As Interactive programming guide maker Gemstar TV-Guide International, struggles to regroup after it lost a patent infringement claim regarding its guides, the waves from the decision are sloshing throughout the industry.

Seemingly overnight, analysts say, the ruling has shifted thinking among iTV companies about which IPG patents they should be paying Gemstar for and which might be falling behind in the innovation race.

On Friday, a U.S. International Trade Commission ruling said Gemstar's competitors did not engage in unfair trade practices regarding the use of Gemstar's patented interactive programming guides used in set-top boxes they import and sell across the television industry. While the ruling upheld the patents, it also held that Gemstar's patents regarding the IPG's were not infringed upon.

Gemstar's shares dropped to new lows on the news, and were still sliding Tuesday below the $5 mark.

"This is a review that Gemstar expected to win," notes Richard Doherty, an analyst with The Envisioneering Group, a cable industry consultancy and research firm.

The trade dispute was related to the patented programming guides installed in set-top boxes and satellite systems imported and sold by EchoStar Communications Corporation, Pioneer Corporation, Pioneer Digital Technologies, Inc., Pioneer New Media Technologies, Inc., Pioneer North America, Inc., Scientific-Atlanta Inc., and SCI Systems, Inc.

While the company appeals the ruling, the interim may buy it some time to shore up its position regarding protecting its patents. But in the meantime, Doherty says, "every investor and licensee is making a decision as to whether they should be paying licensing fees for the guides."

Competing IPGs in the dispute are Pioneer's Passport, Scientific-Atlanta's "Sara" and EchoStar's DISH (built by Samini-SCI), Merrill Lynch's Jessica Reif Cohen wrote Monday.

Doherty says the ITC decision has certainly raised an immediate question with those already paying Gemstar the IPG licensing fees, such as Pioneer and Scientific-Atlanta. In addition, "Gemstar's patent portfolio is not getting any younger. That creates concern among licensees as to whether (Gemstar) has a legal right" to keep charging for the patents.

And other IPG and infrastructure companies for the iTV industry are coming on strong, building guides and software that work on more than one television platform, such as mobile devices, satellite and cable systems.

For example, Digeo, Inc. is offering integrated media platforms for interactive television systems in partnership with Motorola and cable company Charter Communications.

Now that Digeo has merged with Moxi, founded by Microsoft's WebTV alum Steve Perlman, the company has built a platform that can wirelessly deliver services to set-top boxes, stereos and PCs, helping to extend its reach beyond the cable industry to satellite providers too. Digeo also has a close association with satellite broadcaster EchoStar, which was involved in Gemstar's patent claim with the ITC.

Gemstar has no choice but to appeal the ITC's ruling. And it also has similar patent infringement claims pending in U.S. District Court in Atlanta against the same companies. But the ITC ruling on the validity of the patents has already undercut Gemstar's claim in federal court, notes Merrill's Cohen.

She expects the ITC's decision will delay or stall the national rollout of Gemstar's IPGs beyond the 15.7 million homes that currently use the guides. Because it wasn't able to establish the primacy of its patents in the ITC case, Gemstar has been slowed in its quest to establish a single industry-wide standard for the IPG in digital television "that would enable it to create a new national platform."

But Marla Backer, an analyst with emerging industry investment firm Brean Murray and Co. says Gemstar's long-term position in the industry is still stable, with over 200 patents to work from beyond the three in the ITC ruling. Still, she also concedes that, with the ITC ruling, Gemstar's patent "mystique has been broken."

But remember that Gemstar has only tested three of its patents in the ITC case, Backer adds. Given that depth, she contends that the company is still the best-positioned IPG maker in the industry.

"It offers (cable operators) significant advantages to use the Gemstar IPG," she says, including the ability to sell advertising space on the guides. Cable companies are in the business of providing cable and entertainment. Gemstar has a headstart in providing a gateway system for programming. Their business fundamentals are still very sound. People overlook that in all this."

Still, with the ruling hanging in the air, consumers' IPG expectations rising, and competitors delivering interactive content to a range of media platforms, the pressure is on for Gemstar to protect its patent portfolio as innovation races onward in the iTV industry.