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TiVo Stock Jumps on Favorable Patent Decision in Comcast Case

TiVo shares shot up more than 17% Tuesday, following a preliminary initial ruling last Friday by the U.S. International Trade Commission that Comcast had violated two TiVo patents.

TiVo — formed by Rovi’s acquisition of the namesake DVR manufacturer last year — currently is engaged in federal litigation against Comcast separate from the ITC complaint. Rovi sued the cable giant and its set-top suppliers last year alleging they infringe 14 patents in the U.S. District Court for the Eastern District of Texas.

The ITC initial determination doesn’t necessarily have any impact on TiVo’s suit in the federal district court. However, B. Riley & Co. analyst Eric Wold wrote in a research note, “we believe this represents a positive step towards resolving the Comcast dispute, puts the power clearly in TiVo’s corner ahead of a possible [set-top box] injunction against Comcast and is likely to lead to a settlement/license from Comcast in order to avoid potential treble damages from an adverse District Court ruling.”

Comcast declined to comment.

TiVo shares traded as high as $19.30 per share Tuesday afternoon, up 17.7% over the previous closing price. The stock closed at $18.70 per share Tuesday (up 14% for the day).

“Although Comcast still has options to pursue in this dispute (e.g., appealing any final determination from the ITC and moving through the District Court case), this initial determination should pressure Comcast to settle and sign a license deal,” Wold wrote. The analyst maintains a “buy” rating on TiVo, with a price target of $31 per share on the stock.

In its complaint with the ITC, TiVo had alleged Comcast violated six patents total. The agency is expected to release more details in the next 30 days with a final determination in late September.

Separately, Hulu last week sued TiVo, seeking a judgment that it does not need to renew a patent licensing agreement the streaming provider entered into in with Rovi 2013. According to Hulu’s suit, none of the three TiVo-owned patents are currently applicable.

Both TiVo and Rovi have a long history of litigation and aggressive patent-licensing action. The combined company holds approximately 6,000 issued and pending patents covering a diverse range of technologies including interactive program guides, DVR functions and mobile device media processes.

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