So TiVo sued Verizon. Then Motorola sued TiVo in apparent retaliation (much like Microsoft sued TiVo after TiVo sued AT&T). Now TiVo is filing a counter suit against Motorola (as they did against Microsoft), and to top it off they’ve included Motorola customer Time Warner Cable in the new suit. There’s some high stakes legal poker going on here.

Tongue out of cheek, the timing is primarily due to the stay on the Motorola suit, which was in place while the AT&T & Microsoft cases proceeded as they involved the same patents, being lifted. As long as the case was stayed TiVo was under no pressure to file a counter suit, but not things are moving forward. TiVo announced the suit in a simple SEC filing:

On March 26, 2012, the Company filed an answer and amended counterclaims in response to a patent infringement suit that Motorola initiated against the Company in the Eastern District of Texas in 2011 that was stayed until earlier this year. In its response, the Company alleged counterclaims against Motorola and Time Warner Cable, one of Motorola’s customers, for infringing U.S. Patent Nos. 6,233,389, 7,529,465, and 6,792,195 owned by TiVo.

The full court filing has been posted on Scribd (thanks to Sam Biller):
TiVo files answers and amended counterclaims against Motorola & Time Warner Cable

The patents involved are the same core patents behind the EchoStar/DISH Network and AT&T settlements, as well as the ongoing case against FiOS. TiVo’s been successful so far, 2 for 2, so that’s a good sign. Time Warner Cable is the only remaining top five MVPD in the US that TiVo doesn’t have a business agreement or a legal settlement from. TiVo has business agreements with the top two, Comcast and DirecTV, and fifth place Cox Communications. Third place DISH Network settled with TiVo. That leaves TWC in fourth place, and many investors have wondered when TiVo would take some form of action against TWC if they didn’t come to an agreement.

These legal fights tend to drag on for years, so I’m not going to hold my breath waiting on any outcome just yet.

Well, as we know, AT&T settled with TiVo in January. Yet the spat with Microsoft continued. Microsoft even ratcheted things up after the settlement, filing a complaint with the International Trade Commission (ITC) seeking to block importation of TiVo units for sale within the US. EDIT: This was my bad – as I wrote this I was thinking the ITC complaint was filed in January 2012, when it was January 2011. The late hour probably had something to do with it, but either way I apologize for my mistake.

However, it seems that with the primary impetus for the fight removed both sides thought better of spending resources on the legal battles. In a terse SEC filing Thursday, TiVo announced that both sides had decided to dismiss their legal claims against the other. TiVo also explicitly stated that they’d granted no patent rights to Microsoft as part of the agreement:

On March 21, 2012, TiVo and Microsoft reached an agreement whereby Microsoft has agreed to dismiss all of its pending litigation against TiVo, including its action in the United States International Trade Commission and both of its cases in the United States District Court for the Northern District of California. In conjunction with these dismissals, TiVo has agreed to dismiss its counterclaim against Microsoft in the United States District Court for the Northern District of California. No patent rights were granted to Microsoft by TiVo.

That seems to be all either side has to say on the issue, I couldn’t find any mention of this from Microsoft.

This is good news for TiVo, it removes the distraction of these legal issues. And they were always a sideshow to the AT&T suit anyway. TiVo only filed against Microsoft as a defense to Microsoft filing against them. TiVo’s strategy has always been to go after the service providers, like AT&T and Verizon, and not their technology providers. (EchoStar was an exception since that whole legal saga started before DISH Network and EchoStar split into separate companies.)

DISH Network Corporation (Nasdaq: DISH) and EchoStar Corporation (Nasdaq: SATS) issued the following statement regarding recent developments in the TiVo Inc. v. EchoStar Communications Corp. lawsuit:

“We are pleased that the Patent and Trademark Office (PTO) granted our Petition for Re-Examination of the software claims of TiVo’s ’389 patent, which are the subject of TiVo’s current motion for contempt. The PTO found that there is a ‘substantial new question’ of patentability as to the software claims in light of prior patents that appear to render TiVo’s ’389 patent invalid as obvious.”

