Busy Gemstar Lawyers Take on EchoStar

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Few would accuse Gemstar-TV Guide International Inc.'s team of patent attorneys of loafing around the office.

Just one week after extracting a $200 million settlement from Motorola Inc., Gemstar aimed its guns at EchoStar Communications Corp. last Monday. Gemstar's StarSight Telecast Inc. division filed a patent infringement suit, claiming EchoStar willfully infringed on StarSight patents by offering subscribers an unlicensed interactive program guide.

Gemstar, which has built a reputation as a staunch defender of its IPG patents, has similar infringement suits pending against Scientific-Atlanta Inc., Pioneer New Media Technologies and TiVo Inc.

In addition to monetary damages for lost advertising and television-commerce revenue, Gemstar wants an injunction that could force EchoStar to stop offering its Dish Network direct-broadcast satellite customers an IPG.

"The advertising and the commerce revenues that we're not receiving are substantial, and if we can prove willful infringement, which we believe we will prove-those damages get tripled back to 1994 on every single unit, per month," Gemstar-TV Guide president Peter Boylan said last week.

Boylan insisted the timing of the Motorola patent-infringement settlement wasn't tied to the filing of the EchoStar complaint, but noted, "the Motorola settlement is quite significant and speaks to the strength of our intellectual property."

EchoStar had talked with Gemstar for an "extensive period of time" about an IPG deal, but those talks went sour, Boylan said. Gemstar decided to sue "when it felt like they were no longer negotiating in good faith with us."

EchoStar spokesman Marc Lumpkin said the company wouldn't comment on the case. But he said that EchoStar has patents that "relate to EPG functionality," and patents pending that relate to program guides.

A search of the U.S. Patent Office database showed that on Oct. 17, EchoStar was granted a patent for an "apparatus and method for integrating a plurality of video sources." The patent involves a "virtual tuner."

EchoStar was also granted an EPG-related patent in May. The DBS company won a patent for a "user interface for television schedule system in which future events are paged in time."

The DBS provider is currently offering its subscribers three EPGs, one source said. The company developed its primary EPG in 1996. EchoStar offers a second guide that was developed by OpenTV Corp.

Subscribers that own the new "Dish Player" set-top have a third guide that was developed by Microsoft Corp.'s WebTV unit. Microsoft has licensed Gemstar's IPG for that product, one source said.

DirecTV also offers its subscribers an IPG without a license from Gemstar, Boylan said last week. Asked why the company wasn't suing DirecTV as well, Boylan said, "We are having good faith negotiations with DirecTV, as we speak, regarding a use license."

One key difference between EchoStar and DirecTV, Boylan said, is that the latter partners with consumer-electronics manufacturers, such as Sony Corp. and Thomson Consumer Electronics, to produce set-tops. Those CE companies have licensing agreements that allow them to "make and sell" set tops with the TV Guide IPG, said Boylan.

DirecTV officials declined to comment last week. The company also wouldn't confirm talks with Gemstar for a use license.

Companies offering competing guides that have not yet been sued by Gemstar include Tribune Media Services and Source Media Inc.

In July, WorldGate Communications Corp. and a consortium of top MSOs unveiled a new joint venture, TVGateway, which is developing its own IPG. Comcast Corp., Cox Communications Inc., Adelphia Communications Corp., Charter Communications Inc. are backing the venture, and are expected to deploy a TVGateway IPG.

WorldGate CEO Hal Krisbergh said he was not concerned about a potential lawsuit from Gemstar-TV Guide, noting that the guide "has been designed not to infringe."

"I think they would just be going after something that they just can't get their hands around," Krisbergh said. "But who knows."

Gemstar-TV Guide hasn't seen the TVGateway IPG, Boylan said. "If they ever do deploy a product where we can see what it is, we will carefully evaluate," he added.

Boylan did acknowledge that it is reasonable for cable operators to want more than one IPG vendor.

"We have no problem with that, provided that they [cable operators] choose to do business with people that aren't stealing our technology, and infringing our patents," he said.

EchoStar, like Gemstar, is no stranger to litigation. One of the company's better-known cases was a $5-billion breach-of-contract suit filed against News Corp. in 1997 for pulling out of their joint U.S. DBS venture. The companies later settled. News Corp. owns 43 percent of Gemstar-TV Guide.

Most patent infringement suits result in out-of-court settlements. But Boylan said the company is prepared to go the distance against EchoStar.

"That's their call," Boylan said. "We're happy to go the distance if that's what's in the cards. In the meantime, every time they add a sub and choose not to pay us.the damages continue to build."

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