That’s the multimillion-dollar question — or could it be well over a billion? — for Charlie Ergen and company.
Dish is going to have to pay up, regardless of whether it chooses to pursue a settlement with TiVo or tries to quickly replace infringing DVR receivers.
On Wednesday, the U.S. Court of Appeals for the Federal Circuit upheld a lower court’s ruling that Dish Network must disable eight models of its DVRs — found to have infringed on a key patent owned by TiVo. Those models of Dish/EchoStar are: DP-501, DP-508, DP-510, DP-522, DP-625, DP-721, DP-921 and DP-942 (see Appeals Court Affirms That Dish Must Disable DVRs In TiVo Case).
Dish isn’t saying how many of those are in customers’ homes, but said they’re older, MPEG-2 models that haven’t been available for several years. TiVo claims it doesn’t know what that number is.
Dish said it has “already upgraded many of these customers and, if we are unsuccessful in obtaining a stay [from the U.S. Supreme Court], we will work as quickly as possible to upgrade the remaining customers to our current generation DVRs, as these are not at issue in the ruling.” (See Dish Vows To Keep Fighting TiVo To Supreme Court.)
In 2008, court records suggested the number was as high as 4 million, according to Sanford Bernstein analyst Craig Moffett — but that’s likely been significantly reduced in the interim, he added.
Moffett cited a report by the Satellite Business News newsletter on Wednesday that only 500,000 to 1 million infringing Dish DVRs are still in the field. “If the number is indeed that low, then Dish Network’s negotiating position is significantly less dire than our previous estimates,” he wrote.
Still, at an estimated $350 per DVR, the cost to replace 3 million DVRs (out of the previously cited 4 million, to get down to 1 million at the top of the range Satellite Business News reported) would be more than $1 billion and Dish’s capex over the last three years doesn’t indicate it has spent that much swapping out the older equipment, Moffett pointed out.
For Dish, settling may be more feasible, but still expensive. Analysts have estimated Dish would be forced to pay a licensing fee of $1.75 to $3 per DVR per month in a settlement with TiVo (see TiVo Zaps Dish on Patent).
Now the question is how long Judge David Folsom of the U.S District Court for the Eastern District of Texas will allow for Dish to comply with the disablement order, and whether he will grant Dish’s request for a stay pending its Supreme Court appeal. “He could give Dish thirty days, or sixty days… or one,” Moffett wrote.
Meanwhile, the appeals court vacated the Texas district court’s finding of contempt of the infringement provision of the permanent injunction, and vacated $110 million in damages awarded to TiVo for EchoStar’s continued infringement. It remanded that provision to Judge Folsom to review the contempt finding on infringement, to determine whether the newly accused product — Dish’s updated DVR with software it said did not infringe the Time Warp patent — was so different from the product previously found to infringe that it raises “a fair ground of doubt as to the wrongfulness of the defendant’s conduct.”
And that process could extend the TiVo-Dish litigation another couple of years, says Moffett. All ye lawyers, rejoice.
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