TiVo and EchoStar head into the US Court of Appeals for the Federal Circuit this Thursday to continue arguing their ongoing patent dispute. The docket is pretty tight, so the hearing should be a brief affair.

An unexpected benefit in attending the pre-DigitalLife event last week was spotting Kunal Madhukar’s badge (and the person attached). Kunal is the Bear Stearns analyst covering digital media — In fact, I’ve quoted him a few times here on ZNF. Kunal has kindly provided me with docket details and, if time permits, I may sit in on the hearing. I doubt they’ll allow mobile blogging or even photographs, but I’ll be sure to draw stick figures of the participants. As far as the case goes, Kunal believes the Final Order could take “six months or more” and finds it “difficult to handicap [the] outcome.”

I realize things appear a bit muddied on my end: EchoStar will be my employer shortly and I’m a TiVo customer… However, I don’t presume to be a patent or legal expert - which hopefully limits me to covering the facts of this landmark case without bias.

It looks like TiVo, Netflix and Blockbuster will be packing their bags for Massachusetts, after they won the first of many legal scrimmages in their patent defense against Lycos. Lycos has asserted that all three companies have violated patents they own, on “information filtering technology.� The two patents that are at the heart of the case are related to the recommendation services that the companies provide.

After Lycos filed their lawsuit against the trio, ChoiceStream (the company that created Blockbuster’s suggestion service) filed a separate lawsuit, to have the patents thrown out.

In their lawsuit against Lycos, they argue that the patents are invalid because of obviousness and prior art. Because Choicestream filed their own lawsuit in the Massachusetts’ court system, TiVo, Netflix and Blockbuster sought to have their case transferred there as well. I’m not familiar enough with the legal subtleties to know why Lycos originally opposed the motion, but with Lycos’ headquarters in MA, the judge found the request reasonable enough and granted the motion.

(more…)

Speaking publicly on the recent Patent Office decisions… Both TiVo and EchoStar appear to hope for the best while appeasing (or is that calming?) their stock holders via the press.

TiVo:

“The patent office affirmed the majority of the claims of the patent including two that the jury found that EchoStar infringed,” he said. “The finding of infringement of one claim is all TiVo needs to prevail against EchoStar. “We do not believe that the ongoing process of re-examining the other claims will have any impact on the appeal of the jury’s determination that Echostar infringed on TiVo’s patent,” he said.

EchoStar:

“Based on our current analysis of the case, including the appellate record and other factors, we believe it is more likely than not that we will prevail on appeal,” EchoStar said.

One TiVo stockholder’s take…

The USPTO action finalizes the first phase of the Patent Office reconsideration of TiVo’s patent. The enforceable part of a patent is a series of “claims” (basically descriptions of part of a thing or process). Some of the claims of TiVo’s patent were validated, some were rejected. The claims that were validated are done — they’re now rock solid. The claims that were rejected will now be the focus of further action.

A couple of things can now happen: 1) TiVo can appeal the decision through the appeals process of the Patent Office, then the federal court of appeals, and finally the Supreme Court; and/or 2) TiVo can work with the Patent Office examiner to modify the claims to make them acceptable to the Office. This second option is particularly valuable because two of TiVo’s claims (#1 and #32) form the basis of all the rejected claims. If they can be “fixed,” all of the rejected claims will likely be validated. Since, in an earlier meeting, the patent examiner agreed that TiVo’s interpretation of the claims distinguished them from prior art, but asked them to show how that was represented in the wording of the claims, it seems that this second route would likely be successful. TiVo has 60 days to respond to this latest action, and will likely do nothing until very close to the end of that period.

In any event, the process will go on for many months or several years, and will therefore likely have no impact on TiVo’s lawsuit against EchoStar. Anyone who doubts this should review NTP v. RIMM. NTP received a huge settlement based on a patent that had been gutted by the USPTO.