And TiVo responded with their own statement:

TiVo Inc. (Nasdaq: TIVO), the creator of and a leader in television products and services for digital video recorders (DVR), offered the following statement today regarding the decision by the United States Patent and Trademark Office to reexamine the software claims of TiVo’s Time Warp Patent:

“EchoStar filed its latest request for reexamination after TiVo asked the United States District Court to hold EchoStar in contempt of the Court’s injunction requiring EchoStar to disable its DVR functionality. An evidentiary hearing on the contempt issues is scheduled to be held on February 17 and 18, 2009.

“EchoStar’s latest tactic follows numerous failed attempts to invalidate TiVo’s groundbreaking Time Warp patent. In 2006, the District Court rejected all of EchoStar’s validity challenges after a full jury trial and the judgment of validity was affirmed by the Federal Circuit in 2008. The USPTO also conducted a prior reexamination of the Time Warp Patent at EchoStar’s request, which concluded on November 11, 2008, with the USPTO issuing a Reexamination Certificate confirming the validity of all of the claims of the Time Warp Patent without any change. EchoStar’s latest request for reexamination is based on a combination of two prior art references that were both already submitted to the USPTO in connection with the earlier reexamination. The USPTO grants most patent reexamination requests. Contrary to EchoStar’s statement, the USPTO made no substantive findings. We are confident that the USPTO will once again confirm the validity of all of the claims of the Time Warp patent.”

Round and round we go…

If the U.S. Court of Appeals for the Federal Circuit in Washington decides that a jury trial is warranted, it would bring everything around to where it was a few years ago – a trial to determine if TiVo’s patents are being infringed. While the jury in the first trial sided with TiVo, and the verdict was upheld on appeal, Dish claims that their new software is no longer infringing. So if a new trial is granted it’d be the same case, redux.

I Am Not A Lawyer, but it seems odd to me. Can this be stretched out indefinitely just by issuing software updates and saying each one needs a new jury trial to determine if it is infringing? I think this show jumped the shark.

Disclaimer: I work for Sling Media, which is owned by EchoStar.

After the announcement, EchoStar and DISH Network issued this statement:

“We are pleased that the district court did not find us in contempt on the face of the injunction. We look forward to the February bench trial on our software design-around. Our subscribers can continue using their award-winning DVRs from DISH Network.”

TiVo responded with a statement of their own:

“We are pleased that the U.S. District Court has scheduled a hearing on EchoStar’s purported workaround on February 17, 2009. Contrary To EchoStar’s statement today, the Court did not rule on TiVo’s pending motion for contempt of the injunction. The Court will do so after the hearing as well as rule on the amount of damages owed to TiVo beyond the nearly $105 million already paid by EchoStar. This is a positive step, particularly the accelerated discovery ordered by the Court, towards the ultimate resolution of all issues in the litigation and we remain confident that we will prevail in showing that EchoStar’s workaround does not avoid infringement.”

So more jousting on both sides. Now we stay tuned until February.

UPDATE: TiVo issued a revised statement today, note the difference:

“We are pleased that the U.S. District Court has scheduled a hearing on EchoStar’s purported workaround on February 17, 2009. Contrary to EchoStar’s statement yesterday, the Court did not rule on TiVo’s pending motion for contempt of the injunction. The Court will do so after the hearing as well as rule on the amount of damages owed to TiVo (which EchoStar admitted at the September 4, 2008 hearing are owed) beyond the nearly $105 million already paid by EchoStar. This is a positive step, particularly the accelerated discovery ordered by the Court, towards the ultimate resolution of all issues in the litigation and we remain confident that we will prevail in showing that EchoStar’s workaround does not avoid infringement.”

Disclaimer: I work for Sling Media, which is owned by EchoStar.

“We are pleased to have received $104,600,472 from EchoStar on October 8, 2008, which includes the initial $74 million in damages awarded by the United States District Court for EchoStar’s willful patent infringement as well as supplemental damages covering the period through September 8, 2006 and interest. We remain confident that the District Court will enforce the injunction and award further damages from EchoStar’s continued infringement of our Time Warp patent.”

