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Supreme Court Denies Cert in Patent Infringement Appeal – Dish Network to Pay TiVo $104M

TiVo’s 2004 lawsuit against Dish Network (formerly EchoStar Communications) ultimately resulted in a $74M patent infringement verdict against Dish Network. The lower court also ordered Dish Network to turn off the three million digital video recorders the court found infringed TiVo’s hardware and software patents.

In January 2008, the Court of Appeals for the Federal Circuit agreed with a lower court that software in DVRs distributed by Dish Network violated TiVo’s patent rights but overturned the lower court’s ruling with regard to infringement of the hardware. The Federal Circuit’s ruling caused TiVo’s stock to leap by nearly 28%. The lower court’s injunction was put on hold pending the appeal, allowing Dish Network the opportunity to change the software in its digital video recorders in an attempt to avoid infringement of TiVo’s software patents.

Today, the United Supreme Court opted out of the fray by issuing a denial of certiorari of Dish Network’s appeal of the Federal Circuit ruling. The Supreme Court denial of cert did not come as a complete surprise to Dish Network. In a press release Dish Network noted:

As expected, the Supreme Court denied our petition for certiorari today.

The Supreme Court’s decision, however, does not impact our software design-around, which has been placed in DISH DVRs subject to the district court’s injunction, and our customers can continue using their DISH DVRs. We believe that the design-around does not infringe Tivo’s patent and that Tivo’s pending motion for contempt should be denied. We look forward to that ruling in the near future.

Because of the Supreme Court’s decision, we will pay Tivo approximately $104 million (the amount the jury awarded in 2006 plus interest). The money is in an escrow account and will be released to Tivo in the next few days.

In response to the ruling, TiVo released the following statement :

"We are extremely pleased that the United States Supreme Court has denied EchoStar’s petition to review the United States Court of Appeals for the Federal Circuit unanimous ruling that upheld the District Court judgment of willful patent infringement, full award of damages, and a permanent injunction against EchoStar’s infringing DVR products. We look forward to the expeditious receipt of damages awarded by the District Court covering the period through September 8, 2006 and remain confident that the District Court will enforce the injunction and award further damages from EchoStar’s continued infringement of our Time Warp patent."

While the Supreme Court’s ruling may have put to rest the issue of patent infringement, given ongoing allegations of contempt and under calculation of royalties, it appears this case may survive for years to come.

The case is EchoStar Communications v. TiVo, 08-179

Brett Trout

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