×

Netflix Wins Patent Ruling in Rovi Dispute

ITC judge deals setback to Rovi, which is trying to secure millions in patents fees from Netflix

A U.S. International Trade Commission judge last week ruled that Netflix did not infringe a Rovi patent covering parental controls for TV user interfaces, with hundreds of millions of dollars in licensing fees riding on the ultimate outcome of the case.

Rovi — which has aggressively pursued licensing deals for its interactive TV guide patents — filed a federal lawsuit and ITC complaint against Netflix in May 2012. An ITC judge ruled Friday that Netflix did not infringe Rovi patents and also that a Rovi-owned patent covering interactive computerized TV schedules was invalid.

Rovi is expected to appeal the ITC ruling; the company did not immediately respond to requests for comment.

“We are pleased with the initial determination and look forward to the full Commission confirming it,” a Netflix rep said.

Separately, in March, Rovi entered into a patent-licensing agreement with Hulu, and also has reached recent patent deals with LG Electronics, Vizio and Mitsubishi. Rovi has lawsuits pending against Amazon.com and Roku.

In light of the ruling, B. Riley & Co. analyst Eric Wold downgraded his rating on Rovi’s shares from “buy” to “neutral,” and lowered price target on the stock from $31 to $28 per share.

Popular on Variety

“Following an ITC judge’s ruling in Netflix’s favor on Friday, we are now somewhat less optimistic about Rovi’s chances of prevailing with its complaints against both Netflix and Roku — and believe an air of caution could form around shares similar to last year,” Wold wrote in a research note.

For Rovi, a licensing deal with Netflix could represent as much as $90 million per year in annual revenue over the next three to five years, according to Wold. “Not only could this opportunity now be at risk, but it could also drive a similar ruling with the complaint against Roku (which we estimated to be worth as much as $10-20M in annual revenues over that same period).”

Rovi’s interactive program guide patent holdings come through the $2.8 billion acquisition of Gemstar-TV Guide International in May 2008.

More Digital

  • Ted Sarandos Milestone Award PGA

    Netflix Leader Ted Sarandos Plans Broader Creative Push for the Future

    Ted Sarandos, who has helped to upend the way audiences receive and consume entertainment as Netflix’s chief content officer, will be honored with the Milestone Award at the 31st annual Producers Guild Awards on Jan. 18. Game-changers including Steven Spielberg, Sherry Lansing, Robert Iger, Jeffrey Katzenberg and Ron Meyer have previously received the recognition, and [...]

  • peacock-ads-NBCU

    NBCU's Peacock Marks Media's Latest Try to Connect Consumers, Commercials

    In an era when consumers feel more empowered to avoid TV commercials, NBCUniversal is the latest media company to try to get them to bring ads back into their TV lives. One of the key selling points of big streaming-video services like Netflix and Disney Plus is that subscribers don’t have to endure the commercial [...]

  • OTT.X - Mark Fisher

    Entertainment Merchants Association (EMA) Gets Renamed OTT.X With Expanded Scope

    The Entertainment Merchants Association (EMA) home-video retailing trade group has changed its name to OTT.X, The Over The Top Exchange. The new name reflects the org’s broader scope and community to adapt to the evolution of the home-entertainment ecosystem, according to Mark Fisher, president and CEO of OTT.X. The group’s new website is at ottx.org. [...]

  • UFC 246 - McGregor vs Cerrone

    UFC Inks Facebook Pact for Exclusive Content to Push Pay-Per-View Fights (EXCLUSIVE)

    UFC has upped its investment in original content for Facebook — where it has more than 26 million global followers — to try to convert more mixed martial arts fans into premium pay-per-view buyers. Under the one-year deal between UFC and Facebook, the MMA promoter is producing three original shows for Facebook Watch. All of [...]

More From Our Brands

Access exclusive content