Judge Folsom in Texas had said he’d try to render his decision by October 1, but that it may come as late as November. As the decision has not yet been delivered, we may have a few more weeks before the final word. Then, of course, DISH there could be further appeals of his decision.

TiVo issued 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.”

DISH Network and EchoStar issued their own statement a short time later:

“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.”

This is not the end however, the US District Court in Texas has yet to rule on additional damages as well as the injunction. TiVo claims that DISH Network continued to infringe after the initial award, and indeed continues to infringe, and therefore TiVo is entitled to additional damages. Further they claim that the DISH Network DVRs are subject to the injunction that is part of the initial ruling, upheld today, and therefore must be switched off.

DISH Network for their part claim that a software ‘design around’ they deployed following the ruling makes their DVRs no longer infringing, and hence means there should be no additional damages and, more importantly, that their DVRs are not subject to the injunction.

So depending on how Judge David Folsom decides in Texas this could be the end, or DISH Network could be facing additional payouts and potentially needing to disable millions of DVRs in the field. (Personally I don’t think it’ll come to that. If they’re ordered to switch them off I expect an 11th hour deal with TiVo to license the patents to keep them on.)

But today’s decision does seem to finally be the beginning of the end for this long legal saga.

Disclaimer: I’m employed by Sling Media, which is owned by EchoStar.

Financial terms weren’t disclosed in a May 30 court filing that said the two sides settled their dispute. TiVo General Counsel Matt Zinn said the Alviso-based company paid Lycos an “immaterial amount of money” to end the suit “before the case went very far.”

So that’s off TiVo’s plate, Blockbuster and Netflix remain in the case which is pending in federal court in Boston.

Missouri’s attorney general subpoenaed TiVo Inc. in April for information related to the company’s rebate program.

The maker of set-top boxes that let users fast-forward through commercials is cooperating with the probe, the Alviso, Calif., company said in a regulatory filing. Atty. Gen. Jay Nixon is investigating whether the company was involved in unlawful merchandising practices with its rebates.

“We are not aware that we’re doing anything wrong,” said Matt Zinn, TiVo’s general counsel.

An unrelated blurb on the same page reports that Netflix has sold out of the $100 Roku boxes for streaming Netflix’s Watch Now videos, due to stronger than expected demand.

TiVo Inc. (Nasdaq: TIVO), the creator of and a leader in television products and services for digital video recorders (DVR), offered the following statement today on the ruling by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. to deny EchoStar of its request for a rehearing en banc:

“We are extremely pleased that the United States Court of Appeals for the Federal Circuit today denied EchoStar’s petition for a rehearing en banc, upholding the Court’s unanimous ruling in our favor on January 31, 2008, in EchoStar’s appeal of the district court judgment of patent infringement, full award of damages and an order for the injunction to be reinstated.

Today’s ruling brings us closer to resolution of EchoStar’s infringement and reconfirms the strength of TiVo’s Time Warp patent, which is in addition to the other benefits TiVo has to offer. We look forward to full enforcement of our rights in the near term.”

EDIT: And DISH Network has also released a statement:

DISH Network Corporation (Nasdaq:DISH) issued the following statement regarding recent developments in the Tivo Inc. v. EchoStar Communications Corp. lawsuit:

“We are disappointed that the Federal Circuit did not grant our petition for rehearing. The decision, however, will have no effect on our current or future customers because EchoStar’s engineers have developed and deployed ‘next-generation’ DVR software to our customers’ DVRs. This improved software is fully operational, has been automatically downloaded to current customers, and does not infringe the Tivo patent at issue in the Federal Circuit’s ruling.

“All DISH Network customers can continue to use their DVRs without any interruption or changes to the award-winning DVR features and services provided by DISH Network.

“We intend to appeal the Federal Circuit’s ruling to the United States Supreme Court.”

So now it goes to the Supreme Court, who can decline to hear the case – thus ending the appeal options, or they can accept the case which would extend it until they have the time for the hearing.

Disclaimer: I’m currently employed by Sling Media, which is owned by EchoStar.