Those of you with a vested interest (stock), probably caught news earlier this week that the US Patent and Trademark Office has completed the reexamination of a TiVo patent at play in the EchoStar case. Several claims were confirmed (software) and several were rejected (hardware). What does this all mean? Hard to say at this point, especially with oral arguments on hold until October. One thing you can bank on: This case is far from over (within both the courts and the Patent Office) unless a settlement is reached. Another thing you can bank on: Skittish investors dumping TiVo stock.

(more…)

TiVo’s dust up with Dish may get all of the ink love, but in reality, it represents a very small part of their patent portfolio. Between their trademark filings, their patent applications and their aggressive open market acquisitions, TiVo has managed to build a very impressive intellectual property portfolio around their technology. They haven’t always had the cash to defend this moat, but with damages from TiVo’s potential patent award against Dish, now up to $130 million it could free up a lot of cash to go after other infringers, if Dish loses their appeal.

Some of TiVo’s patents have obvious applications and some of them are really held more for defensive purposes, but it’s the bizarre ones that I find most interesting and on Tuesday, TiVo was issued a patent for a method of locking down hard drives, that involves creating a password, that is so hard to guess, it would take longer than the expected life of your hard drive for someone to crack. According to the patent document, the method is described as the following.

An authentication system for securing information within a disk drive to be read and written to only by a specific host computer such that it is difficult or impossible to access the drive by any system other than a designated host is disclosed. While the invention is similar in intent to a password scheme, it significantly more secure. The invention thus provides a secure environment for important information stored within a disk drive. The information can only be accessed by a host if the host can respond to random challenges asked by the disk drive. The host’s responses are generated using a cryptography chip processing a specific algorithm. This technique allows the disk drive and the host to communicate using a coded security system where attempts to break the code and choose the correct password take longer to learn than the useful life of the disk drive itself.

At first the whole thing seems pretty silly to me, but when I think about it, I see two ways that TiVo could take this technology. (more…)

To recap… Verizon went after Vonage, claiming patent infringement. The jury agreed that Vonage infringed on three of Verizon’s patents, ordering $56 million in repayment plus future royalties. The court seemed to move towards a total injunction, but yesterday GigaOm reported on Verizon’s propsal:

Judge Claude Hilton has issued an injunction that bars Vonage from signing up new customers. “It’s the difference of cutting off oxygen as opposed to the bullet in the head,” Vonage lawyer Roger Warin told the Associated Press. Still the 2.2 million Vonage customers can breathe a sigh of relief - their phone service is not going to be turned off this weekend.

Which was quickly followed by a stay:

Vonage has been granted a temporary stay from U.S. Court of Appeals for the Federal Circuit in Washington, DC, the company said. The company is now able to continue signing up new customers.

As a Vonage customer, I’ve been following this story. I find their service adequate and their customer service poor. I’ll have no problem (and will shed no tears) finding another provider, or going without, should they get shut down.

One TiVo stockholder’s take… 

EchoStar responded to Judge Duffey’s order to show cause with a lengthy set of documents outlining their reasons for believing the various documents in question are immune from discovery. Generally they take the position that the documents are simply internal work product that was never communicated to EchoStar. Without access to the documents in question, we cannot comment on the strength of EchoStar’s position on these documents, however we do find their response regarding Document 88 to be quite curious. Document 88 is a set of handwritten notes taken during a telephonic conference call, about which EchoStar says:

When Merchant & Gould attorneys were retained to provide an opinion
regarding a patent over which litigation was pending, they had a
conference call with litigation counsel from Morrison & Foerster. The only participants in the call were Merchant & Gould attorneys retained to provide advice on legal matters related to the pending litigation, and Morrison & Foerster counsel representing EchoStar in the litigation. [ ... ] Document 88 was never communicated to EchoStar (in this form or orally), and it does not reference, describe, or disclose any communication with EchoStar.

EchoStar, then, appears to be taking the position that direct communication with the law firm they retained to represent them in the litigation is legally distinct from communication with EchoStar itself with respect to the that litigation. We doubt TiVo’s attorneys will see it the same way. We wonder if the judge will.