By Erika Morphy E-Commerce Times
07/02/09 11:30 AM PT
EchoStar has scored few victories in its years of legal wrangling with TiVo over DVR technology patents. It paid a $103 million fine after losing in court three years ago, and it now stands to lose another $103 million following a Wednesday ruling that found its workaround still infringed on TiVo's patents. The only thing it has going for it is a temporary stay of that decision while it prepares an appeal.
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The final day of reckoning in the four-year battle between TiVo (Nasdaq: TIVO) and EchoStar (Nasdaq: SATS) has been pushed out a little further. Late Wednesday evening, the U.S. Court of Appeals for the Federal Circuit granted EchoStar's request to stay a contempt order imposed by the U.S. District Court the day before, until its appeal can be heard.
The two companies have been locked in a dispute over allegations that EchoStar, through its Dish Network, infringed on TiVo's pause, rewind and live record patents. In 2006, TiVo's assertion of that claim was upheld, and it was awarded US$73.9 million in damages -- an amount that eventually came to $103 million with interest. EchoStar paid that tab last year.
After the 2006 court decision, EchoStar then developed a workaround -- which TiVo promptly claimed was still in violation of its patents.
Rewinding Last Court Decision
Again, the courts agreed; on Tuesday, the U.S. District Court for the Eastern District of Texas found EchoStar's workaround still infringed on TiVo's patents. EchoStar is now on the hook for another $103 million as a result of that ruling.
The court ordered Dish to disable the pause, rewind and live record functions on the 4 million Dish Network digital video recorders covered in the suit. The decision will affect some 12 million viewers, according to EchoStar.
Late Wednesday, a federal appeals court temporarily stayed the lower court's decision until EchoStar's appeal can be heard. It also ordered an expedited briefing schedule for the appeal.
TiVo spokesperson Krista Wierzbicki told the E-Commerce Times that the company was unable to offer any comment beyond what it says in its prepared statement, which notes that the last time the court of appeals stayed the District Court's order, the judgment against EchoStar was affirmed on appeal. EchoStar did not return a call to the E-Commerce Times in time for this article's deadline.
Little Recourse
The conventional wisdom in legal circles is that TiVo will sooner or later prevail, according to Chris Collins, an attorney with Vanderpool, Frostick & Nishanian.
"Certainly that is the camp I am in," he told the E-Commerce Times.
With a TiVo victory appearing to be a forgone conclusion, talk has turned to what such an outcome would mean for the two companies.
"The Dish Network's business model will hold on but will likely see declining revenues unless it can break into streaming video on-demand [and meet] the expectations by consumers for this DVR functionality," Collins predicted.
More than likely, Dish will license the technology from TiVo, which would probably be open to such an arrangement, Peter Cohan of Peter Cohan & Associates, told the E-Commerce Times.
Consumers have become accustomed to the DVR functionality available from cable companies now, he said.
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