TiVo prevails in long-running EchoStar patent case

LOS ANGELES Tue Jun 2, 2009 7:52pm EDT

LOS ANGELES (Reuters) - A federal judge in Texas awarded set-top box maker TiVo Inc an additional $103 million in damages plus interest on Tuesday in a long-running patent infringement dispute with DISH Network Corp and EchoStar Corp.

EchoStar has already paid TiVo a total of $104 million in damages and lost profits as the result of a 2006 jury award for infringing on patents for digital video recorder technology.

The judge may impose additional damages later this summer stemming from his finding that EchoStar violated an injunction he put in place following the jury verdict by implementing new "work-around" technology that TiVo claimed still infringed.

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

After the verdict, EchoStar continued to distribute its digital video recorders and collect subscription fees for millions of DVRs with the work-around software.

U.S. District Judge David Folsom found in TiVo's favor on the work-around issue and ordered EchoStar to disable an infringing function on all but about 193,000 digital video recorders placed with subscribers.

EchoStar also was ordered to inform the court before it attempts to implement another work-around of the patent it infringed.

DISH and EchoStar will appeal the court's decision and file a motion to stay the order with a federal appeals court, the companies said in a statement.

TiVo Chief Executive Tom Rogers told Reuters the ruling "demonstrates the value of our intellectual property" and shows there are "major ramifications for infringing."

"We think the perception of that value will help drive our business forward," Rogers said in an interview. "Our view has been that we want to enter into commercial relationships with people for the distribution of TiVo."

TiVo has licensing agreements with the top U.S. cable provider Comcast Corp and top satellite provider DirecTV Group Inc. EchoStar is the No. 3 programing provider.

Alan Gould, senior media analyst for Natixis Bleichroeder, said the final judgment is "a strong positive" for TiVo that should strengthen the company's hand in licensing negotiations with the cable, telephone and satellite providers with which it does not yet have agreements.

"We have been recommending TiVo stock and said TiVo was worth $5 a share if they lost. A win in the EchoStar case would be worth at least an incremental $6 a share to TiVo," Gould said.

TiVo shares jumped more than 37 percent to $9.57 after hours compared with a $6.98 close on Nasdaq on Tuesday.

DISH was formerly known as EchoStar Communications Corp. It spun off its technology assets over a year ago, including its set-top box division, to create EchoStar Corp.

(Reporting by Gina Keating; Editing by Andre Grenon)

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