DISH, cornered and out of options, finally agrees to pay TiVo for the use of its patents

DISH Network Corp conceded defeat and agreed to pay TiVo Inc $104 million Monday, wrapping up a heated, long-running patent battle over Dish’s DVR technologies.

TiVo originally won a set of patent claims against DISH in 2006, claiming that DISH illegally violated its patents when DISH was developing its own DVR systems. DISH opted to appeal defeat to the next highest court – leading to a string of disappointments that stopped only when the Supreme Court decided not to hear the case.

The original claims, filed in 2004, revolved around patents for a TiVo DVR’s ability to record one program and watch another, a technique that the company pioneered during the late 90s – in additional to a number of infringement claims regarding DISH’s DVR hardware. While lower courts eventually overturned TiVo’s hardware claims, the original software claim – and the resulting $74 million judgment – stuck.

DISH’s $104 million payment covers the original judgment plus interest for the time spent in appeals. It is unclear if TiVo will seek additional damages.

The case is far from over, however, as a number of claims regarding DISH’s development of a workaround – which it says do not infringe on TiVo’s patents – are still being worked out.

While DISH customers are still able to use their DVR boxes at this time, that ability may be in jeopardy in the near future: a lower court ordered DISH to shut down the 3 million DVR boxes its customers use, however that decision is on hold pending additional appeals.

DISH remains confident its workaround is sufficiently different from TiVo’s patents, adding that “TiVo’s pending motion for contempt should be denied.”

“We look forward to that ruling in the near future,” DISH said.

The Motley Fool notes that $104 million is a virtually insignificant sum to DISH, who last year had over $2.6 billion in operating cash flow – as opposed to TiVo’s $273 million in 2007 net sales and a “tradition of negative cash flows.” It also notes that shutting a court order forcing DISH to unplug its DVR boxes would give the satellite company’s competitors – namely, Comcast, Verizon, DirecTV, and others – an unfair competitive advantage, since they would be unaffected.

DISH Network Corp changed its name from EchoStar Communications in late 2007. The company recently accused DirecTV owner News Corp of hiring the world’s “second best hacker” in order to develop counterfeit DISH access cards.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
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