Court Rules in Favor of TiVo over Dish Network

Published June 1, 2008

A federal appeals court has upheld a ruling in favor of TiVo in a patent-dispute case with Dish Network over the latter’s alleged use of TiVo’s proprietary digital-video recorder (DVR) technology.

TiVo first sought legal action against EchoStar, Dish Network’s parent company, in 2004. The April 11 ruling was issued by the U.S. Court of Appeals for the Federal Circuit.

TiVo issued a statement saying it was “extremely pleased” with the ruling. EchoStar sought to reassure its customers with its own subsequent statement, affirming, “All DISH Network customers can continue to use their DVRs without any interruption.”

During an analysts’ conference call in late March, TiVo CEO Tom Rogers defended the resort to litigation: “I would say based on our experience with litigation, the costs of litigation are far less than the returns that we are seeing just from the cap side of this equation, and I don’t think people have seen the end of what the cap side of that equation is, but just on the basis of damage award, what we’ve spent versus what we’ve gotten back, its been a great business move.”

Consumers Unaffected

According to information technology analyst Tom Lipscomb, the case is “not a consumer issue.” He added, “The consumer benefits fine. If [you have] Dish TV, enjoy it.”

Lawsuits like this one “happen all the time,” Lipscomb said. “You’re constantly going to read about lawsuits between companies over technology.” He does not see that as a problem, because “competition means lower prices” for the consumer.

Not a Political Issue

Despite the frequency of such lawsuits over intellectual property, Lipscomb does not think Congress should get involved. “I think Congress should be concerned about [allowing the market to provide] technology at a low cost to consumers.”

“There’s always a question of whether there should be intervention for high-profile products. I don’t favor intervention, and I won’t make an exception for a high-profile product,” intellectual property expert Bruce Abramson said. “I don’t see it [Dish vs. TiVo] as a huge political issue,” he added.

“TiVo wants exclusive rights to its intellectual property, and then license its technology to EchoStar,” Abramson explained.

Intellectual property is a “relatively new term, … very rarely used before the 1970s,” but patents “have been used since the seventeenth century,” Abramson noted.

Big Issues Remain

There are two patent licensing systems, Abramson pointed out: the first-to-invent system, in which the first party to invent receives the patent; and the first-to-file system, in which the first to file for a patent receives it.

“The U.S. operates under the first-to-invent system. The rest of the world uses the first-to-file system,” Abramson said.

The basic argument for implementing the first-to-file system is that it “helps small business,” Abramson said, but it is “difficult and expensive to implement.”

Abramson acknowledged U.S. “patent law has some problems. Whether or not people should have exclusive rights to intellectual property is a big problem. Any electrical product you buy has hundreds and thousands of patents. The economics of having exclusive patents is a big issue.

“Congress is not considering any of the big issues now. None of them,” Abramson added.

Gina-Marie Cheeseman ([email protected]) writes from Fresno, California.