TiVo sued EchoStar in 2004, claiming the satellite TV company stole TiVo's digital video recorder technology for pausing, fast forwarding, and rewinding live TV shows. A U.S. District Court ruled against EchoStar, and the case is pending before the U.S. Court of Appeals.
A statement from EchoStar was not immediately available on Friday, but TiVo said the patent office's decision bolsters its case. "This decision by the PTO is final and not appealable by EchoStar," TiVo said in a statement. "Today's decision by the PTO brings us another step closer to ending EchoStar's continued infringement, and we are hopeful that the United States Court of Appeals for the Federal Circuit will uphold the district court judgment of patent infringement."
TiVo pioneered the digital video recorder, which is now offered by cable and satellite TV companies, and telecom service providers. While TiVo once stood alone in the market, it now faces stiff competition from rivals Cisco Systems, Scientific-Atlanta, and Motorola.
A federal court jury awarded TiVo about $74 million in damages plus interests, and found that EchoStar had willfully infringed on TiVo's patent. The court ordered EchoStar to stop deploying its DVR service to new and existing customers.
EchoStar appealed the decision and won a temporary stay of the ruling from the appellate court. While the original decision should entice other companies to enter into commercial agreements with TiVo, there's no guarantee the final decision will favor TiVo, Zacks Equity Research said in its analyst's blog. "If the decision is overturned, we think TiVo's valuation multiples and stock price will be negatively affected," the firm said.
Cable and satellite providers started offering DVRs more than three years ago, causing TiVo's market share to shrink. To make up for the loss in subscribers, TiVo is expanding into other markets by linking its DVR to Internet video and other services; and offering advertisers data based on its subscribers' viewing habits.