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Cable Technology Feature Article

March 04, 2010

TiVo Prevails Against Dish Network Corporation

By David Sims, TMCnet Contributing Editor

TiVo (News - Alert) stands to reap a windfall from a federal appeals court's decision over patents for digital video recorders, as the court cleared the way for TiVo to collect hundreds of millions of dollars.

EchoStar's Dish said it will seek a review of the three-judge panel's decision by the full U.S. Court of Appeals for the Federal Circuit. Shares of TiVo shot up $5.62, or 55 percent, to $15.83 in afternoon trading Thursday while Dish Network lost $1.01, or 4.7 percent, to $20.70.

'EchoStar contends that it undertook a Herculean effort in redesigning the DVR software in its receivers so that it would no longer infringe the software claims in TiVo's patent, [but] we agree with the district court that that was not a major redesign of the software,' according to the ruling as cited in PCMag.
EchoStar changed its name to Dish Network Corporation in 2007.

If the decision stands Dish owes TiVo $300 million, 'about $100 million in damages and interest,' according to the Associated Press (News - Alert), 'and the rest in contempt sanctions that TiVo already has been awarded. That would be on top of about $100 million in damages that Dish had already paid TiVo in earlier litigation.'

Bernstein Research analyst Craig Moffett told USA Today that 'What is at stake is nothing less than (Dish's) ability to continue to offer DVRs' -- which many satellite viewers consider an essential service. 'For example, he says that TiVo could 'open negotiations with DirecTV (News - Alert) for exclusivity in DVRs within the satellite space,'' USA Today reported.

Given TiVo's struggle for profit, actually collecting such an amount would help. Dish offers a generic DVR device similar to TiVo's. The company also has sued AT&T (News - Alert) and Verizon for infringing certain DVR patents.

'The courts have ruled in TiVo's favor numerous times over the past five years, which should help ... in the company's litigation against AT&T, Verizon (News - Alert), and Microsoft,' Tony Wible, an analyst from Janney Montgomery Scott, said in a research note cited by the AP.

Wible said he thinks Dish will probably end up paying a license fee to use TiVo's technology on Dish's DVRs or have to disable the boxes.

The basic issue is TiVo's patent on 'technology for storing and retrieving video on DVRs, which lets viewers pause, rewind and replay live TV,' the AP notes, adding that when TiVo sued Dish in 2004 for patent infringement, Dish lost and paid TiVo $104.6 million in damages and interest and was barred from using the technology.

David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Patrick Barnard