Dish Network said it plans to appeal a ruling ordering it to shut down DVRs that infringe TiVo's "Time Warp" patent to the U.S. Supreme Court, and the satellite operator also said only certain older MPEG-2-based DVRs are affected and will be upgraded "as quickly as possible" if it cannot obtain a stay.
TiVo shares rocketed up more than 34% after the decision was announced, trading at about $11.21 per share in mid-afternoon trading Wednesday. Dish's stock dropped 1.7%, to about $23.47 per share.
On Wednesday, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court's ruling that Dish must shut down eight models of DVR receivers that infringe the TiVo patent.
In a statement Dish/EchoStar said, "We intend to seek review of that part of the decision by the United States Supreme Court and seek a stay of the injunction while doing so. We also will be making a motion to dissolve the injunction based on TiVo's recent representations to the Patent and Trademark Office substantially limiting the scope of the claims at issue in this case."
In October 2010, the U.S. Patent and Trademark Office issued a ruling validating TiVo's Time Warp DVR patent, U.S. Patent No. 6,233,389 ("Multimedia Time Warping System"). But Dish argued the decision about the TiVo patent narrowed the scope of the DVR company's previous claims.
Meanwhile, the appeals court Wednesday vacated a Texas district court's finding of contempt of the infringement provision of the permanent injunction, and vacated in part the damages awarded to TiVo for EchoStar's continued infringement. It remanded that provision to the U.S. District Court for the Eastern District of Texas to review the contempt finding on infringement, to determine whether the newly accused product -- Dish's updated DVR with software it said did not infringe the Time Warp patent -- was so different from the product previously found to infringe that it raises "a fair ground of doubt as to the wrongfulness of the defendant's conduct."
"Dish Network and EchoStar are pleased that the Federal Circuit Court of Appeals has unanimously vacated the district court's contempt ruling regarding our software design-around," the companies said.
Dish and EchoStar noted that appeals court, which decided the matter en banc, ruled 7-5 to affirm the district court's ruling on the DVR disablement question.
Dish said the disablement ruling covers "only certain older-generation MPEG-2 DVRs. We have already upgraded many of these customers and, if we are unsuccessful in obtaining a stay, we will work as quickly as possible to upgrade the remaining customers to our current generation DVRs, as these are not at issue in the ruling."
Dish had 14.1 million satellite TV customers as of the end of 2010. The company does not disclose how many of those customers have DVRs. Analysts estimate between 4 million and 8 million Dish DVR receivers would be affected by the disablement order.
The eight models of Dish/EchoStar receivers that a jury found infringed the TiVo patent are: DP-501, DP-508, DP-510, DP-522, DP-625, DP-721, DP-921 and DP-942.
In statement TiVo said in part, "We look forward to the permanent injunction against EchoStar and Dish Network finally being enforced with respect to the DVRs they must now disable. This ruling also paves the way for TiVo to receive substantial damages and contempt sanctions regarding the DVRs that EchoStar and Dish Network failed to disable. With respect to the remand of the infringement provision of the District Court's order, we intend to pursue the most rapid path to resolution. We will continue our efforts to protect our intellectual property from further infringement by EchoStar and Dish Network."