Tivo wins patent infringement battle

By
Cyrine Amor

June 09, 2009

US satellite TV operator Dish Network and its set-top-box (STB) supplier Echostar may have to pay an additional $103m to Tivo, after being found in contempt of a court order requesting they stop using Personal Video Recorders (PVR) found to infringe Tivo's famous "Time warp" patent. Dish was also given 30 days to disable all infringing PVRs currently deployed in subscriber households. Dish appealed the court decision and won a temporary stay. Dish currently has approximately 13.6m subscribers, 5.2m of which are PVR equipped.

The verdict, by a Texan District Court, was reached after a lengthy legal battle between Dish and Tivo which started in 2004. Dish has already paid $104.6m in damages to Tivo after losing its appeal of the initial infringement case in October 2008. However, Tivo filed the current contempt suit claiming that the work-around solution deployed by Dish since 2006 was still in breach of its patent.

When Tivo filed its Time warp patent in 2001, it was anticipated that its licensing activities would generate a solid separate revenue stream. The broadness of the clauses covered by the patent meant that competitors would struggle to develop effective ways around the technology without risking infringement. Winning this latest chapter in the Tivo-Dish case not only contributes to this revenue stream but further strengthens Tivo's position in the market, perhaps making it an acquisition target. It is likely that the court decision will prompt further licensing deals with companies eager to avoid Dish's predicament. DirecTV and Comcast currently license PVR technologies from Tivo.

As it currently stands, Tivo should be receiving in excess of $207m in total from Dish for patent infringement, excluding additional interest accumulated until the outcome of this appeal is announced. Given the court's support for Tivo's infringement suit as well as the current contempt verdict it seems unlikely that Dish will win this appeal. Should Dish lose, it would have to incur further costs of disabling the deployed infringing PVRs. However, given the cost of replacing these PVRs it is more likely that Dish will enter into a licensing agreement with Tivo to settle the dispute in the long run.

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Countries: USA
Companies: Comcast DirecTV Dish Network Echostar Tivo