EchoStar-TiVo Patent Fight Renewed in En Banc Review

A rare en banc review of an appeals court decision that could force EchoStar to shut down millions of set-top boxes renewed arguments over to what extent EchoStar had violated a TiVo patent and a court injunction. The oral argument Tuesday before nine judges in the U.S. Court of Appeals for the Federal Circuit raised questions on the standard for a contempt ruling against EchoStar for continued infringement of TiVo’s DVR patent.

Previously, a district court judge found EchoStar to be in contempt because EchoStar used DVRs the judge said violate an injunction against future infringement. EchoStar has said it redesigned the DVRs in good faith to avoid infringement and a new trial should determine whether the work-around violates the patent.

EchoStar’s efforts to work around TiVo’s patent don’t create an “open issue of infringement,” which would require a new proceeding, said TiVo’s lawyer, Seth Waxman. Among the questions the court is reviewing is whether alleged continued infringement in violation of an injunction merits contempt of court or new litigation to determine liability. EchoStar’s work-around must be found to be more than “colorably different” to avoid a finding of continued infringement of TiVo’s patent. EchoStar innovations created a device that is more than “colorably different” from the patented TiVo product, the company’s lawyer, Joshua Rosenkranz said. EchoStar was forced to, and able to, find a “new way to do the same thing,” with the redesigned DVR, said Rosenkranz.

Much of the discussion focused on how TiVo’s DVR processes audio and video data and if EchoStar’s DVR processes the data in the same way. EchoStar tried to work around the patent by changing its audio and video data parsing. TiVo has said the changes aren’t different enough. Judge Kimberly Ann Moore asked whether the continued arguments over whether or not EchoStar’s work-around violates the injunction or is cause for new infringement litigation in itself “create” a fair ground of “doubt.” Other judges seemed to indicate there was ambiguity over whether EchoStar’s redesign really did infringe. A contempt finding should still be appropriate even if there is ambiguity over the infringement issue because EchoStar was required to seek clarification from the court on any ambiguity before moving forward with a new DVR, said TiVo’s Waxman.

If the review allows the contempt finding to go forward, EchoStar may be forced to shut down millions of DVRs and would have to pay TiVo $300 million. If the review finds the contempt finding to be in error, the case may go back to U.S. District Court for the judge to reconsider the contempt motion. A ruling isn’t expected on the case for weeks. In March, a three judge appeals court panel sided with TiVo.

The six-year legal battle is over TiVo’s so-called time-warp patent that allows the recording of one program while watching another. A federal jury in 2006 awarded TiVo $76 million plus interest after finding Dish infringed the patent. U.S. District Judge Charles Folsom later ordered Dish to pay $103 million in additional damages, along with about $200 million in contempt sanctions. Folsom issued an injunction barring Dish from selling products that infringed the TiVo patent, but implementation of the injunction was postponed as the case wound through the appeals process.

"We believe our arguments on both the policy issues and the merits are strong,” said TiVo. “It is our hope that today proves the closing chapter in our six-year battle to protect TiVo’s patented technology.”