Court Blocks Order to Turn Off Dish DVRs
Friday, August 18, 2006; 9:22 PM
DALLAS -- EchoStar Communications Corp. rushed to a federal appeals court Friday in a successful bid to avoid shutting down more than 3 million digital video recorders used by customers of its Dish satellite-TV service.
But the victory could be only temporary. EchoStar is fighting an uphill battle against TiVo Inc., which convinced a jury in April that EchoStar infringed on its patented TV-viewing technology in making set-top boxes for Dish customers.
Late Thursday, the federal district court judge who presided over the trial also sided with TiVo. He issued an injunction ordering EchoStar to stop selling the recorders and to turn off machines already in customers' homes within 30 days.
Judge David Folsom also ordered EchoStar to pay TiVo $89.6 million in damages _ more than the $74 million the jury awarded.
The ruling helped push TiVo shares up more than 8 percent Friday. Investors kept bidding the shares higher even after a federal appeals court in Washington temporarily blocked the order to disable EchoStar's video recorders.
The appeals court said that it wasn't ruling on the merits of the case, only that it wanted more time to study whether the injunction should be delayed until appeals can be heard.
Meanwhile, EchoStar finds itself under attack in a Florida court on a separate issue that could also force it to curtail services to Dish customers.
EchoStar asked the Florida judge to delay until Sept. 11 an order that Dish stop selling signals of distant network stations _ for example, a customer in Dallas who wants to receive broadcasts from ABC, CBS, NBC or Fox affiliates in New York or Los Angeles. The judge denied the request.
A EchoStar spokeswoman, Kathie Gonzalez, said the company had appealed to the U.S. Supreme Court and was negotiating with broadcasters who had sued EchoStar to prevent customers from losing their distant programming.
Both cases hold the potential to cost Dish customers, but the TiVo affair is easily the more serious, said analyst Matthew Harrigan of Janco Partners Inc.
"There is absolutely no way they can turn off those (recording) boxes without getting blind-sided. They would lose a lot of customers," Harrigan said. "People who use those boxes really like them. They would be furious."
That was the argument EchoStar lawyers made in asking the appeals court in Washington to block Judge Folsom's injunction. Forcing Dish to disable those boxes would force customers to give up a treasured service or find new video-recording service from another provider, the lawyers said.