Dish Seeks Approval to Design Around TiVo Patent (Update2)
March 10, 2010, 4:22 PM EST(Updates share prices in penultimate paragraph.)
By Susan Decker
March 10 (Bloomberg) -- Dish Network Corp. and EchoStar Corp., which lost an appeals court ruling last week that their digital-recording service infringes a TiVo Inc. patent, have a revised plan to design around the invention.
Details of the changed plan were filed under seal yesterday in federal court in Marshall, Texas. Dish and EchoStar are required to get pre-approval from the trial judge in the case after an earlier version was deemed little different than one found by a federal jury in 2006 to violate the TiVo patent.
An appeals court on March 4 upheld a lower court’s finding that the companies were still in violation of TiVo’s patent, even after claiming they had changed their technology enough to avoid infringement. TiVo said there is “very little reason to believe that the results will be different this time.”
The court also upheld U.S. District Judge David Folsom’s ruling that Dish must get pre-approval before implementing any further changes to its service to avoid TiVo’s invention related to so-called time-warp technology that lets users record a TV program and play it back at the same time.
Last year, Folsom ordered Englewood, Colorado-based Dish to stop providing its digital video recorder service. That order was put on hold during the appeal and remains in effect while Dish and EchoStar, also based in Englewood, ask the appeals court to reconsider its decision.
TiVo filed a request today with the U.S. Court of Appeals for the Federal Circuit, which issued last week’s ruling, asking that the order to halt Dish’s DVR service take effect immediately.
Original Lawsuit
Dish is the second-biggest U.S. satellite-TV provider, behind DirecTV Group Inc. The suit originally was filed against EchoStar Communications Inc., which oversaw digital set-top box manufacturing and satellite services businesses, and ran the Dish TV network. The businesses split into EchoStar and Dish Network Corp. in January 2008.
TiVo won a 2006 trial on the case. Dish continued to provide its DVR service even after the appeals court upheld the jury verdict, prompting Folsom to find Dish and EchoStar in contempt last year. It was the contempt finding that was upheld last week.
‘Track Record’
“EchoStar does not have a good track record,” Krista Wierzbicki, a TiVo spokeswoman, said in a statement. “EchoStar’s software was found to infringe. EchoStar appealed and lost. EchoStar’s first purported design around -- which they hailed as ‘next generation software’ -- was found to infringe, and EchoStar was found to be in contempt of the Court’s injunction.”
Francie Bauer, a spokeswoman for Dish, said the company had no comment.
In the last design change, Dish argued to the appeals court that it had “paid 15 engineers to spend 8,000 hours on the redesign, which took a year,” according to the court ruling. Still, the Federal Circuit said there were “no open questions of infringement” left.
TiVo said in today’s court filing that it has lost more than a third of its subscribers “at the same time that EchoStar’s DVR subscriber base has doubled.
“If an injunction in a patent case is to have meaning, it must at some point be enforceable,” TiVo said in the filing.
TiVo fell 3 cents to $16.67 in Nasdaq Stock Market trading. The shares have risen 64 percent this year. Dish rose 26 cents to $21.80 and is up 5 percent this year.
The appeal is TiVo v. EchoStar, 2009-1374, U.S. Court of Appeals for the Federal Circuit (Washington). The lower-court case is TiVo Inc. v. EchoStar Communications Corp., 04-cv-00001, U.S. District Court, Eastern District of Texas (Marshall).
--Editors: Michael Hytha, Peter Blumberg.
To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
