DISH Ordered to Pay TiVo an Additional $103 Million (Plus Interest) in "Time Warp" Patent Case

US District Judge David Folsom ruled Tuesday that DISH Network (formerly EchoStar Communications) owes TiVo $103 million (plus interest) in additional damages in the so-called "Time Warp" patent case between the companies, that it must disable certain features on DVR's that it offers its subscribers (according to news agency, Reuters, all but 193,000 of DISH's approximately 4 million deployed DVR's will be affected), and that its efforts to find a workaround for technologies that were previously determined to be TiVo's intellectual property put it in contempt of court by violating a permanent injunction that Folsom himself had previously issued. (Note: The patent dispute between TiVo and DISH dates back to 2004, when TiVo sued the then-EchoStar, alleging that it was violating its US patent, #6,233,389--i.e. the "Time Warp" patent--which was granted to the company in May, 2001. The patent describes methods for recording one program while playing back another, and for watching a show as it is recording, as well as a storage format that supports "trick-play" capabilities, such as pause-live-TV, fast-forward, rewind, instant replays, and slow motion. In 2006, a jury awarded TiVo $74 million in damages; and in January and April of last year DISH/EchoStar's appeals were rejected. TiVo had claimed that it was owed an additional $220 million in damages for the 18 months during which the jury verdict in the case was stayed while DISH/EchoStar unsuccessfully appealed it.)

"We are extremely gratified by the Court's well reasoned and thorough decision, in which it rejected EchoStar's attempted workaround claim regarding the TiVo patent, found EchoStar to be in contempt of court and ordered the permanent injunction fully enforced," TiVo said in a prepared statement issued in response to Judge Folsom's decision. "In addition, the Court's award of an additional $103 million plus interest through April 2008 makes this victory all the more important. EchoStar may attempt to further delay this case but we are very pleased the Court has made it clear that there are major ramifications for continued infringement." DISH Network and EchoStar (note: DISH spun off its hardware arm into a separate company last year and gave it the EchoStar brand) also issued a statement: "We are disappointed in the district court's decision finding us in contempt," the statement read. "DISH Network will appeal, and will file a motion to stay the order with the Federal Circuit. We believe a stay is warranted and that we have strong grounds for appeal. Our engineers spent close to a year designing-around Tivo's [sic] patent and removed the very features that Tivo said infringed at trial. Existing DISH Network customers with DVR's are not immediately impacted by these recent developments." Despite DISH's attempts to put a brave face on the situation, many observers believe that its chances of securing a more favorable ruling are minimal and that it will now have to negotiate a technology licensing deal with TiVo.

Following the ruling, TiVo's shares rose 38% in after-hours trading. Judge Folsom has scheduled a June 26th hearing to determine whether additional sanctions should be imposed on DISH Network for having been found in contempt of court, and has also ruled that the company must consult with the court before attempting any additional workarounds relating to the TiVo patent.