Cisco: Will TiVo Lawsuit Damage Its Stock?

| About: Cisco Systems, (CSCO)

Cisco (NASDAQ:CSCO) is being countersued by TiVo (NASDAQ:TIVO) for several digital video recorder (NYSE:DVR) tech patents.

Everything started when Cisco sued TiVo for "failing to grant a broad license for its technology, because doing so would impede on TiVo's ability to bring, and ultimately settle, lawsuits over its patents". This seems like a sensible request to me.

Now TiVo claims that Cisco violated four of its digital video recorder tech patents. The company claims that Cisco boxes infringe on patents that make the playback of time-shifted TV possible. This is not good news for Cisco. TiVo wants Cisco to pay compensatory and other damages for the infringement. Cisco says that it will "defend its DVR products and our customers against TiVo's aggressive strategy of wrongfully asserting its patent claims". Cisco is facing several issues in the consumer realm, and this is just the cherry on top of the cake.

However, Cisco has put forward the argument in a pre-emptive lawsuit that if TiVo wants rights to those patents, it must license them. It seems that TiVo plans to make money out of other companies by suing them every time they make use of DVRs that Cisco owns but has not licensed. If TiVo wants to make a big deal about the situation, it has to license its products. Consequently, Cisco has filed a complaint against TiVo. Basically the tech company wants TiVo to either license the technology, or have the patents declared invalid. Again, that seems like a fair enough demand. If the court decides to announce the patents as invalid there will no longer be a lawsuit against Cisco.

The news that TiVo is suing Cisco is not particularly surprising as the company has used this method in several other instances and against other firms in order to generate income. The other firms that it is suing are ones that originally bought the DVRs from Cisco, so it is not surprising that TiVo has finally turned its attention to Cisco itself for its newest legal battle. As things stand, TiVo has been involved in more than seven years of litigation cases similar to this one. I feel that Cisco may have the stronger case in this situation as TiVo should be compelled to license the technology if it wants to claim intellectual rights over it.

However, it is safe to assume that Cisco knew about the patents and the infringements because of the cases that TiVo has waged against other companies with which Cisco has close ties and partnerships, namely Verizon (NYSE:VZ) and AT&T (NYSE:T). It will be quite interesting to see which of the two companies comes out on top of this case. In my opinion, Cisco has the stronger argument, but not everyone necessarily sees it that way.

Court cases always generate bad press for a company. However, if Cisco's appeal against TiVo is successful I believe that the damage caused in his regard will be minimal. From my point of view, it seems that TiVo does not have much of a case and that it won't be successful with its litigation this time. However, we will have to wait and see where this leads the company.

Competitor IBM (NYSE:IBM) recently decided to boost its smarter computing initiative, a very good strategy, I feel, as this shows the company's dedications to making things faster for enterprising businesses. The businesses that use the new form of smarter computing will be able to analyze and organize data in ways that will allow them to serve their customers better and thereby increase their revenue. This is something that will keep IBM very popular with a number of businesses, and I think that this is a tech stock that has the right idea about how to move forward.

Dell (NASDAQ:DELL) is expanding its Inspiron laptop range by introducing a laptop specifically for families and students. These new Inspiron laptops come with Intel's (NASDAQ:INTC) new 3rd Generation Core i processors and the Microsoft (NASDAQ:MSFT) Windows 7 Home Premium operating system. All-in-all the new laptops come with some impressive specs. However, I feel that Dell should be looking into the tablet market rather than focusing on its Laptop range. Its competitors are way ahead of it in this regard and it needs to catch up if it wants to be a serious player in the industry.

Hewlett Packard's (NYSE:HPQ) new CEO Meg Whitman has a very simple vision for HP's future, and she may just be the right person to achieve that vision. There is a long way to go and the company will have to focus on its traditional products and not move on to more consumer-favored options for a while to come, but in the long run we may see a turnaround. This is not something to get too excited about. There is a long way to go and a number of things that must be done before this end goal is reached.

EMC (EMC) is making the right move in its attempt to get involved in the arena of cloud computing. This is definitely the way forward for tech stocks. Recently, it partnered with Verizon to work on its new cloud computing initiative. I expect great success form this partnership. However, there are many other companies also entering the market of cloud computing. Oracle (NYSE:ORCL) also recently announced new cloud computing options. EMC will have to move quickly to stay ahead of the game and make a significant mark on the industry.

Keep an eye out for Cisco's legal future and see where that goes. Cisco's status could remain up in the air until a conclusion is reached.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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