Down for the count: Dish to pay TiVo $104 million

By Scott M. Fulton, III, BetaNews

October 6, 2008, 9:28 PM

The nation's highest court today shut the door on EchoStar's and Dish Network's petitions for a final appeal of their patent infringement case. Now all they can hope is for mercy from TiVo, if they are to continue producing DVRs in the US.

After the US Supreme Court declined this afternoon to hear the appeal of Dish Network and its former parent EchoStar in a long-running patent infringement case, EchoStar decided it had no other option: It's paying TiVo $104 million, in hopes that this will settle the companies' disputes over whether Dish Network software infringed on TiVo patents.

"Because of the Supreme Court's decision, we will pay TiVo approximately $104 million (the amount the jury awarded in 2006 plus interest)," reads EchoStar's statement from earlier today. "The money is in an escrow account and will be released to TiVo in the next few days."

When this case began, EchoStar was Dish Network's parent company; now, it's merely a part-owner and business partner.

In its public statement, EchoStar said it has already implemented a "software workaround" for the "Time Warp" functionality which TiVo said infringed on its patents. Though some are classifying the $104 million payment as a settlement, TiVo's last statement on the matter today -- issued about a half-hour before EchoStar's -- made it clear that TiVo would continue to seek a permanent injunction on the sale of Dish Network DVRs. An injunction was granted in the spring of 2006, but was stayed by the Federal Circuit that August.

There's no legal impediment now for a judge to lift that stay, even if the $104 million goes through as EchoStar promises.

So this could very well be the worst of the no fewer than 28 possible negative scenarios that Dish reported to the SEC last August. In the event that a judge lifted a stay of the injunction, Dish warned, "we would be at a significant disadvantage to our competitors who could offer this functionality and, while we would attempt to provide that functionality using different technology and/or manufacturers other than EchoStar, the adverse affect on our business could be material. We could also have to pay substantial additional damages."

The $104 million amount is about 31% of what Dish Network -- now separate from EchoStar -- earned in operating income in its second fiscal quarter.