TiVo Inc., the creator of digital video recorders, has filed a patent infringement lawsuit against EchoStar Communications Corp. (DISH).
TiVo currently licenses its technology to eight companies, including Pioneer Corp., Toshiba Corp., Sony Corp., Humax Co., News Corp.'s DirecTV, and others.
TiVo said EchoStar violated its "Time Warp patent" which governs the way its technology records one program while playing back another. The suit was filed in federal district court in Texas.
TiVo is seeking injunction against EchoStar to stop deploying TiVo's technology and is seeking fees for past infringement. The company also hopes to establish a "reasonable royalty" with EchoStar.
EchoStar spokesman Steve Caulk declined to comment, as the company has not yet seen the lawsuit.
In filing suit, TiVo is joining the scores of similar companies, including Gemstar-TV Guide International Inc., Liberate Technologies, OpenTV Corp., and others, who have claimed patent infringement it the past.
TiVo avoided getting into lawsuits, even when it was in vogue, noted Dan Ernst, analyst at Rodman & Renshaw. Despite the profusion of lawsuits, there wasn't a lot of profit in it, according to Mr. Ernst, but that appears to have changed now that there is a "sizeable market" in digital video recorders. Patent awards depend on the size of the lost opportunity, and TiVo probably determined that the potential awards outweigh the costs, according to Mr. Ernst.
Mark Radcliffe, an intellectual property attorney at Gray, Cary Ware & Freidenrich in Palo Alto, CA, U.S., believes TiVo likely has a stronger case than Gemstar, OpenTV, and others had in the past.
"This is technology where TiVo was one of the originators," he said. Assuming that TiVo got the patent early enough, the company may have captured a fundamental part of the DVR which could make it difficult for other companies to get around its patent, Mr. Radcliffe continued.
TiVo said it filed its "Time Warp" patent with the U.S. Patent & Trademark Office in July 1998 and received the patent in May 2001.
Mr. Ernst estimated that TiVo could receive a payoff of about U.S. $24 million annually, plus an upfront fee of $5 million to $10 million. TiVo currently receives about $2 per subscriber from its relationship with DirecTV. EchoStar currently has about 1 million customers using its DVR box. (Dow Jones)
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