TiVo wins court ruling against EchoStar; stock soars

TiVo's shares soared more than 53% after the company announced it had won a key ruling in federal court in a long-running patent infringement case against EchoStar's Dish Network.

The ruling by the U.S. Court of Appeals for Eastern District of Texas paves the way for TiVo to potentially claim within a year as much as $300 million in damages and sanctions, a windfall for the financially strapped pioneer of digital videorecorders.

TiVo, in a statement, suggested that even more money could be forthcoming. The lawsuit covers violations up to July 1, 2009. But TiVo maintains that EchoStar's digital videorecorders continued to infringe its patents after July 1, entitling it to additional damages.

"We will also seek further damages and contempt sanctions for the period of continued infringement" after the period covered by the lawsuit, the Alviso, Calif., company said. Depending on how the damages are calculated, this could yield an additional tens of millions of dollars for TiVo.

EchoStar promised an appeal. "We are disappointed in the Federal Circuit's split decision," the Englewood, Colo., satellite TV company said in a statement. "Therefore, we will be seeking en banc review by the full Federal Circuit."

Only a fraction of cases requesting an en banc review, which would involve all of the federal appeals court judges within the circuit, are granted each year, and only to cases that have broader legal implications. EchoStar has until March 18 to file a request.

Analysts are skeptical of EchoStar's chances of winning a review. "That will lead to another two-week delay, but is very likely to go in TiVo’s favor," Tony Wible, an analyst with Janney Montgomery Scott, wrote in a note to investors. "After this process, we believe Dish would have 30 days to land a commercial deal with TiVo or risk having its DVR's deactivated."

For now, EchoStar said the ruling does not affect its 14 million satellite customers.

TiVo has struggled to reap the benefits of the technology it helped pioneer 10 years ago when it introduced a digital videorecorder that let viewers record and pause live television shows. The popularity of TiVo's features spawned numerous copycats. Cable and satellite companies, including EchoStar, rushed to integrate similar features in their own set-top boxes, rather than license TiVo's technology.

TiVo's shares climbed $5.46 to $15.67 in midafternoon trading after the announcement of its legal win.

-- Alex Pham