TiVo Digs DVR Ruling
The decision -- arrived at by the Court of Appeals for the Federal Circuit in Washington, D.C. -- agreed with a Texas court's finding in 2006 that EchoStar Communications Corp. (the name the company was known as back then) infringed on TiVo's software patent. The appeals court overturned a ruling that the satellite TV company infringed on hardware components of the TiVo patent, but upheld the damages originally awarded to TiVo.
That could put Dish on the hook for about $74 million in damages, and possibly force the company and its EchoStar Corp. (Nasdaq: SATS) spinoff to hammer out a licensing deal.
Earlier this year, EchoStar Communications split into two companies. The Dish Network division retained the pay-TV side of the business, while the EchoStar Holding unit operates the company's infrastructure technology and tech operations, including set-top boxes and the assets obtained through its $380 million acquisition of Sling Media Inc. (See EchoStar Ready to Split and EchoStar to Buy Sling Media.)
The appeals court's decision caused TiVo shares to jump $2.14 (31.47%) to $8.94 in midday trading. It had little impact on stocks associated with EchoStar. Dish shares were up 4 cents, to $28.43 each; EchoStar Holding was up 23 cents, to $28.57.
In a prepared statement, TiVo said it was "extremely pleased" with the ruling, which supported a "full award of damages and that the injunction, which was stayed pending appeal, was ordered to be reinstated." The ruling, TiVo added, will allow the company to focus on distribution via its standalone DVR and distribution efforts.
Dish Network did not immediately respond to a request for comment. Kathie Gonzalez, a spokeswoman for the Englewood, Colo.-based company, told CNNMoney.com that the court's decision "will have no effect on our current or future customers because EchoStar's engineers have developed and deployed 'next-generation' DVR software to our customers' DVRs." News of such a workaround suggests that Dish is trying to avoid having to ink a licensing deal with TiVo.
The decision handed down Thursday should offer some comfort to Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cox Communications Inc. , which have both signed deals to port TiVo's software to digital cable set-top boxes. Of those two, Comcast recently expanded the offering of Motorola Inc. (NYSE: MOT) boxes outfitted with the TiVo service and interface in the Boston area for $2.95 more per month than the cost of the MSO's "generic" DVR. Comcast is also porting TiVo to the Scientific Atlanta /Cisco Systems Inc. (Nasdaq: CSCO) environment. Cox has yet to pinpoint when it expects to begin selling boxes with TiVo on board. (See The Friday Five and TiVo Set-Tops Trickle Out .)
On a broader scale, the cable industry has made some tweaks to the tru2way (formerly the OpenCable Platform) to accommodate the TiVo interface and set-tops apps and services that are native to cable operators. (See TiVo à la Mode .)
— Jeff Baumgartner, Site Editor, Cable Digital News