The U.S. Court of Appeals for the Federal Circuit on Wednesday granted Dish Network's motion to stay a lower court's order that would have forced the satellite TV operator to disable millions of DVRs that infringe on a key TiVo patent.
On June 2, a Texas district court ruled that Dish's proposed workaround for TiVo's Time Warp DVR patent continued to infringe the patent. Dish was ordered to disable some 4 million DVR receivers within 30 days and to pay TiVo another $103 million plus interest. Dish immediately appealed the decision and the Federal Appeals Court granted a temporary stay.
In its order Wednesday, the appeals court said that "we determine based upon the arguments raised in the motion papers that EchoStar has met its burden of demonstrating the requisites for a stay of the order, pending appeal." To win a motion staying an injunction, the court said, a party must at least "demonstrate that it has a substantial case on the merits."
The appeals court expedited scheduling for the case, with EchoStar's opening brief due by July 17. The case will be placed on its schedule for November if possible.
In a statement, Dish and EchoStar said, "We are pleased that the Federal Circuit has blocked the district court's injunction pending our appeal... As a result of the stay, our customers can continue using their Dish DVRs."
TiVo did not immediately respond to a request for comment.
The appeals court's order is available here: http://www.cafc.uscourts.gov/motions/Orders/2009/2009-1374.7-1-09.1.PDF.
The litigation dates back to 2004, when TiVo sued EchoStar Communications for patent infringement. (EchoStar last year officially changed its name to Dish Network.) A federal jury found in TiVo's favor, and the U.S District Court for the Eastern District of Texas originally ordered Dish to disable all infringing DVRs in August 2006.
Dish earlier this month told the Texas court it was "investigating" other potential design-around options but that it was unsure if such a workaround was possible.
Analysts have expected Dish to reach an agreement with TiVo on licensing terms for the Time Warp patent, which describes a DVR system that allows for simultaneous storage and playback of TV programming from a cable or satellite source.
"Dish Network would now appear to have little choice but to settle," Sanford Bernstein senior analyst Craig Moffett wrote in a report following the June 2 ruling. "But at what rate? TiVo would now appear to hold all the cards."
Moffett said any settlement by Dish "would likely be far above the licensing rates agreed to by DirecTV and Comcast a few years ago, leaving Dish Network at a decided competitive disadvantage."
TiVo has agreements with Comcast, Cox Communications and DirecTV to provide TiVo-based DVRs to their respective subscribers. Comcast, which has offered TiVo DVR service in its New England systems since last fall, plans to launch next in Chicago and to make TiVo the "primary" DVR option in at least one yet-to-be-announced market.