Reacting to the decision by the Federal Appeals Court in Washington, DC to have the full court hear the arguments of Dish Network against TiVo’s digital video recorder (DVR) patents, Moody’s Investors Service said a successful outcome of the appeal by Dish would have positive credit implications for the satellite TV company, as it would save Dish billions of dollars over future years.
“In March 2010, Dish ended up on the losing side of a patent infringement case with TiVo Inc. Dish faced a $400 million judgment and the prospect of either paying TiVo for licensing or turning off its DVR service until it is able to replace its boxes or software at great cost. It appeared as though an en banc hearing was remote, however, the U.S. Federal Circuit Court of Appeals has granted their petition for rehearing en banc which means that the entire 16 member court will rehear the case, effectively appealing the March decision made by only three judges. We believe that the consequences of a more favorable ruling by the larger court could have positive credit ramifications for Dish Network in the near term by virtue of the cash judgment and over the longer-term if it results in Dish being able to continue offering its DVR service without paying a significant licensing fee to TiVo. Dish’s rating outlook is stable,” Moody’s said in a statement.
[Editor’s note: Moody’s says all 16 judges will hear the case, but that is not likely. The exact number who will participate is yet to be decided, but is expected to be more than 10.]