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Re: TiVo's patent-infringement lawsuit against Ech

A federal jury awarded
TiVo Inc. more than $73 million in damages Thursday in a patent infringement lawsuit against EchoStar Communications Inc.

TiVo had sought $87 million in damages from the Dish satellite-TV network in a patent dispute that TiVo lawyers said could be "life or death" for the company that sold the first box for pausing and rewinding live television.

Lawyers for EchoStar, Dish's parent, had countered in their closing arguments that the company invented its own digital video recorder without TiVo technology. They said TiVo is using EchoStar as an excuse for its own failure to compete against other makers of set-top boxes. TiVo, based in Alviso, Calif., has lost nearly $650 million in its nine-year history.

TiVo claimed EchoStar violated its patent for a "multimedia time warping system" to pause, rewind or fast-forward live TV programs by recording them on a hard drive. EchoStar's own box "didn't work. It was a disaster," TiVo lawyer Sam Baxter said.

News of the verdict sent TiVo shares soaring nearly 20 percent, or $1.60, to $9.65 in late-session electronic trading. EchoStar shares dropped 27 cents.

The case was closely watched on Wall Street. Analysts said a win would give TiVo power to negotiate licensing deals with cable operators who use TiVo-like boxes.

Separately, TiVo announced Wednesday that it has extended an agreement with its largest partner, satellite TV provider DirecTV Group Inc., for three more years.

The $87 million request was based on a financial consultant's estimate of how much TiVo would have earned if EchoStar had not sold more than 4 million of its own recorders using TiVo technology.

"This is life or death for them," Baxter said of TiVo.

EchoStar witnesses said the company's box differed from TiVo's in several ways. EchoStar lawyer Harold McElhinny also blamed TiVo's problems on erratic business decisions and an overpriced product — EchoStar now gives new customers a free recorder.

"TiVo is a pretty expensive toy," McElhinny said. "I don't think 190,000 people would have bought this particular toy if they could have gotten it free from their cable company."

The trial featured two weeks of often technical testimony by dueling engineers who talked about MPEG transports, output modules, media switches and Direct Memory Access engines.

An engineering professor hired by TiVo said the EchoStar box was so similar that it infringed on TiVo patents. But two professors hired by EchoStar said the Dish box, called a digital video recorder, used different software and hardware than the TiVo device.

TiVo was the first company to sell a box that let viewers pause live TV and skip through commercials. Co-founder James M. Barton, whose name is listed first on TiVo's most important patent, boasted that the invention moved viewers out of the Dark Ages.

The box became a hit, spawning the verb "tivo" — to manipulate live TV programs.

But TiVo was soon undercut on price by Dish and cable providers who used recorders made by other companies including Motorola Inc., News Corp., and a unit of Cisco Systems Inc.

Barton and fellow co-founder Michael Ramsay testified that TiVo couldn't win licensing deals, other than one with Dish rival DirecTV, because cable operators didn't respect TiVo's willingness to enforce its patents. A change in attitude led TiVo to sue much-bigger EchoStar in January 2004, they said.

Recently, TiVo announced an agreement under which cable giant Comcast Corp. will sell its set-top boxes beginning later this year.

Englewood, Colo.-based EchoStar had $8.4 billion in sales last year, compared to $172 million for TiVo.

No one on the 10-person jury owns a TiVo, although the judge said he does.
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Posted in reply to: TiVo's patent-infringement lawsuit against EchoSta by DFW Tecs
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