TiVo, EchoStar return to court over patent fight

NEW YORK (Reuters) - Digital video recorder maker TiVo Inc (TIVO.O) and EchoStar Corp (SATS.O) return to a Texas court on Tuesday in the latest round of a longstanding fight over a television recording technology patent.

The legal dispute dates back to 2004, when TiVo charged that satellite TV provider EchoStar Communications Corp's Dish network system violated TiVo's patent for "Time Warp" software, which allows users to record one TV program while watching another.

The court ruled in TiVo's favor in 2006, and Dish (DISH.O) and EchoStar Corp last year paid $104 million in damages after the U.S. Supreme Court denied Dish's appeal of the ruling.

Following the ruling, EchoStar continued to distribute its digital video recorders, and collect subscription fees for the DVRs, which had replaced the software with a "work-around" that it claimed did not infringe on TiVo's patented technology.

Arguments are expected to take place Tuesday and Wednesday in U.S. District Court in Texarkana, Texas, before Judge David Folsom. He will consider whether TiVo can prove EchoStar's new DVR software further infringed on TiVo's patent, and therefore owes TiVo more damages.

Analyst Spencer Wang of Credit Suisse said that a ruling in TiVo's favor, which could take months to come, could be rough for Dish, since the work-around software is deployed on the vast majority of its millions of DVRs.

"If the company's work-around is found to be in violation, the court could still order Dish to pay damages to TiVo, and to shut down/disable a large portion, if not all, of its DVRs," he said in a note to clients. "This would be a major blow to Dish, potentially requiring the company to buy new DVRs that do not violate Tivo intellectual property."

TiVo Chief Executive Tom Rogers told Reuters last month that he hoped a win would give him the legal leverage to sign new cable and satellite partnerships that can boost subscribers to the digital video recorder service.

Once TiVo puts the legal battle to rest, new agreements to license its recording technology with operators in the United States and overseas may become easier to score, he said.

TiVo fell 30 cents, or 4 percent, to $7.09, and Dish dropped 88 cents, or 6.5 percent, to $12.69 in early trade on Nasdaq.

(Reporting by Franklin Paul, editing by Dave Zimmerman)