TiVo scored a major victory in its long-running patent battle against Dish Network parent company EchoStar Thursday, but it's not over yet.
In a 2-1 decision, the U.S. Court of Appeals for the Federal District upheld a lower court's ruling that changes EchoStar made to its DVR software were not enough to get around TiVo's patents, meaning that EchoStar failed to comply with an injunction against the sale of those products and was subject to additional penalties. TiVo and EchoStar have been fighting over DVR patents since 2004, and with EchoStar unable to overturn a 2006 court decision that its DVRs infringed on those patents, the dispute has now turned to changes EchoStar made in hopes of bypassing those patents.
The decision (PDF) could ultimately force EchoStar to remove or replace DVRs used by its customers, but that won't happen immediately. In a statement, EchoStar said it plans to ask for an "en banc" review of the split decision and submit a new "design-around" that it hopes will be approved by the lower court. "At this time, our DVR customers are not impacted," it said.
Judge Alan Lourie and Judge Haldane Mayer agreed with the lower court's ruling that the changes EchoStar submitted to bypass the patents were insufficient, writing that in one case EchoStar simply removed one buffer from its original design in hopes of bypassing the patent claims.
Judge Randall Rader dissented from the majority opinion, arguing that EchoStar consulted outside legal experts before implementing its workaround. "In its current form, this decision discourages good faith efforts to design around an infringement verdict," Rader wrote.
TiVo's stock price shot up 55 percent on news of the ruling, which could ultimately see the company receive nearly $300 million from EchoStar.
"We are pleased that the United States Court of Appeals for the Federal Circuit fully affirmed the district court's finding of contempt against EchoStar, including both the disablement and infringement provisions," TiVo said in a statement. "Additionally, this ruling paves the way for TiVo to receive the approximately $300M in damages and contempt sanctions awarded to us for EchoStar's continued infringement through July 1, 2009."