I'll admit it. I had to do a little eye-rubbing when I first read that Microsoft (NASDAQ:MSFT) is suing TiVo (NASDAQ:TIVO).
Isn't Microsoft typically the target of lawsuits, ultimately digging deep into its pockets to pacify countries or RealNetworks (NASDAQ:RNWK)?
Isn't TiVo the one usually calling out the legal hounds, the way it goes after the likes of DISHNetwork (NASDAQ:DISH), AT&T (NYSE:T), and Verizon (NYSE:VZ) when they get too close to its intellectual property?
Well, in a case of "man bites dog," the world's leading software company is going after the pioneer of digital video recording. Microsoft alleges that TiVo is stepping all over its patents, given the way TiVo displays programmable information and the way it sets up its platform for the secure buying and delivering of video content.
Microsoft's complaint was filed in a San Francisco federal court yesterday.
Despite the popularity of its brand, TiVo has struggled to grow its subscriber base in recent years. Spotty profitability has also been a concern. Many of TiVo's share gains have typically come on the heels of its legal victories against DISH Network.
Bloomberg's report of the legal complaint suggests that Microsoft is getting litigious to defend AT&T, whose U-Verse service relies on Microsoft's Mediaroom software. That may very well be the case, but it doesn't mean that Microsoft doesn't have a case.
The market dislikes legal uncertainty, and that's why shares of TiVo headed lower this morning before they eventually rebounded later in the day, as more facts came to light. Courtroom tussles have usually worked in favor of TiVo when it's on the attack, but it's not as fun for shareholders when they're on the other end of a lawsuit.
Who do you think will come out ahead in this legal battle? Share your thoughts in the comments box below.
