TiVo 2011 Annual Report Download - page 16

Table of Contents
currently viewed by us to be immaterial may also materially and adversely affect our business, financial condition or results of operations.
We have incurred significant net losses and may never achieve sustained profitability.
During the fiscal years ended January 31, 2012, 2011, and 2010, our net income (losses) were $102.2 million, $(84.5) million, and $(23.0) million,
respectively. As of January 31, 2012, we had an accumulated deficit of $(677.1) million. The size of future net losses will be impacted by a number of factors,
including the timing of the development or deployment of solutions under our television service provider arrangements, the growth or decline in the number
of TiVo-Owned subscriptions, the price at which we sell TiVo-Owned set-top boxes, the amount of research and development expenses we incur to fund new
product development and expand our engineering services capacity, the amount and timing of litigation expenses we incur in connection with protecting our
intellectual property and the outcomes of our intellectual property litigations. In particular, we expect to incur significant net losses in our fiscal year ending
January 31, 2013. Unless and until we generate significant additional revenues or substantially reduce our expenses, including revenues and expenses
resulting from our ongoing legal proceedings, we will likely continue to incur losses in our current and future fiscal years and we may never achieve sustained
profitability. Over time, continued net losses and negative cash flow could drain our existing cash balance.
We are a party to patent infringement lawsuits involving Verizon and Motorola. We are incurring material litigation expenses as a result, and
an adverse outcome in any of these lawsuits could harm our business.
Our claims against Verizon. On August 26, 2009, we filed a complaint against Verizon Communications, Inc. in the United States District Court for the
Eastern District of Texas for infringement of the following three TiVo patents: U.S. Patent Nos. 6,233,389 B1 (“Multimedia Time Warping System”),
7,529,465 B2 (“System for Time Shifting Multimedia Content Streams”), and 7,493,015 B1 (“Automatic Playback Overshoot Correction System”). Our
complaint seeks, among other things, damages for past infringement and a permanent injunction, similar to that issued by the United States District Court,
Eastern District of Texas against EchoStar. We continue to incur material expenses in connection with this lawsuit, and in the event we were to lose, our
business would be harmed.
Verizon's claims against us. On February 24, 2010, Verizon answered our August 26, 2009 complaint and Verizon asserted counterclaims. The
counterclaims seek declaratory judgment of non-infringement and invalidity of the patents we asserted against Verizon in our August 26, 2009 complaint.
Additionally, Verizon alleged infringement by us of U.S. Patents: 5,410,344 (“Apparatus and Method of Selecting Video Programs Based on Viewers'
Preferences”), 5,635,979 (“Dynamically Programmable Digital Entertainment Terminal Using Downloaded Software to Control Broadband Data
Operations”), 5,973,684 (“Digital Entertainment Terminal Providing Dynamic Execution in Video Dial Tone Networks”), 7,561,214 (“Two-dimensional
Navigation of Multiplexed Channels in a Digital Video Distribution System”), and 6,367,078 (“Electronic Program-Guide System with Sideways-Surfing
Capability”). On March 15, 2010, Verizon filed an amended answer further alleging infringement by us of U.S. Patent No. 6,381,748 (“Apparatus And
Methods For Network Access Using A Set Top Box And Television”). Verizon seeks, among other things, damages and a permanent injunction. We continue
to incur material expenses in connection with this lawsuit, and in the event we were to lose, we could be forced to pay damages for infringement or to license
technology from Verizon, and we could be subject to an injunction preventing us from infringing Verizon's technology or otherwise affecting our business,
and in any such case, our business would be harmed.
Motorola's claims against us. On February 25, 2011, Motorola Mobility, Inc. and General Instrument Corporation, a subsidiary of Motorola, filed a
complaint against us in the United States District Court for the Eastern District of Texas seeking declaratory judgment of non-infringement and invalidity of
two of the patents we asserted against Verizon in our August 26, 2009 complaint. Additionally, Motorola alleged infringement of U.S. Patents: 6,304,714 (“In
Home Digital Video Unit with Combined Archival Storage and High-Access Storage”), 5,949,948 (“Method and Apparatus for Implementing Playback
Features for Compressed Video”) and 6,356,708 (“Method and Apparatus for Implementing Playback Features for Compressed Video”). Motorola seeks,
among other things, damages and a permanent injunction. We continue to incur material expenses in connection with this lawsuit, and in the event we were to
lose, we could be forced to pay damages for infringement, to license technology from Motorola, and we could be subject to an injunction preventing us from
infringing Motorola's technology or otherwise affecting our business, and in any such case, our business would be harmed.
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