Since that time, Amazon has continued to expand its video and over-the-top offerings through new products like the recently announced Fire TV.”
Today’s court decision centered on a dispute over whether the patents’ coverage of “data feed” included transmissions sent directly over the Internet and if the phrase “interactive program guide” was limited to screens identifying the channels and times when TV shows would air, rather than simply finding television shows as Rovi argued.
Rovi conceded that, based on the court’s interpretation, Amazon.com’s products to allow the purchase of movies over the Internet didn’t infringe the patents. In agreeing with the trial judge on what the patents covered, the Federal Circuit affirmed the judgment of non-infringement.
Investors may be reacting to the opinion’s narrowing of what the patents cover, Sterling Auty, an analyst with JPMorgan Chase & Co., said in a note to clients.
“We actually believe the ruling is not as damaging as the market seems to believe because the patent portfolio, as it relates to over-the-top vendors, is in better shape today, in our view, than it was three years ago,” Auty said. He said Rovi probably will file another suit against Amazon over newer products.
Seattle-based Amazon.com last week announced its $99 TV box for watching digitally delivered shows and movies.
Mary Osako, a spokeswoman for Amazon.com, didn’t immediately respond to a request for comment.
“We plan to continue to pursue Amazon going forward to take the necessary licenses under our patent portfolio, not only to protect our rights but also the rights of our existing licensees in this space,” Armaly said.
The case is United Video Properties Inc. v. Amazon.com Inc. (AMZN), 2013-1396, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is 11-0003, U.S. District Court for the District of Delaware (Wilmington).
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