A lot of investors seem to think the DVR patent infringement suit with Google‘s Motorola Mobility could result in either a big settlement — or perhaps a sale. TiVo‘s stock is flirting with a 52-week high: it’s up about 1.7% this morning, and more than 19% since the middle of last week when it reported generally encouraging Q3 earnings. The reason: Company watchers believe that Google wants the TiVo suit out of the way so it can sell Motorola Mobility’s pay TV set-top box business. Bids for the operation are due today, although the deadline might be extended, The Wall Street Journal reports. Outsiders say the unit should sell for about $2B. Meanwhile, TiVo’s hand in the case appeared to have been strengthened yesterday by what Lazard Capital Markets’ Barton Crockett says was “a positive claim construction ruling” involving one of the company’s key patents. TiVo has a perfect record so far in resolving these cases, including against companies that use Motorola Mobility’s DVRs.  It  believes that it could collect $1B in damages in its suit — equal to all of the settlements from its patent infringement case settlements with DVR providers including Dish Network, Verizon, and AT&T. The case is scheduled to go to trial in May.

So Google has an incentive to settle. Or…perhaps buy TiVo outright. “Motorola would be more attractive with the TiVo software,” Janney Capital Markets’ Tony Wible says. What’s more, the owner of the combined operation could bet on collecting cash from TiVo’s patent infringement suit against Motorola’s top competitor, Cisco. That’s why Wible says anyone who wants TiVo probably would have to pay 50% more than the company’s current market value of $1.5B. Google recently wrote down $349M from its $12.5B acquisition of Motorola Mobility which closed in May.

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