Dish, EchoStar to Pay TiVo $500M to Settle SuitDish, EchoStar to Pay TiVo $500M to Settle Suit

The seven-year DVR patent dispute between TiVo Inc. (Nasdaq: TIVO) and Dish Network LLC (Nasdaq: DISH) and EchoStar Corp. LLC (Nasdaq: SATS) has reached an end.

On Monday, the companies announced they had settled their ongoing patent litigation, with Dish and EchoStar agreeing to pay TiVo $500 million, including an initial payment of $300 million, with the remaining $200 million to be distributed in six equal annual installments between 2012 and 2017. With earlier payments factored in, Dish's TiVo-related bill will exceed $600 million.

The settlement comes about ten days after an en banc panel ruled that Dish/EchoStar must disable older MPEG-2-based DVRs that infringe on TiVo's "Time Warp" patent.

Under the agreement, TiVo granted Dish a license for the patent and some "related patents" for the remaining life of those patents, and EchoStar has issued TiVo a license for some of its DVR-related patents to cover TiVo-branded, co-branded and "ingredient-branded" products.

To further their newfound love for each other, TiVo said it will play a role in helping Dish promote the Blockbuster LLC digital video service. (See Dish Wraps Up Blockbuster Buy and Dish's Latest Buy Is a Blockbuster .)

Why this matters
The settlement puts an end to all injunctions against Dish and EchoStar and dismisses all pending litigation between the companies.

Importantly, the settlement will prevent Dish from having to disable millions of older-generation DVRs. Dish claimed to have upgraded "many" of those customers, but analysts have suggested there are as many as 3 million to 4 million infringing DVRs in the field, with some believing that the costs for product replacement and the subscriber churn could have run Dish and EchoStar anywhere from $750 million to north of $1 billion.

With the Dish/EchoStar case settled, expect TiVo to turn up the heat on its other patent cases against Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T). (See TiVo Suit Targets AT&T & Verizon and TiVo: AT&T and Verizon Won't Strike a Deal .)

For more
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— Jeff Baumgartner, Site Editor, Light Reading Cable