Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of digital entertainment specialist Rovi (NASDAQ:ROVI) plunged as much as 23.7% Thursday morning. The stock bounced off that low to recover slightly, but was still down 15% at 11:30 AM Eastern. Rovi suffered a setback in legal proceedings against Netflix (NASDAQ:NFLX) this morning, which could spell trouble for Rovi's revenue-generating patent licensing efforts.

So what: Judge Phyllis Hamilton, acting for the District Court of Northern California, wrote a long order in favor of summary judgment in this case, which began in December of 2011. She then filed a very short order, declaring the five Rovi patents in question as invalid, dismissing Rovi's counterclaims against Netflix.

Image source: Rovi.

Now what: Netflix isn't asking for money, but the loss of important patents could derail Rovi's broader operations. In 2014, 22% of Rovi's revenues came from licensing agreements with three major broadcasting systems, and these deals are expiring within the next 12 months. These companies are paying a license fee for the rights to use many of the content management concepts that Netflix is invalidating here, undermining an important piece of Rovi's business model.

Putting a positive spin on the setback, Rovi executive Samir Armaly noted that the court agreed with most of Rovi's claim construction statements. The head of Rovi's intellectual property and licensing operations also pointed out the all-important Alice ruling two years after the Netflix v. Rovi proceedings started, and that Rovi has more than 1,500 other patents in its arsenal.

Are these details important case-busters and selling points for licensing deals? Or are they irrelevant technicalities, changing nothing? Higher courts will settle that question. In the meantime, Rovi shares have now fallen 37% over the last 12 months as investors lose hope about those licensing renewals.