Dish/EchoStar loses another court round to TiVo

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A federal appeals court has upheld a contempt citation by a lower court against EchoStar and Dish Network for patent infringement. That puts Dish/EchoStar on the hook for $103 million, plus interest, in addition to the $104 million already paid to TiVo. TiVo shares soared Thursday on the news.


“We are pleased that the United States Court of Appeals for the Federal Circuit fully affirmed the district court’s finding of contempt against EchoStar, including both the disablement and infringement provisions. Additionally, this ruling paves the way for TiVo to receive the approximately $300M in damages and contempt sanctions awarded to us for EchoStar’s continued infringement through July 1, 2009. We will also seek further damages and contempt sanctions for the period of continued infringement thereafter. We will continue our efforts to protect our intellectual property from further infringement,” said a statement Thursday by TiVo.

Dish/EchoStar, which were a single company when the case began (and both still headed by Charlie Ergen), had claimed that an engineering work-around after losing the first case for infringing TiVo’s digital video recorder (DVR) patents had ended the infringement. But the federal judge in the case disagreed and held Dish/EchoStar in contempt.

In its latest appeal, Dish/EchoStar had argued that its good faith efforts to avoid patent infringement – hiring 15 engineers who worked 8,000 hours on the DVR redesign, along with obtaining an opinion of noninfringement from a respected patent law firm – protected it from any contempt finding. The federal appeals court did not buy the argument.

“The district court has presided over this case for over five years. Given its familiarity with the parties, the patent at issue, and the infringing products, in addition to the well articulated reasoning for its decision, we do not find an abuse of the court’s discretion to hold contempt proceedings,” said the majority of the three judge appeals panel, while one member dissented in favor of the “good faith” claim.

“We are disappointed in the Federal Circuit’s split decision, but are pleased that Judge Rader agreed with our position. Therefore, we will be seeking en banc review by the full Federal Circuit. We also will be proposing a new design-around to the district court for approval. At this time, our DVR customers are not impacted,” said a joint statement by Dish and EchoStar.

Dish/EchoStar had already tried once before to get the patent infringement case before the US Supreme Court, but the high court refused to hear the appeal.

RBR-TVBR observation: It remains to be seen how long Charlie Ergen will continue to fight this case on principle. Certainly it would have been a lot cheaper to license the TiVo patents, which is what pretty much every other maker and distributor of DVRs has done.