EchoStar Wins Stay of TiVo Injunction

After suffering a major court defeat that required EchoStar to disable DVR functionality used by millions of its subscribers, the satellite TV company has won a temporary reprieve. The Federal Circuit Court of Appeals in Washington, D.C. has temporarily stayed the injunction won by TiVo.

"As a result of the stay EchoStar can continue to sell, and provide to consumers, all of its digital video recorder models," the company said in a statement. "We continue to believe the Texas decision was wrong, and should be reversed on appeal. We also continue to work on modifications to our new DVRs, and to our DVRs in the field, intended to avoid future alleged infringement."

The stay is not permanent, however, and the injunction could still stand upon further review by the Court of Appeals.

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TiVo downplayed the significance of the stay, saying that it was a routine action to give a court sufficient time to decide if the injunction should take effect during the appeal. "We are very pleased by recent developments involving the issuance of a permanent injunction in our patent case against EchoStar by the United States District Court, Eastern District of Texas," the company said in a statement.

"The court of appeals temporarily stayed the district court injunction only until it decides whether a stay should or should not be in effect for the duration of the appeals process. The court stated that the temporary stay is not based on a consideration of the merits of EchoStar’s request," TiVo added.

TiVo had earlier won the critical victory as part of a patent infringement case against EchoStar, the parent company of DISH Network. A federal judge in Texas ruled Friday that the satellite company must immediately stop the production, sale and use of its digital video recorders within 30 days.

U.S. District Judge David Folsom also forced EchoStar to pay TiVo nearly $74 million in damages as awarded by jury, although he denied TiVo's motion to increase the damages. The final penalty would increase to $90 million based on $5.4 million in interest payments and $10.3 million in supplemental damages however, he ruled.

The ruling means that millions of EchoStar customers will lose DVR capabilities capabilities within a month. The issue now puts EchoStar in a precarious position: either negotiate with TiVo, or risk losing subscribers.

"TiVo is pleased that Judge Folsom has granted a permanent injunction against EchoStar's DVR products along with supplemental damages and interest," the company said in a statement. "This decision recognizes that our intellectual property is valuable and will ensure that moving forward EchoStar will be unable to use our patented technology without our authorization."

A federal jury ruled against EchoStar in April, saying the company willfully infringed on TiVo's patent surrounding the ability to play one television show while recording another, in addition to various DVR functions including the pausing of live television. TiVo filed for an injunction in May.

Folsom agreed with both sides that DVR technologies are "sticky," or that once the customer signs on to the technology, they usually do not migrate to another provider. Thus, TiVo would be losing customers to DISH's solution, and the only way to prevent further damage would be through an injunction.

EchoStar tried to defend itself by saying the suit's timing showed TiVo was not suffering financial harm. Folsom disagreed, noting TiVo had attempted to negotiate with the company during that time.

In an early morning statement, EchoStar disagreed with much of TiVo's position, and said it expected to win on appeal. "We believe that, for a number of reasons, the Texas Court should be reversed in all other respects on appeal. We also continue to work on modifications to our new DVRs, and to our DVRs in the field, intended to avoid future infringement," it said in a statement.

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