After decades of DVR patent litigation, the court’s most recent decision has forced EchoStar (SATS) and DISH Network into a $500 million settlement with TiVo. Above and beyond the court-sanctioned penalty of $100+ million paid in 2008.
As the story goes, TiVo approached DISH way back when to partner and dropped off an early DVR for evaluation. Well, a deal didn’t get done and that DVR was never seen (by TiVo) again. Yet the underlying tech was reverse engineered, finding its way into EchoStar’s own DVR offerings. And, thus, TiVo filed suit. It’s been a long and winding road. Including a sleep-inducing visit to the US Courts of Appeals by yours truly. While most other corporate entities would probably have settled sooner at a smaller cost, DISH/Echo CEO Charlie’s Ergen’s strategy appears to have been dragging litigation out as long as possible until they either caught a lucky break or TiVo ceases to exist. Heck, TiVo challenged the courts to do the right thing and wrap this up in a timely fashion. It didn’t happen, DISH/Echo were found in contempt (again), and here we are. $500 million isn’t the $1 billion (!) TiVo was posturing for. However, for a company that has very rarely found profitability by actually selling its own product, this is a huge windfall and the respective parties can finally put it to bed. Assuming the courts let them.
Some details of the settlement from a joint announcement:
Under the terms of the settlement, DISH Network and EchoStar agreed to pay TiVo $500 million, including an initial payment of $300 million with the remaining $200 million distributed in six equal annual installments between 2012 and 2017. TiVo, DISH Network and EchoStar agreed to dismiss all pending litigation between the companies with prejudice and to dissolve all injunctions against DISH Network and EchoStar.
The parties also granted certain patent licenses to each other. TiVo granted DISH Network a license under its Time Warp patent (US Pat. No. 6,233,389) and certain related patents, for the remaining life of those patents. TiVo also granted EchoStar a license under the same ’389 patent and certain related patents, for the remaining life of those patents, to design and make certain DVR-enabled products solely for DISH Network and two international customers. EchoStar granted TiVo a license under certain DVR-related patents for TiVo-branded, co-branded and ingredient-branded products.
This large influx of cash will certainly come in handy as TiVo hopes for a repeat by taking on Verizon, Motorola, AT&T and Microsoft. Also, one hopes a newly flush TiVo won’t necessarily have to abandon retail. Although, there’s no guarantee they won’t.