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TiVo Asks Judge to Halt EchoStar's Rival Service

The maker of digital video recorders says it's losing subscribers while awaiting a patent ruling.

May 24, 2006|From Bloomberg News

TiVo Inc., which created the market for digital video recorders, has asked a judge to shut down a competing service offered by EchoStar Communications Corp. because it's infringing a patent.

A jury found in April that EchoStar was violating TiVo's patent for products that let a viewer record one TV program while watching another. U.S. District Judge David Folsom, who presided over the case in Texarkana, Texas, is to oversee a trial next month on whether the patent can be enforced.

"Each day EchoStar is allowed to continue its infringement, EchoStar takes subscribers that would otherwise be TiVo's," TiVo said in a court filing Monday. "TiVo is a small company with essentially one product -- its patented DVR technology. If TiVo cannot deliver this technology, its current business will fail."

To win the court order, Alviso, Calif.-based TiVo must prove that it would suffer irreparable harm without it, and that cash or continuing royalties would be inadequate compensation. Such orders used to be granted almost automatically after findings of infringement, before a U.S. Supreme Court ruling May 15.

TiVo must "paint the picture that 'they're going to drive us into oblivion,' " said Brad Wright, a patent lawyer who isn't involved in the case. "In the past, the court cases said you could presume irreparable injury if the patent was infringed. I think the Supreme Court has put a question mark on that."

Shares of TiVo fell 2 cents to $7.37. EchoStar, based in Englewood, Colo., rose 8 cents to $30.35.

TiVo had sales of $195.9 million in the fiscal year ended Jan. 31 and has posted losses every year since going public in 1999. The company sells its video recording device and service directly to consumers and also through DirecTV Group Inc. to the satellite-TV provider's customers. DirecTV also markets its own recording service.

TiVo said it needed the court order "immediately" because EchoStar "is using any delay in the judicial proceedings to expand, at TiVo's expense, the DVR market share it has developed through its infringement."

Kathie Gonzalez, an EchoStar spokeswoman, had no immediate comment on the filing. The company, which denies that its products use TiVo's technology, has vowed to challenge the Texas jury's verdict, which awarded $74 million in damages.

EchoStar has asked the U.S. Patent and Trademark Office to take a second look at the patent and will seek a ruling that the patent is unenforceable at the trial set to start June 26.

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