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From USA Today
TiVo patent court ruling could impact all Dish Network DVRs
By David Lieberman
TiVo shares rocketed nearly 59%, to $16.20, at mid-day Thursday after the digital video recorder pioneer won a key -- and possibly decisive -- court victory in a long-running patent infringement case against Dish Network.
The United States Court of Appeals for the Federal Circuit upheld a lower court ruling that Dish's DVRs violate TiVo's patents, including one that enables users to watch one TV show while recording another.
The appeals judges also upheld a ruling by the U.S. District Court in eastern Texas that Dish had been in contempt after it changed the software in its DVRs, but did so in a way that continued to copy TiVo's technology.
The appeals court decision could be "the beginning of the endgame" in a six-year fight over TiVo's intellectual property, Bernstein Research analyst Craig Moffett says.
He adds: "What is at stake is nothing less than (Dish's) ability to continue to offer DVRs" -- which many satellite viewers consider an essential service. For example, he says that TiVo could "open negotiations with DirecTV for exclusivity in DVRs within the satellite space."
The decision also could help TiVo in its patent infringement cases against Verizon and AT&T, says J.P Morgan analyst Bridget Weishaar says.
Dish said, in a statement, that its 14.1 million customers "are not impacted" at this point. The company says it will ask the entire Federal Circuit to review the latest decision. Such reviews are rare, and typically occur when there are questions about the nature of the law -- not the facts of a case.
"I don't think (the hearing request) does anything" for Dish, Collins Stewart analyst Tom Eagan says.
Dish shares were down about 5%, to $20.60, at mid-day.
Barring a reversal of the decisions favoring TiVo, the big questions now involve the extent of the damages to Dish.
The Texas court has already ordered Dish to pay $300 million to TiVo for damages up to July 1, 2009. TiVo says it now will ask for more cash for patent infringements since then.
Wall Street analysts say that Dish also likely will have to cut a deal with TiVo, and pay a monthly fee to avoid having to replace millions of DVRs.
Eagan says that Dish's stock price suggests that investors believe it will have to pay $3 a month for each DVR. But he believes the final price could be closer to $4. In addition, the change could lead about 500,000 Dish customers to drop the service or switch to DirecTV or cable.
But there's no consensus. For example, Wells Fargo Securities analyst Marci Ryvicker says a monthly fee could be as high as $3 and as low as $1.75.