We TiVo (Nasdaq: TIVO) investors are a happy bunch today. Shares jumped big time this week. The catalyst: another large legal settlement. TiVo and AT&T (NYSE: T) have agreed to cross-license their "advanced TV" technology portfolios and drop all charges against each other, and Ma Bell ends up paying at least $215 million over several years in licensing fees.

This settlement is far smaller than the $500 million TiVo collected from DISH Network (Nasdaq: DISH) last year. Then again, we're not looking back at a seven-year court battle this time that kept jacking up the final price tag. AT&T decided to get this DVR war out of the way now, perhaps avoiding a much larger cost in the future. The settlement comes just days before the scheduled jury selection.

TiVo isn't done with its legal tactics quite yet. The company still has cases pending against Microsoft (Nasdaq: MSFT) over alleged infringements in the Xbox Live platform as well as Verizon (NYSE: VZ) for its unlicensed FiOS DVR products and services. Motorola Mobility got dragged into the Verizon action as the provider of potentially infringing FiOS set-top boxes. Each of these opponents could end up paying TiVo a few hundred million in fees and damages. Of course, this cuts both ways, as every defendant has filed countersuits of its own. But the pattern here makes me like TiVo's chances.

So TiVo is well on its way to resolving all its lawsuits and expects legal costs to drop dramatically in 2012. The courtroom campaign is part of a larger strategy shift away from low-margin hardware sales and into a much more profitable technology licensing model. The idea is that DVR boxes running software either developed or at the very least approved by TiVo should be a valuable selling point for cable companies the world over. By all means, design your own solution around TiVo's technologies, but then you don't get to slap a "TiVo Inside" sticker on your service.

Settlement payments will eventually dry up as each case runs its course. TiVo wants to replace them with recurring license and service fees. I like what I see here, but The Motley Fool has found an even more promising stock idea for 2012. This brand-new special report is free but only for a limited time -- get yours today.