TiVo 2011 Annual Report Download - page 13

agreements with our service provider customers and, in turn, upon our customers’ successful commercialization of their underlying products. We face
competition from companies such as NDS, Microsoft, Motorola, Cisco, Arris, and Rovi, which have created competing products that provide user interface
software for use on television set-top boxes and consumer electronic devices. Such companies may offer more economically attractive agreements to service
providers and consumer electronics manufacturers. We also face competition from internal development initiatives at some large service providers and
consumer electronics manufacturers who may choose to develop similar products on their own rather than resell products/services developed by TiVo.
Competition in the Media Services business. Digital video recorder services, in general, and TiVo, specifically, compete with other advertising media
such as print, radio, television, Video on Demand, internet, and other emerging advertising platforms for a share of advertisers’ total advertising budgets. If
advertisers do not perceive digital video recording services, in general, and TiVo specifically, as an effective advertising medium, they may be reluctant to
advertise on the TiVo service. In addition, advertisers may not support or embrace the TiVo technology due to a belief that our technology’s ability to fast-
forward through commercials will reduce the effectiveness of general television advertising.
We compete with audience research companies such as Nielsen, Kantar Media Research, and RenTrak for research spend from advertisers, advertising
agencies, and television networks. These companies have all announced intentions to provide second-by-second viewership information based on data from
digital cable set-top boxes and satellite set-top boxes. The type of research we provide is a discretionary purchase. If advertisers, advertising agencies, and
television networks perceive the information provided by these companies to be more valuable, they may invest in those services rather than ours, or they may
choose not to purchase this type of information at all.
Patents and Intellectual Property
We have filed patent applications relating to numerous inventions resulting from TiVo research and development, including many critical aspects of the
design, functionality, and operation of TiVo products and services as well as technology that we may incorporate in future products and services. We have
been awarded approximately 238 foreign and domestic patents and have approximately 413 foreign and domestic patent applications pending. For example,
TiVo owns U.S. Patent No. 6,233,389, titled “Multimedia Time Warping System” (referred to as the Time Warp patent or the '389 patent) which describes an
invention that allows an user to store selected television shows while the user is simultaneously watching or storing another program and expires in July 2018.
The Time Warp patent has been through reexamination at the United States Patent Office twice and had its claims upheld without modification. The majority
of our patents have expirations beyond 2018.
TiVo is prosecuting an intellectual property lawsuit against Verizon, including for willful infringement of the Time Warp patent. During the fiscal year
ended January 31, 2012, TiVo entered into separate settlements of pending intellectual property lawsuits it had filed against DISH Network and AT&T Inc.
for $500 million and $215 million, respectively. TiVo is also defending counterclaims from Verizon and a lawsuit from Motorola, in addition to other
intellectual property litigation. See the discussions in Item 1A. Risk Factors, relating to pending intellectual property litigation, and Item 3. Legal Proceedings.
TiVo has secured numerous foreign and domestic trademark registrations for its distinctive marks, including but not limited to registrations, for the
marks “TiVo,” the TiVo logo, “Season Pass,” Thumbs logos, and certain sound marks. We anticipate ongoing progress in our establishment of a defensible
and useful intellectual property portfolio; however, we cannot assure you that current patents will be enforceable or our current patent applications will ever
be allowed or granted. See Part I. Item 1A. “Risk Factors – Our success depends on our ability to secure and protect our patents, trademarks, and other
proprietary rights” and “Pending Intellectual Property Litigation” for additional information concerning our intellectual property.
Privacy Policy
We have adopted a privacy policy, which we make available on our website at www.tivo.com/privacy and deliver to each new subscriber to the TiVo
service. This policy was last updated in February 2011 to cover new features that we have introduced and plan to introduce in the future. This policy explains
that we collect certain types of information such as anonymous viewing and diagnostic information, but unless the subscriber gives prior consent, we do not
collect or access personally identifiable viewing information from a subscriber’s DVRs except as necessary to provide service to the DVR. We further give
subscribers the ability to “opt-out” from the collection of anonymous viewing information and diagnostic information log files.
We have designed a system that ensures that any anonymous viewing information transmitted from a TiVo-enabled DVR remains unidentifiable to a
particular viewer (known as anonymous viewing information). Anonymous
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