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Cable Technology Feature Article

April 21, 2011

Appeals Court Confirms EchoStar Infringed on TiVo Patents

By Beecher Tuttle, TMCnet Contributor

TiVo (News - Alert) shares skyrocketed on Wednesday after a Federal appeals court upheld a 2010 ruling that satellite television provider EchoStar was infringing on its patents.

The two companies have been plodding through this legal battle since 2004, when TiVo sued EchoStar for infringing on its Time Warp software, a digital technology that enables viewers to record one show while simultaneously watching another.

EchoStar made efforts to change the technology following a 2006 ruling in TiVo's favor, but the appeals court found it didn't do enough. Wednesday's ruling also indicated that EchoStar violated an injunction that ordered the company to disable all infringing devices, according to Dow Jones. Dish Network, a sister company of EchoStar, will also be affected by the ruling as the two companies use similar devices.

Tivo said in a statement that it is pleased with the ruling and looks forward to a permanent injunction being enforced against EchoStar and Dish Network.

"This ruling also paves the way for TiVo to receive substantial damages and contempt sanctions regarding the DVRs that EchoStar and Dish Network failed to disable," a company spokesperson added.

The legal battle is not over yet, however. A lower court in Texas will now make a final ruling on whether Dish Network needs to disable the digital recorders that were found to infringe upon TiVo patents, according to Reuters.

Craig Moffett, an analyst at Bernstein Research, said that shutting down and replacing the devices could cost Dish Network as much as $3 billion.

"Faced with an imminent shut-down of millions of DVRs, we believe Dish will be faced with a gun-to-the-head settlement," Moffett added.

Dish and EchoStar issued a joint statement that indicated that the two companies plan to appeal to the U.S. Supreme Court and will seek a stay of injunction while they wait for a potential court date.

TiVo shares increased by more than 30 percent in Wednesday afternoon trading.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell