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ECommerceTimes.com

Dish Stuck With $104M Tab in TiVo Patent Case

By Erika Morphy
Oct 7, 2008 3:46 PM PT

The U.S. Supreme Court has declined to hear Dish Network's appeal of a decision that found EchoStar had infringed TiVo's patent for its Time Warp software, which allows users to record television programs while watching a different channel, and also to skip over commercials.

Dish Stuck With $104M Tab in TiVo Patent Case

The appellate court ruling now stands, requiring Dish to pay US$104 million in damages to TiVo, an amount that includes interest that accrued as the 2006 court case made its way through the appeal process.

A pending related matter could cost Dish Network even more money. A U.S. District Court in Texas is currently considering whether Echostar's workaround for the patent infringement violated an injunction.

Dish Networks maintains its workaround will withstand the legal challenge. TiVo is equally confident that Dish will be found liable for damages for violating the injunction. Both companies provided statements the E-Commerce Times but declined to comment otherwise.

Original Case

In the last few years, there has seen a sea change in the way patent law has been applied in the courts. This particular case, while not a game-changer for patent holders or challengers, does affirm some important trends in case law, Ian DiBernardo, an attorney with Stroock & Stroock & Lavan, told the E-Commerce Times.

"It was important -- especially in 2006, when more and more new products were coming to market that involved satellite transmissions," DiBernardo said. A line of argument had developed in patent law holding that patents describing analog technology could also be used to cover digital technology.

The original case drew on this concept -- but with a twist.

"TiVo's patent in fact did describe both analog and digital signal systems, but Echostar had argued that it should only apply to analog because Echostar's DVRs only time-shifted digital satellite signals," DiBernardo explained. Echostar lost, obviously, following this line of reasoning.

This case was also notable in that it was an exception to the trend of narrowing patents, he added. "In fact, the patent had a broad instruction."

Supreme Court's Role

The Supreme Court's decision against hearing arguments in this matter doesn't necessarily mean that it accepts these or any of the supporting decisions or arguments that are part of the litigation trail in this case, Mark S. Davies, an attorney with O'Melveny & Myers, told the E-Commerce Times.

"It wasn't surprising, frankly. In every Supreme Court legal season, there are lists circulating about cases that the Supreme Court is likely to hear. This case wasn't on any of those lists," he continued.

Essentially, it was a commercial dispute that has significance for the companies and probably the larger industry, he said, "but it doesn't stand for any broad legal concepts or business practices."

It is likely that the pending ruling about Dish's workaround could have a greater material effect on the company.

In its Aug. 4 SEC quarterly filing, Dish noted that if it should be unsuccessful in defending against TiVo's motion for contempt or any other claim that its alternative technology infringes TiVo's patent, "we could be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers. In that event we would be at a significant disadvantage to our competitors who could offer this functionality and, while we would attempt to provide that functionality through other manufacturers, the adverse affect on our business could be material. We could also have to pay substantial additional damages."


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