Microsoft Sues TiVo, Casts Doubt On Patents As a Business Model

Microsoft (s MSFT) has launched a lawsuit against TiVo (s TIVO), alleging that the DVR maker is infringing on patents related to the display of programmable information and the sale and delivery of videos, according to a report from Bloomberg. Microsoft’s lawsuit is widely seen as a move to defend AT&T (s t) in a related lawsuit filed by TiVo last August when it sued the telco as well as Verizon (s VZ) in an attempt to force them to license its DVR patents.

This isn’t the first time TiVo has engaged in such lawsuits. The company has been in a long legal fight with satellite TV providers DISH (s DISH) and EchoStar (s SATS) about DVR patents, and judges have so far sided with TiVo. Most recently, a court awarded TiVo $200 million. However, the U.S. Patent Office has cast doubts as to whether TiVo should have been awarded patents for time-shifting in the first place — something that is surely going to come up again in Microsoft’s lawsuit against the DVR maker.

Microsoft, of course, has a vested interest in the outcome of TiVo’s lawsuit against AT&T, whose U-verse service is based on Microsoft’s Mediaroom solution. Mediaroom is essentially a media center with online access and DVR capabilities that Microsoft supplies to telcos to support their broadband offerings, and any legal precedence against AT&T would force other potential Mediaroom customers to license TiVo’s technology as well. Furthermore, AT&T has insisted on Microsoft picking up the tab if TiVo prevails in court.

TiVo said in a statement released today that Microsoft’s lawsuit wasn’t any sign that its claims against AT&T are unfounded. “Rather these actions are part of a legal strategy to defend AT&T,” adding that the company remained confident that AT&T will be found liable.

For TiVo, there’s a lot at stake with these lawsuits. The company has been bleeding subscribers lately, losing as many as 314,000 in the quarter ending Oct. 31st. TiVo has been more successful at striking patent licensing agreements with cable operators, as well as DirecTV (S dtv). TiVo’s legal victories against DISH have certainly helped the company to strike some of those agreements. However, the case against DISH has been going on since 2004, and one has to wonder how long a dispute fueled by Microsoft’s war chest would last.

The irony of this conflict is that TiVo recently complained in a comment to the FCC that cable companies are stifling innovation by restricting the use of set-top boxes. Maybe it’s time that TiVo starts spending fewer days in court and more days to actually innovate itself?