EchoStar Communications Corp., the second-largest U.S. satellite-television provider, won a court ruling Tuesday that allows the company to continue selling digital video recorders while it appeals TiVo Inc.’s victory in a patent case.
The U.S. Court of Appeals for the Federal Circuit put on hold an order that Doug las County-based 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 percent in after-hours trading.
“There is a substantial case” for Echo Star’s appeal, Circuit Judge William C. Bryson wrote in Tuesday’s three-page decision.
EchoStar showed 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. EchoStar provides DVRs to as many as 4 million customers.
Shares of Alviso, Calif.-based TiVo fell as low as $6.80 after hours after ending the day down 1 cent at $7.52 in Nasdaq Stock Market trading. They have gained 47 percent this year, valuing the company at $718.6 million.
“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. “It is important to note that most injunctions in patent cases are stayed pending appeal.” EchoStar Shares EchoStar shares rose as much as 13 cents to $32.20 in after-hours trading after closing down 2 cents. They have gained 18 percent this year, giving the company a market value of $14.3 billion.
EchoStar, based in Englewood, Colorado, won a temporary hold in August on the injunction halting its DVR sales. 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 an e-mailed statement. “We look forward to complete vindication of our position.” EchoStar argued that its customers shouldn’t be penalized when the company may ultimately win the case. TiVo countered in court papers that it’s being hurt by EchoStar’s infringement. EchoStar reported sales of $8.43 billion last year, compared with TiVo’s $195.9 million in the fiscal year through January.
The appeals court 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 pending against TiVo that is on hold while the U.S. Patent and Trademark Office reviews EchoStar’s patents.
DirecTV Group Inc. is the biggest satellite-television provider.
The lower-court case is TiVo Inc. v. EchoStar Communications Corp., 04cv01, U.S. District Court for the Eastern District of Texas (Texarkana).
-With reporting by Jeff St. Onge in Washington. Editor: Farr.
To contact the reporter on this story: Susan Decker in Washington at (1) (202) 624-1941 or sdecker1@bloomberg.net.
To contact the editor responsible for this story: Patrick Oster at (212) 617-4088 or poster@bloomberg.net.
-0- Oct/03/2006 21:56 GMT 10-03-06 2256GMT
