Verizon Suffers Another Video-On-Demand Blow

(CN) - Verizon must change or shut down its video-on-demand service by May 2012, a federal judge ruled, following up on a jury's finding that the telecommunications giant owes $115 million for patent infringement.

Vindicated in the dispute is ActiveVideo, an interactive television technology provider. The San Jose, Calif.-based company markets an application platform called CloudTV that delivers both traditional television and web-based content to cable boxes and consumer electronic devices.

ActiveVideo Networks sued Verizon Communications for alleged patent infringement on four of its patents in May 2010.

In its complaint, the company alleged that video-on-demand services offered through Verizon's FiOS system used ActiveVideo's intellectual property.

After a three-week trial this summer, a jury found that Verizon had infringed on ActiveVideo's patents and awarded ActiveVideo $115 million in damages.

Shortly thereafter, ActiveVideo filed a motion for a permanent injunction seeking to block Verizon from using the adjudicated patents. While ActiveVideo and Verizon are not direct competitors, the motion argued that ActiveVideo suffered irreparable harm from Verizon's infringement because ActiveVideo licenses its services to Cablevision, a company that offers digital cable television and directly competes with Verizon.

U.S. District Judge Raymond Jackson granted ActiveVideo's motion last week with a sunset provision. Verizon must pay sunset royalties of $2.74 per FiOS TV subscriber per month until the injunction takes effect on May 23, 2012.

"There is no doubt that ActiveVideo suffers indirect losses when Cablevision suffers direct losses from Verizon's infringement," Jackson wrote.

Though Verizon claimed that ActiveVideo would be better off obtaining a royalty from Verizon, rather than obtaining an injunction, Jackson said "this type of unquantifiable harm, the type that ActiveVideo has suffered, cannot be adequately compensated with money damages."

"Without Verizon's added competition, Cablevision would have more subscribers and need an expanded CloudTV platform which would, in turn, generate more revenue and broader recognition for ActiveVideo," Jackson continued.

The court's ruling will require Verizon to change its FiOS technology or shut it down altogether. Verizon's appeal of the jury's verdict is still pending.

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