TiVo Seeks to Block EchoStar DVR Service

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The Associated Press
Wednesday, May 24, 2006; 4:12 PM

NEW YORK -- The ongoing patent dispute between TiVo Inc. and EchoStar Communications Corp. flared up again this week as TiVo filed an injunction seeking to ban EchoStar from making or selling its digital video recorder product.

The two companies also issued dueling statements Wednesday in reaction to a preliminary rejection by the U.S. Patent and Trademark Office of some of TiVo's patent claims. EchoStar said the patent office decision, made Tuesday, will bolster its case against TiVo, while TiVo portrayed it as insignificant.

In court papers filed Monday, TiVo sought to disable the DVR functionality in all but 192,702 of EchoStar's DVRs already placed with customers. The company also sought to recall products already with distributors and retailers and to stop the production of infringing products.

U.S. District Judge David Folsom, who also presided over the jury trial in Eastern Texas that concluded in TiVo's favor last month, will decide whether to approve the injunction at a hearing beginning June 26. That is when the judge will also decide on damages owed TiVo.

A federal jury in April determined that EchoStar willfully infringed TiVo's "time-warp" patent, which controls the way a DVR simultaneously records one program while playing back another. Jurors awarded Alviso, Calif.-based TiVo about $74 million, but because the infringement was seen as willful, the final award could jump to triple that amount. EchoStar appealed the decision soon afterward.

As part of the ongoing lawsuit, the patent office conducted a reevaluation of TiVo's patents.

TiVo said the patent office had gone through 61 claims and was "pleased" the office confirmed the validity of most of them, including two that the jury found EchoStar had infringed. Some patent claims were rejected but "this should in no way impact the jury verdict," the company said.

EchoStar, a satellite TV company based in Englewood, Colo., also said it was "pleased" with the patent office's reexamination and that the decision, together with a favorable decision from the Court of Appeals earlier this month, "are steps in the right direction as we prepare our response to TiVo's recently filed injunction motion."

TiVo dismissed EchoStar's stance. "The level of misleading spin that EchoStar is putting out with respect to our patent case against them is quite extraordinary," the company said.

Representatives of EchoStar declined to comment beyond the statement, while TiVo said it planned to discuss the matter when it was to report its first-quarter results late Wednesday.

Bobbie J. Wilson, an intellectual property attorney with Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco, agreed that the preliminary decision by the patent office would have "little impact" since more hearings will be held before a final ruling is made _ a process that could take three years.

In addition, Wilson noted how a judge refused to take into account the patent office's rejections of NTP Inc.'s patents in its recent high-profile infringement case against BlackBerry maker Research in Motion Ltd. After four years of legal wrangling, that case ultimately settled in March with RIM agreeing to pay NTP $612.5 million.

TiVo shares fell 29 cents, or 3.9 percent, to $7.08 in afternoon trading on the Nasdaq Stock Market. EchoStar shares were at $30.09, down 26 cents, or less than 1 percent.

EchoStar also has a countersuit pending against TiVo, scheduled for early next year, also in Eastern Texas.


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© 2006 The Associated Press

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