Technology

TiVo Wins Round 2 Against EchoStar


Satellite TV company EchoStar has to pay $103 million in a second court ruling against its attempt to work around TiVo's set-top box technology

Talk about rewinding and playing again. For the second time in three years, a federal judge has ruled for TV time-shifting pioneer TiVo (TIVO) in a patent infringement case against satellite TV operator EchoStar (SATS). Both times came with serious money awards—this time, $103 million. In a 2006 ruling, EchoStar had to pay nearly $105 million.

The money goes a long way toward helping TiVo, which would have made only $300,000 last year if not for the first award. TiVo reported a $4.1 million loss in its most recently reported quarter.

TiVo has been working hard to branch out from its original business—providing services so viewers can record programs and skip ads. Now it uses its set-top box to create ad ratings information for TV networks and advertisers and to create "pop-up" style ads on the screen that can't be zapped while viewers fast-forward through commercials. TiVo also has deals with Netflix (NFLX) and Blockbuster (BBI) to stream or download movies and TV shows to its users.

Dish Network Found in Contempt

The June 2 decision by U.S. District Court Judge David Folsom in Marshall, Tex., found EchoStar's Dish Network (DISH) satellite service in contempt for violating an injunction handed down in 2006. In April of that year, a jury found that EchoStar violated TiVo's 11-year-old "time warp patent." TiVo says that patent covers its method for recording one program on its TV set-top digital video recorder devices while a viewer watches another and stores the program for future use. That patent expires on July 30, 2018. The jury decision was upheld on appeal.

Dish claims it then perfected its own method for performing many of the same functions and incorporated them into its boxes. Judge Folsom disagreed.

In a statement released after the decision, Englewood (Colo.)-based Dish said it intends to appeal and that it has "strong grounds for appeal. Our engineers spent close to a year designing around TiVo's patent and removed the very features that TiVo said infringed at trial."

In after-hours trading following the decision, TiVo's shares jumped 39%, to 9.73.

Editor's Note: This story originally said TiVo would have lost money last year if not for the first court award.

Grover is Los Angeles bureau chief for BusinessWeek.

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