TiVo wins ruling on digital recorder patents
TiVo Inc. said Thursday that it won a victory in a regulatory ruling on its digital video recording patents, halting a key challenge by satellite television operator EchoStar Communications Corp. to TiVo’s intellectual property claims.
The decision by the U.S. Patent and Trademark Office validates a set of TiVo’s “time warp” patents covering technology that lets TiVo’s boxes record, pause and rewind live television. The final ruling trumps a preliminary decision issued in August by the office that initially affirmed the patents covering TiVo’s software, but rejected the patents on TiVo’s hardware.
TiVo’s shares soared nearly 25%, up $1.48 to $7.46. EchoStar, which operates the Dish Network, slipped 14 cents to $42.70.
“It’s an important win for TiVo,” said Josh Martin, a Yankee Group analyst. “It strengthens their patent portfolio.”
TiVo, in a statement, said it was “extremely pleased.”
EchoStar requested the regulatory review in 2005 after Alviso, Calif.-based TiVo filed a lawsuit in 2004 claiming that the company’s digital video recorders infringed TiVo’s patents.
Although the ruling eliminated one avenue for EchoStar to challenge TiVo, it has little bearing on the lawsuit. TiVo won the suit in April 2006 when a federal district court jury ordered the satellite TV operator to pay $89 million in licensing fees. EchoStar appealed and the case is awaiting a ruling by a three-judge panel.
“We are disappointed in the Patent and Trademark Office’s decision,” EchoStar said in a statement. “The decision, however, does not impact in any way our pending appeal.”
In the lawsuit, EchoStar did not challenge the validity of TiVo’s patents. Instead, the Englewood, Colo., company argued that its recorders did not infringe those patents.
Still, the patent validation is significant for TiVo because it opens a potential revenue stream for the financially strapped company, analysts said. TiVo on Wednesday said its third-quarter loss narrowed to $8.2 million, or 8 cents a share, compared with a loss of $11.1 million, or 12 cents, a year earlier. That topped analysts’ expectations of a loss of 13 cents a share.
TiVo has yet to collect royalties on its individual patents, preferring instead to partner with broadcasters and cable companies such as NBC Universal and Comcast Corp. to provide an array of technology and services that include access to those patents. But that doesn’t mean it won’t, Martin said.
“The last quarterly report was positive, but they’re still losing money,” Martin said. “At the end of the day, they, like any company, are looking to make some money wherever they can find it.”
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