Last July, TiVo (NASDAQ:TIVO) requested that three of Echostar’s (NASDAQ:DISH) DVR patents be re-examined by the US patent office for prior art. At the same time, they filed an argument asking to delay Dish’s countersuit against TiVo until the patent office concluded their reexamination.
When Dish failed to respond to TiVo’s request in August, the judge issued a delay in the trial pending the outcome of the re-examination process. On August 2, the US patent office found that there was enough evidence to move forward with the reexamination process for one of the patents, but remained silent about the other two. Last Friday though, the US patent office updated their website to indicate that the remaining two patents will also undergo the re-examiniation process.
When Dish won a re-examination of TiVo’s patents, they issued a press release on the morning of TiVo’s Q1 earnings report, claiming that it was a victory of sorts. TiVo responded with a press release of their own and accused Dish of engaging in misleading spin. Later on their first quarter conference call held that afternoon, TiVo’s lead council Matt Zinn explained the re-examination process as follows"
Now the next step in the re-examination process provides TiVo the opportunity to discuss and distinguish the prior [art] relied upon by the Patent Office as to the rejected claims and to present new claims. This is not an opportunity the patent holder gets until the Patent Office issues its office action. EchoStar is not permitted to participate further in the re-examination proceedings.
In other words, with respect to the claims re-affirmed by the Patent Office this is the end of the process and EchoStar has no right to appeal.
With respect to the rejected claims, this is the beginning of the process which now affords TiVo the opportunity to participate and discuss the prior [art] with the Patent Office. Patent claims that come out of re-examination are often stronger than before, since their validity has been re-affirmed over the additional prior [art]. Importantly, even if the Patent Office were to make a determination final with respect to the rejected claims — which we believe will not be the case after we have the opportunity to respond — TiVo believes that such a determination should not impact the jury verdict against EchoStar given that the Patent Office confirmed the validity of two claims of our patent that the jury found were willfully infringed by EchoStar.”
While this is a small legal victory for TiVo, it is still an important one. Because Dish had failed to respond to TiVo’s requests to delay their trial, the Dish countersuit will now have to wait for the re-examination process to conclude before moving forward with their litigation against TiVo. If Dish is unable to convince the patent offices to validate their three claims against TiVo, then their countersuit will be meaningless. Meanwhile, Dish faces the possibility that their temporary stay on the injunction against them could be lifted at any time and if this happens, then they will be forced to negotiate with TiVo without having a patent judgement to squeeze them with. There is still a lot that can happen in the re-examination process and it’s now up to Dish to argue the merits of their patents, but it puts them in a tenuous position of potentially having their DVR countersuit invalidated before their trial is even set to start.
Disclosure: Author owns TIVO stock