TiVo Actively Pursuing Damages From EchoStar >TIVO
7:34 AM EDT May 25, 2006
By Ellen Sheng
Of DOW JONES NEWSWIRES
(This article was originally published Wednesday)
NEW YORK (Dow Jones)--TiVo Inc. (TIVO) said it remains confident in its patent case against EchoStar Communications Inc. (DISH) and is actively pursuing damages for willful patent infringement as well as an injunction.
Speaking on a quarterly conference call Wednesday, Matthew Zinn, TiVo's general counsel, said the company will file for enhanced damages from EchoStar on Thursday.
A federal jury unanimously decided in April that EchoStar willfully infringed TiVo's "time-warp" patent, which controls the way a DVR simultaneously records one program while playing back another. Jurors awarded TiVo about $74 million in damages, but the judge could triple that amount because the infringement was seen as willful.
The company on Monday filed an injunction seeking to ban EchoStar from making or selling its digital video recorder product. U.S. District Judge David Folsom, who also presided over the jury trial that concluded last month, will decide whether or not to approve the injunction.
"There is no indication as to when the judge will rule, but we have a high level of confidence in our ability to continue to prevail at all phases of this litigation," TiVo Chief Executive Tom Rogers said.
On June 26 to 28, the judge is scheduled to listen to some remaining issues, including whether EchoStar will be required to pay TiVo's attorney fees. EchoStar can be expected to appeal any judgment for TiVo, and the appeals process generally takes about 18 months, Zinn said.
EchoStar said Wednesday that it is preparing a response to TiVo's motion for injunction. It also said that the U.S. Patent and Trademark Office recently rejected some of TiVo's patent claims as invalid - a move that would help EchoStar.
TiVo dismissed EchoStar's statement Wednesday as spin and claimed the patent office's re-examination was actually a win for TiVo. The patent office went through all 61 of TiVo's patent claims and did reject some of them, Zinn acknowledged, but most of the claims were upheld, including two of the claims that EchoStar has been found to have willfully infringed, Zinn said. TiVo has no right to appeal to the patent office.
"We are aware that we will be met with a lot of spin from EchoStar ... Though they may feel this is an effective way for them to pursue their interest, it has very little to do with the substance of the case," Rogers said on the call.
TiVo Wednesday posted a wider fiscal first-quarter net loss, due partly to legal costs from its patent case against EchoStar. The company also said that more aggressive price offerings and the expensing of stock options pressured the bottom line.
TiVo posted a net loss of $10.7 million, or 13 cents a share, in the period ending April 30, compared with a loss of $857,000, or a penny a share, in the year-ago quarter. Revenue from service and technology was $55.1 million, up from $40 million a year ago.
"We certainly had an active quarter introducing all kinds of features that begin to demonstrate a level of momentum," CEO Rogers said in an interview. The new features are helping to drive a perception of value and quality that sets the company apart from the competition, he added.
TiVo came out with its long-awaited dual tuner DVR during the quarter, which lets users record one channel while watching another, or record two programs at the same time.
The Alviso, Calif., company added 91,000 independent, TiVo-owned subscriptions in the quarter, down from 104,000 a year ago. Though the number was lower than a year ago, it was up from the previous quarter.
Previously, TiVo's main source of new subscribers was DirecTV Group Inc. (DTV), but that relationship has wound down to focus on existing customers since the satellite TV provider started emphasizing a new competing digital video recorder. TiVo managed to add a small number of DirecTV TiVo subscribers during the quarter. In the future, however, the company expects to lose some DirecTV subscribers each quarter, Rogers said on the conference call.
TiVo's partnership with Comcast Corp. (CMCSA, CMCSK), the country's largest cable operator, is still on track to start up later this year, Rogers said.
-By Ellen Sheng, Dow Jones Newswires; 201-938-5863; ellen.sheng@dowjones.com
(END) Dow Jones Newswires
05-25-06 0734ET
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