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Verizon Gets Mixed Ruling in Video-On-Demand Patent Fight

Aug. 24 (Bloomberg) -- Verizon Communications Inc. must pay royalties to a California company whose patents it infringes, though it doesn’t have to stop providing its FiOS TV customers with video-on-demand service, a U.S. appeals court said today.

A jury’s $115 million damage award to ActiveVideo Networks Inc. was affirmed, as was an order for Verizon to pay ActiveVideo $2.74 per month for each FiOS-TV subscriber. The U.S. Court of Appeals for the Federal Circuit in Washington upheld a finding that three ActiveVideo patents were infringed and reversed a finding as to a fourth.

ActiveVideo, which licenses its technology to Verizon competitor Cablevision Systems Corp., owns inventions related to delivering interactive television to subscribers. After Verizon lost the trial, a federal judge in Norfolk, Virginia, gave Verizon six months to alter its video-on-demand service or stop providing it. That order was put on hold pending the appeal.

The damage award has grown to almost $260 million with interest and royalties, Jeff Miller, ActiveVideo’s chief executive officer, said in a statement.

“We’re glad to have this part of the case behind us so that we can put all of our energies into doing what ActiveVideo Networks does best: enabling our customers to deliver the best TV navigation, guides and content experiences to all of their subscribers,” Miller said in the statement.

‘Substantial Evidence’

Edward McFadden, a spokesman for Verizon, said the company had no immediate comment.

The appeals court said that “substantial evidence supports the jury’s verdict” against New York-based Verizon regarding three patents, while it doesn’t back up a claim against FiOS processors involving one of the patents.

ActiveVideo can’t prevent Verizon from providing a video-on-demand service when the San Jose, California-based company was actively licensing its patents to all comers, the panel wrote. Cablevision might lose customers to the competition; ActiveVideo only loses potential revenue that would be balanced out by Verizon’s royalties, it said.

“In light of the record evidence including ActiveVideo’s past licensing of this technology and its pursuit of Verizon as a licensee, no fact finder could reasonably conclude that ActiveVideo would be irreparably harmed by the payment of a royalty,” the three-judge panel wrote in an opinion posted on its website.

The Federal Circuit panel also vacated a judge’s ruling that a Verizon patent was invalid and remanded that part of the case for further proceedings. The jury had awarded Verizon $16,000 in damages based on infringement of its patents.

The case is ActiveVideo Networks Inc. v. Verizon Communications Inc., 2011-1538, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is ActiveVideo Networks Inc. v. Verizon Communications Inc., 10cv248, U.S. District Court, Eastern District of Virginia (Norfolk).

To contact the reporter on this story: Susan Decker in Washington at

To contact the editor responsible for this story: Bernard Kohn at

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