We are pleased the Federal Circuit found for us on Tivo’s hardware claims, but are disappointed in the Federal Circuit’s decision on the software claims. 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 affirming the $94 million jury verdict.

Though it seems that TiVo doesn’t agree with DISH’s assessment regarding the injunction, based on a comment quoted by CNNMoney.com:

“EchoStar has made a series of statements over the years related to the infringement of the TiVo patents that turned out to be both false and misleading,” the company said in a statement. “At this point it doesn’t really matter what EchoStar says by way of further self-serving statements. It matters what the courts say – and the courts have spoken.”

TiVo’s law firm Irell & Manella LLP also took the opportunity to tout their roll in the ruling in a press release:

Feb 1, 2008 10:15 ET

Federal Appellate Court Upholds Irell & Manella’s $94 Million Patent Infringement Judgment for DVR Market Leader TiVo

Unanimous decision affirms all damage claims and a critical injunction against EchoStar for use of TiVo’s ‘time warp’ digital video recording technology; court sustains TiVo’s claims of validity and infringement

LOS ANGELES, Feb. 1 /PRNewswire/ — The U.S. Court of Appeals for the Federal Circuit in Washington, D.C. has upheld a $94 million ruling in favor of digital video recorder pioneer TiVo Inc. in its patent infringement suit against EchoStar Communications Corp.

Law firm Irell & Manella LLP represented TiVo in both the original trial and the appeal, and was joined on appeal by members of the Washington office of Wilmer Cutler Pickering Hale and Doer LLP and Ropes & Gray LLP.

In a unanimous ruling written by Judge William Bryson, the three-judge panel affirmed an April 13, 2006 jury verdict in Marshall, Texas that EchoStar had willfully infringed TiVo’s patent on its innovative “time-warp” technology for digital video recorders (known as DVRs). The appellate decision also upheld all damages claims against EchoStar, as well as a key injunction preventing EchoStar from using TiVo’s technology.

The appellate court also sent the case back to the district court to decide additional damages for the period the injunction was stayed pending appeal.

The court overturned a finding of infringement by the hardware used by EchoStar, which will have no practical effect on damages or the overall outcome.

The decision validates TiVo’s market-leading position as the first company to successfully and market a low-cost DVR product that allows consumers to pause, rewind, and fast-forward a live television program.

“This is gratifying for TiVo,” said Morgan Chu, the Irell lawyer who led TiVo’s trial team. “The courts have recognized that TiVo was the creator of a revolutionary technology, one that reshaped the entire home entertainment industry. The court’s strong affirmation of the patents will be a great boost to TiVo as it looks to continue to break new ground in creating marketing leading advancements.”

Irell has been representing Alviso-based TiVo since January 2000, when the market leader first came under attack from companies looking to profit from the DVR craze. The firm successfully defended TiVo in separate actions by both Gemstar and Pause Technology.

The 2006 trial in Marshall, Texas involved extensive testimony about complex technology and patent issues, though the jurors needed barely two hours of deliberations to reach a unanimous verdict.

TiVo was represented at trial by Irell attorneys Morgan Chu, Christine Byrd, Perry Goldberg, Ben Yorks, Andrei Iancu, Laura Brill, and Alexander Giza.

Note: Irell & Manella LLP is a full service law firm with approximately 200 attorneys in offices in Los Angeles and Newport Beach, CA. Founded in 1941, Irell is nationally recognized for its tax, entertainment, intellectual property, corporate and litigation practices. Irell was named the Number 1 U.S. law firm for intellectual property by Chambers Global in 2005 and 2006. The firm’s clients include Fortune 500 corporations, universities, and leading-edge entrepreneurial companies in aviation, life sciences and medical devices, telecommunications, gaming, finance, technology and consumer electronics, and entertainment. For more, visit www.irell.com.

From: Stephanie Colvin 310-203-7533 scolvin@irell.com

Source: Irell & Manella LLP

CONTACT: Stephanie Colvin of Irell & Manella LLP, +1-310-203-7533,
scolvin@irell.com

Web site: http://www.irell.com/

In sum, because of a failure of proof of literal infringement, we reverse the judgment of infringement of the hardware claims with respect to all of the accused devices. We remand for any further proceedings that may be necessary with respect to those claims. We affirm the judgment of infringement of the software claims with respect to all of the accused devices. Because the damages calculation at trial was not predicated on the infringement of particular claims, and because we have upheld the jury’s verdict that all of the accused devices infringe the software claims, we affirm the damages award entered by the district court.

The district court’s injunction was stayed during the course of these proceedings. The stay that was issued pending appeal will dissolve when this appeal becomes final. At that time, the district court can make a determination as to the additional damages, if any, that TiVo has sustained while the stay of the permanent injunction has been in effect.

TiVo issued a statement regarding the ruling:

“We are extremely pleased that the United States Court of Appeals for the Federal Circuit unanimously ruled in our favor in EchoStar’s appeal of the district court judgment of patent infringement, full award of damages and that the injunction, which was stayed pending appeal, was ordered to be reinstated. Today’s ruling is confirmation of the value of TiVo’s IP portfolio, which is in addition to the other benefits TiVo has to offer. TiVo can now continue to focus on its goal to drive greater distribution in both its stand alone and mass distribution efforts.”

This is certainly not the outcome EchoStar was hoping for, and it is all good news for TiVo. While EchoStar may try to appeal this ruling, I think it is more likely that they will quickly come to terms with TiVo on licensing of TiVo’s patents, to avoid having to disable EchoStar DVRs already in the field under terms of the injunction. I don’t think it is very likely that they will actually license the TiVo platform and use it on DVRs, as DirecTV did, but rather that they will license the patents so that they can use the IP in their own DVRs.

This ruling is not only good for TiVo for the damages, and licensing revenue, they’ll collect from EchoStar, but also because it strengthens their position when negotiating with other vendors. With the infringement ruling upheld, other DVR vendors are more likely to license TiVo’s patent portfolio, rather than face their own lawsuit. And it could encourage more cable MSOs to license TiVo’s OCAP software for their networks.

Certainly a good day for TiVo.

Thanks to reader Jason for the link to the PDF of the ruling.

EDIT: See follow-up post for additional comments on the case.