TiVo, EchoStar wrangle over DVR patent appeal

* TiVo says DISH, EchoStar in contempt

* TiVo says companies still infringe its technology

* DISH, EchoStar say their devices do not infringe

* TiVo share price down 5.6 percent

WASHINGTON, Nov 9 (Reuters) - TiVo Inc TIVO.O, the digital video recorder company, argued in an appeals court on Tuesday that sister companies EchoStar SATS.O and DISH Network DISH.O were in contempt of a lower court ruling ordering them to stop infringing a TiVo patent.

TiVo told the US Court of Appeals for the Federal Circuit that a new digital video recorder designed after EchoStar lost a patent infringement fight also infringed on a TiVo “Time Warp” patent, and that the company was in contempt of a court order barring infringement.

EchoStar responded that it had made a new and better recorder. “EchoStar removed the very features that TiVo said infringed,” said Joshua Rosenkranz, who argued the case for EchoStar.

The legal battle dates back to 2004, when TiVo accused satellite TV provider EchoStar’s DISH Network of violating TiVo’s patent for Time Warp software that allows users to record one TV program while watching another.

The extended legal battle has hurt TiVo’s ability to profit from its software patents. Alviso, California-based TiVo pioneered digital TV recording software, but has posted quarter after quarter of losses as cable companies have crowded its market with cheaper recording boxes.

TiVo’s stock price has been volatile during the company’s battle with DISH and EchoStar. Its share price was down 5.6 percent at $10.66 in midday trading.

The case was argued before a nine-judge panel. The Federal Circuit initially agreed with the lower court that EchoStar and DISH were still infringing, but set aside that decision and agreed to have a full panel of judges rehear the case.

EchoStar, which was DISH’s parent until it spun off in 2008, has a liability limit of $5 million in the case. Before the split, EchoStar paid TiVo $104 million in damages.

Companies often change their products because of accusations of patent infringement, and patent-holders often say the workarounds are inadequate.

TiVo also has lawsuits against AT&T Inc T.N, Verizon Communications Inc VZ.N and Microsoft Corp MSFT.O.

The case is TiVo Inc vs EchoStar Corporation, Case No. 2009-1374, United States Court of Appeals for the Federal Circuit. (Reporting by Diane Bartz. Editing by Robert MacMillan)