TiVo (TIVO) - Get Reportis making nice with online video streamer Netflix (NFLX) - Get Report as the San Carlos, Calif., digital video recorder and TV technology company looks to avoid lawsuits and boost its offerings.

The agreement, announced following Monday's closing bell, advances the companies' existing product partnership and also instates a new intellectual property license deal.

TiVo set-top boxes available through pay-TV providers and retail stores will now come with Netflix services more fully integrated, including a unified search option and a dedicated Netflix button on remotes. Netflix also has gotten a license to TiVo's patent portfolios and to the company's over-the-top patent portfolio with privately owned global invention company Intellectual Ventures.

TiVo shares were up 1.9% to $21.15 on the news Tuesday morning. The stock is up nearly 27% year-to-date.

Netflix stock climbed more modestly, rising about 1% to $118.07 by late morning. Shares of the Los Gatos, Calif., company are up about 3.2% so far this year.

"Our agreements with Netflix represent a major milestone for TiVo as we expand our offerings for the fast-growing OTT space and further [demonstrate] our commitment to delivering innovative technologies to new and emerging markets," TiVo CEO Tom Carson said in the statement.

The move to seal a deal with Netflix comes after TiVo, then Rovi, lost a legal tussle with the video streamer.

In July, five patents of interactive TV media guide company Rovi were invalidated following five years of litigation against Netflix. Rovi, which bought the former TiVo on Sept. 8 for $1.1 billion in cash and stock and assumed the TiVo name and ticker, alleged that Netflix's categorization of content as well as other features on the streaming service infringed on Rovi's licensed technology.

U.S. District Judge Phyllis Hamilton ruled in favor of Netflix, however, saying that Rovi's five patents in question had no "meaningful limitations." Rovi later appealed the decision, but it was upheld in the U.S. Court of Appeals for the Federal Circuit on Nov. 7.

B. Riley's Eric Wold said the new IP agreement with Netflix appears to be a risk-avoidance move on TiVo's side.

"We believe that some meaningful level of potential revenues from NFLX under a separate license agreement or litigation settlement were put to the side in order to continue the product partnership that has been in place for years -- and allow TIVO to continue to offer service providers a seamless linear and OTT search/discovery environment," Wold contended in an analyst note Monday. Nevertheless, he reiterated a buy rating and $31 price target on TiVo shares. B. Riley does not rate Netflix stock.

"[The agreement] does provide value in that the legacy TIVO/NFLX relationship remains in place, which is valuable to TIVO's license agreements with the [set-top box] providers and service providers in terms of providing full search capability across linear and OTT," he added via email. "In addition, there is value in avoiding litigation expense and the risk of any future patents being deemed invalid during litigation."

Globally, the combined TiVo/Rovi has more than 6,000 issued patents and pending applications, Variety reports. In its latest annual report, filed March 23, TiVo estimated it had received $1.6 billion in cash and future revenue commitments from IP litigation.

Wold said in the analyst note that TiVo could leverage the latest agreement with Netflix to snag deals with other companies in the over-the-top space, including Amazon (AMZN) - Get Report and Apple (AAPL) - Get Report.

JPMorgan analyst Sterling Auty said in a note Monday that the deal shows the strength of Rovi and TiVo's portfolio, which has "broader applicability."

"The deal is a positive as it adds incremental revenue, although not huge at first, and eliminates the legal costs associated with Netflix litigation," Auty added, maintaining an overweight rating and $34 price target on TiVo. For Netflix stock, JPMorgan's Doug Anmuth has an overweight rating.

A Netflix spokeswoman declined comment.

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