2nd UPDATE: US Patent Office Rejects TiVo's Software Claims
(Adds details at the bottom about AT&T and Verizon.) By Roger Cheng Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Dish Network Corp. (DISH) and Echostar Corp. (SATS) scored a legal victory after the U.S. Patent and Trademark Office ruled that TiVo Inc.'s (TIVO) patent claims over its "time-warp" digital video recorder technology were invalid.
The ruling comes after a second reexamination of the patents by the PTO. Dish and Echostar applauded the ruling, and TiVo said it would follow up with additional arguments.
The action doesn't stop a separate review of the patent infringement case, which has leaned heavily in TiVo's favor and could still lead to the satellite companies paying damages to the set-top box maker. But the PTO ruling could have ramifications for TiVo's case against AT&T Inc. (T) and Verizon Communications Inc. (VZ) over their DVR services.
TiVo shares closed down 5.5% at $7.70, while Dish Network Corp. (DISH) and sister company EchoStar Corp. (SATS) finished at $19.97 and $20.50, up 5 cents and 1.1%, respectively.
The companies have been in a years-long battle regarding the rights to technology that allows someone to pause, rewind and fast-forward through live television. A jury in 2006 found Dish and EchoStar liable for infringing TiVo's DVR patent when they began making their own set-top boxes. The companies are going through a process called an en banc review to establish the legal ramifications of the decision, but most on Wall Street believe TiVo will eventually emerge victorious.
A federal judge imposed contempt sanctions last year after finding that a technological redesign developed by EchoStar and Dish still infringed TiVo's patent. The companies had argued their alternative removed all the DVR features that TiVo had accused of infringement. The en banc review will determine if the injunction and finding of contempt by both the district court judge and appeals court were appropriate.
A federal appeals court in March handed a key legal victory to TiVo, temporarily clearing the way for it to collect about $300 million from the duo. But the panel last month said it would rehear the matter.
The en banc review is expected to wrap up before the PTO case, because TiVo still has the option to appeal the PTO decision. As a result, Dish and EchoStar could potentially pay TiVo damages even if the PTO case goes on. But the PTO decision over the invalidity of the patents could affect the size of the damages TiVo is entitled to get.
Dish and EchoStar said in a statement Tuesday that the claims rejected by the patent office are the same as those pending before the appeals court. TiVo called the patent-office move "separate and apart" from the appeals court matter.
While expressing disappointment with the so-called final action, TiVo also noted that previous final actions invalidating claims were ultimately reversed by the patent office.
Beyond Dish and EchoStar, TiVo next faces a similar patent case against AT&T and Verizon. Both offer DVR services that TiVo claims infringes upon its technology, but the company faces two telecommunications giants with more legal resources and a history of dealing with claims of intellectual property.
Microsoft Corp. (MSFT), which runs AT&T's TV service, has countersued TiVo on behalf of the telco. Verizon has purchased several patents to bolster its position.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
(Kevin Kingsbury contributed to this report.)
NEW YORK (Dow Jones)--Dish Network Corp. (DISH) and Echostar Corp. (SATS) scored a legal victory after the U.S. Patent and Trademark Office ruled that TiVo Inc.'s (TIVO) patent claims over its "time-warp" digital video recorder technology were invalid.
The ruling comes after a second reexamination of the patents by the PTO. Dish and Echostar applauded the ruling, and TiVo said it would follow up with additional arguments.
The action doesn't stop a separate review of the patent infringement case, which has leaned heavily in TiVo's favor and could still lead to the satellite companies paying damages to the set-top box maker. But the PTO ruling could have ramifications for TiVo's case against AT&T Inc. (T) and Verizon Communications Inc. (VZ) over their DVR services.
TiVo shares closed down 5.5% at $7.70, while Dish Network Corp. (DISH) and sister company EchoStar Corp. (SATS) finished at $19.97 and $20.50, up 5 cents and 1.1%, respectively.
The companies have been in a years-long battle regarding the rights to technology that allows someone to pause, rewind and fast-forward through live television. A jury in 2006 found Dish and EchoStar liable for infringing TiVo's DVR patent when they began making their own set-top boxes. The companies are going through a process called an en banc review to establish the legal ramifications of the decision, but most on Wall Street believe TiVo will eventually emerge victorious.
A federal judge imposed contempt sanctions last year after finding that a technological redesign developed by EchoStar and Dish still infringed TiVo's patent. The companies had argued their alternative removed all the DVR features that TiVo had accused of infringement. The en banc review will determine if the injunction and finding of contempt by both the district court judge and appeals court were appropriate.
A federal appeals court in March handed a key legal victory to TiVo, temporarily clearing the way for it to collect about $300 million from the duo. But the panel last month said it would rehear the matter.
The en banc review is expected to wrap up before the PTO case, because TiVo still has the option to appeal the PTO decision. As a result, Dish and EchoStar could potentially pay TiVo damages even if the PTO case goes on. But the PTO decision over the invalidity of the patents could affect the size of the damages TiVo is entitled to get.
Dish and EchoStar said in a statement Tuesday that the claims rejected by the patent office are the same as those pending before the appeals court. TiVo called the patent-office move "separate and apart" from the appeals court matter.
While expressing disappointment with the so-called final action, TiVo also noted that previous final actions invalidating claims were ultimately reversed by the patent office.
Beyond Dish and EchoStar, TiVo next faces a similar patent case against AT&T and Verizon. Both offer DVR services that TiVo claims infringes upon its technology, but the company faces two telecommunications giants with more legal resources and a history of dealing with claims of intellectual property.
Microsoft Corp. (MSFT), which runs AT&T's TV service, has countersued TiVo on behalf of the telco. Verizon has purchased several patents to bolster its position.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
(Kevin Kingsbury contributed to this report.)