EchoStar Told to Settle with TIVO or Cease DVR Operation

A final injunction has been handed down by the Texas court handling the Tivo (TIVO) -Echostar (DISH) patent infringement case. Echostar will not only pay $89M in cash damages, but will also have to disable nearly all customer DVR’s in the field within 30 days.

According to a press release, Echostar will now appeal at a federal level. They also indicate that existing customers are not impacted by this court order, even though a scan of the court order clearly shows that they must cease operating all but 100k+ of their DVRs. That’s right, they need to settle or shut down all of their customer DVRs.

Tivo will likely secure a contract similar to the DirectTV extension they secured earlier this year, where DirectTV pays $1 a month per DVR to Tivo. Echostar has sold 4 Million DVRs to date, and a significant portion of those still operate. This also provides a great precedent for negotiating with other makers of DVRs.

I still believe Tivo needs to move beyond the “Sue your Customers” model that Rambus used. They need to position themselves as content distribution mechanism (see Tivo - Better Off Without The Legal Jackpot).

Hat Tip: Davis Freeberg