(By Balachander) TiVo Inc. (NASDAQ:TIVO) shares jumped in early trade on Monday after the digital-video-recorder (DVR) company agreed to settle a pending patent suit with Verizon Communications Inc. (NYSE:VZ).
Under the terms of the agreement, Verizon will pay at least $250.4 million to TiVo, including an initial $100 million and recurring quarterly payments totaling an additional $150.4 million through July 2018.
TiVo, which has struggled to fight competition from low-cost rivals in recent years, will receive monthly license fees from Verizon through July 2018 for each Verizon DVR subscriber beyond certain agreed-upon levels.
In addition, the companies are exploring future distribution of Internet video services developed through Verizon's joint venture with Redbox via TiVo DVRs.
Further, the companies have entered into a cross license of their respective patent portfolios in the advanced television field.
"We are pleased to reach an agreement with Verizon which underscores the significant value our distribution partners derive from TiVo's technological innovations and our shareholders derive from our investments in protecting TiVo's intellectual property," said TiVo Chief Executive Tom Rogers.
TiVo shares rose 6.38 percent to trade at $10.17 on Monday, while VZ shares inched 0.24 percent higher.