TiVo Wins Patent Infringement Again

The satellite television provider TiVo Inc. (TIVO - Analyst Report) is a pioneer in digital video recording (DVR) technology. The company won a patent infringement lawsuit against EchoStar Communications Corp (SATS - Snapshot Report), the parent company of Dish Network Corp. (DISH - Snapshot Report). Under the 5-year multimedia patent infringement, TiVo has been awarded a sanction of $200 million ($110 million in damages and $90 million in sanctions in addition to attorney fees) from the U.S. District Court in the Eastern District of Texas. 

Dish was spun off from EchoStar in 2008. It was found that a software in Dish Network’s set-top boxes violated TiVo live TV technology that consists of features like the ability to pause and rewind live programming. 

Earlier, TiVo had won its 5-year patent lawsuit against EchoStar, forcing it to choose between the payment of licensing fees or stopping the use of TiVo’s technology. TiVo received damages of $104.6 million on account of a willful patent infringement after the U.S. Supreme Court’s decision to uphold the lower court ruling in its favor. The court’s decision recognizes TiVo's intellectual property and provides incentive for other companies to enter into commercial arrangements with TiVo. 

While EchoStar said it created its own DVR with no intention of copying TiVo's technology and claimed that it had made an adjustment to its software that averted infringement, TiVo claimed that Echostar continued the old patent violation and won the contempt judgment from the Texas court on June 2. 

This is good news for TiVo and if EchoStar does not abide by the injunction, it may be subjected to further sanctions. While this is an important win, it does not qualify for a total victory. TiVo had requested the court to make EchoStar pay $1 billion for using the modified technology from April 2008 to July 2009. But the court rejected TiVo’s huge claim and asked EchoStar to appeal again. If the EchoStar appeal is not successful, it will have to pay more than $400 million in contempt sanctions to TiVo. 

TiVo has also filed a lawsuit against large telecom providers such as AT&T (T - Analyst Report) and Verizon Wireless (VZ - Analyst Report) over its DVR technology. 

TiVo faces increasing competition from cable and satellite providers, who have also begun offering DVR services with its digital cable in one set-top box at no upfront costs and at comparable monthly subscription rates. To bolster its sagging market share, TiVo has made great strides, differentiating its DVRs from less expensive generics, recently signing a number of content deals. Among those deals are agreements with Blockbuster, Netflix Inc. (NFLX - Snapshot Report), Amazon.com (AMZN - Analyst Report) and Disney (DIS - Snapshot Report) to rent and sell their movies and TV shows. 

Shares of Alviso, California based TiVo rose 6.2% and closed at $10.41 on Friday.