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TiVo Decries EchoStar Tactics as Q1 Loss Deepens

24 May, 2006 By: Erik Gruenwedel

Digital video recording (DVR) pioneer TiVo Inc. May 24 characterized as “spin” efforts by defendant EchoStar Communications to undermine a recent $74 million patent infringement verdict for TiVo, referring to EchoStar's statements as “quite extraordinary” and “misleading."

Alviso, Calif.-based TiVo is seeking an injunction prohibiting Englewood, Colo.-based EchoStar from marketing its DVR — a move TiVo reportedly cited as imperative to staying in business.

A Dallas jury in April found EchoStar had violated nine TiVo hardware and software patents. However, the United States Patent and Trademark Office May 23 rejected all seven of TiVo's hardware patent claims against EchoStar.

EchoStar applauded the decision and cited the U.S. Supreme Court's May 15 decision that courts couldn't automatically impose a permanent injunction against a patent infringer.

“That reexamination ruling, together with the favorable decision from the [Texas] Court of Appeals are steps in the right direction as we prepare our response to TiVo's recently filed injunction motion,” said EchoStar in a statement.

TiVo CEO Tom Rogers, in an investor call, reiterated the value of the jury verdict as an incentive for other companies to enter into commercial arrangements with TiVo.

“We are actively pursuing damages [against EchoStar] for willfulness and injunction,” said Rogers. “We are confident in our case and continue to fight it out in court.”

Costs associated with the litigation, pricing discounts and stock options contributed to TiVo posting a first-quarter (ended April 30) loss of $10.7 million, compared to a loss of $857,000 during the same period last year.

Revenue increased 38%, to $55.1 million, due in part to a net increase of 53,000 new subscribers and $7.2 million in revenue from an ongoing technology agreement with Comcast.

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