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Ruling Allows EchoStar DVR Sale During Appeal

October 04, 2006|From Bloomberg News

EchoStar Communications Corp. won a court ruling Tuesday that allows the company to continue selling digital video recorders while it appeals rival TiVo Inc.'s victory in a patent case.

The U.S. Court of Appeals for the Federal Circuit put on hold an order that EchoStar stop selling devices that compete with TiVo's and end DVR service for existing customers. A judge issued the order after TiVo won a jury trial in April. TiVo shares fell as much as 10% in after-hours trading Tuesday.

"There is a substantial case" for EchoStar's appeal, Circuit Judge William C. Bryson wrote in a three-page decision. EchoStar showed that it had a chance to win and would be harmed if forced to shut down its service during the appeal, Bryson said. The ruling wasn't based on the appeal's merits.

TiVo, whose set-top boxes revolutionized video recording, won a trial in Texas, where it accused EchoStar of infringing a patent on so-called time warp technology that lets users record one program while watching another.

Shares of Alviso, Calif.-based TiVo fell as low as $6.80 after hours after ending the day down 1 cent to $7.52.

"We are confident that the jury's decision in TiVo's favor will be upheld once the Federal Circuit has the opportunity to review the entire record in this case," the company said in a statement.

EchoStar shares rose as much as 13 cents to $32.20 in after-hours trading after closing at $32.07, down 2 cents.

EchoStar, based in Englewood, Colo., won a temporary hold in August on the injunction. Both sides submitted written arguments to the appeals court in Washington, which specializes in U.S. patent law.

"This action by the Federal Court reinforces our belief that the Texas court made significant errors during the trial process," EchoStar said in a statement.

EchoStar argued that its customers shouldn't be penalized when the company might ultimately win the case. TiVo countered in court papers that it was being hurt by EchoStar's infringement.

The latest ruling doesn't affect U.S. District Judge David Folsom's decision that EchoStar must pay TiVo about $90 million in damages. EchoStar also has a patent suit against TiVo that is on hold while the U.S. Patent and Trademark Office reviews EchoStar's patents.

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