TiVo Wants $1 Billion In Sanctions

[Davis Freeberg]

Those of you who were holding your breath for a settlement should really think about exhaling. In a court filing we learned that TiVo is asking for close to $1 billion in sanctions over Dish's refusal to disable their DVRs. Whoever said crime doesn't pay, must not be following this lawsuit. If $1 billion is the minimum asking price for peace, then there is no way that TiVo will settle for a lowball licensing deal. It'd be nice to have this chapter over, but I think we're going to see this one come down to a judge.

http://www.zatznotfunny.com/2009-07/tivo-wants-1-billion-out-of-dishechostar/

http://static.zooomr.com/images/7797070_268fbcf20e.jpg

[ZeoTiVo]

holy Cr@p!! - that seems a little high, how in the world did they get to that number.

[jfh3]

I'm sure $1B wasn't the minimum asking price - but that ship sailed for Dish years ago.

I would love to see what's in the request, but I suspect it's at least $3.75/box + disgorgement of profits.

[Rob Helmerichs]

Heh...when I saw the thread title, I came in intending to make a Dr. Evil joke!

[Davis Freeberg]

If they did get a billion, it would be more than 13 and a half times the original judgment. At some point one would have thought that Dish would have tired of fighting, but it looks like win or lose we're going to see some kind of precedent set.

[howard23]

Those of you who were holding your breath for a settlement should really think about exhaling. In a court filing we learned that TiVo is asking for close to $1 billion in sanctions over Dish's refusal to disable their DVRs. Whoever said crime doesn't pay, must not be following this lawsuit. If $1 billion is the minimum asking price for peace, then there is no way that TiVo will settle for a lowball licensing deal. It'd be nice to have this chapter over, but I think we're going to see this one come down to a judge.

http://www.zatznotfunny.com/2009-07/tivo-wants-1-billion-out-of-dishechostar/

http://static.zooomr.com/images/7797070_268fbcf20e.jpg

ok Davis, i agree that TiVo won't be settling for a lowball license deal but, those dollars should motivate Charlie into some sort of settlement which will ensure Tivo's market share going forward! TiVo doesn't benefit from a one time payment however large (as shareholders we will though!) , it does benefit long term by lucrative recurring revenue licensing deals.

[AJRitz]

ok Davis, i agree that TiVo won't be settling for a lowball license deal but, those dollars should motivate Charlie into some sort of settlement which will ensure Tivo's market share going forward! TiVo doesn't benefit from a one time payment however large (as shareholders we will though!) , it does benefit long term by lucrative recurring revenue licensing deals.

This isn't about either/or. It's about yes, both. The huge one-time amount is intended to be coercive - to force Dish to comply with the court's order to desist from continuing infringement. The logical outcome is for Dish to negotiate a licensing agreement, but I don't think Charlie's ever been accused of being logical.

The judge is likely to order a daily penalty until Dish either stops the infringing conduct or gets a licensing deal done. That penalty doesn't just evaporate when the deal gets done. And this is the part that Charlie's not used to dealing with. He's made a regular practice of letting 11th hour negotiations drag into overtime and just ignoring the fallout until the gets the terms he wants. But those deals don't involve an increasingly pissed off federal judge. Ignoring a judge's order isn't the same as ignoring complaining subscribers. Subscribers are fungible - there was a reasonable business case that the savings from the hardball tactics would offset the costs of the lost subscribers. The judge is going to levy the fine either way. It doesn't evaporate when a licensing deal is announced. And if Charlie tries to play the same negotiating game in this case, TiVo will own Dish by the time it's all over.

[Davis Freeberg]

ok Davis, i agree that TiVo won't be settling for a lowball license deal but, those dollars should motivate Charlie into some sort of settlement which will ensure Tivo's market share going forward! TiVo doesn't benefit from a one time payment however large (as shareholders we will though!) , it does benefit long term by lucrative recurring revenue licensing deals.

With TiVo's own market cap at less than a billion, I'd argue that a billion in cash would benefit shareholders and TiVo. It'd certainly give them a war chest to sue other infringers. Still waiting for Engadget to call off the death watch, but I guess $200 million in cash and another billion that TiVo is asking for still isn't enough to convince them that TiVo won't go bankrupt.

As far as the revenue licensing deal goes, I stand by what I said earlier. Anything less than the amount that stand alone subs pay would be an insult to shareholders and would undermine TiVo's business model. If Dish wants to give away their DVR that's fine, but they need to pay TiVo for the damage that does. At $12 bucks a month * 6 million DVRs, I'd be looking for $800 - $900 million a year in licensing fees before I'd let them off the hook.

[dswallow]

The judge is likely to order a daily penalty until Dish either stops the infringing conduct or gets a licensing deal done. That penalty doesn't just evaporate when the deal gets done. And this is the part that Charlie's not used to dealing with. He's made a regular practice of letting 11th hour negotiations drag into overtime and just ignoring the fallout until the gets the terms he wants. But those deals don't involve an increasingly pissed off federal judge. Ignoring a judge's order isn't the same as ignoring complaining subscribers. Subscribers are fungible - there was a reasonable business case that the savings from the hardball tactics would offset the costs of the lost subscribers. The judge is going to levy the fine either way. It doesn't evaporate when a licensing deal is announced. And if Charlie tries to play the same negotiating game in this case, TiVo will own Dish by the time it's all over.

I'd agree with that except for the fact the court (system) has managed to do little except use words for how many years now? And there's really been no particular sign that the pattern is changing, either. Except for the hopefulness on some of our parts, that is. But certainly no real sign of anything ever being done to make Dish do anything they're told to do.

[net114]

I wonder if this also includes the years of legal fees that Tivo had to incur as well. Those attorney fees have got to be way high.

[davezatz]

it does benefit long term by lucrative recurring revenue licensing deals.

TiVo has indicated they're not interested in a licensing deal with Echo and bristled when the court imply they do so. Then again, that could just be more posturing.

[howard23]

TiVo has indicated they're not interested in a licensing deal with Echo and bristled when the court imply they do so. Then again, that could just be more posturing.

that is EXACTLY what they need in order to thrive. why would TiVo not want to add those subs to their current recurring revenue subs???

[dswallow]

that is EXACTLY what they need in order to thrive. why would TiVo not want to add those subs to their current recurring revenue subs???

Well, I can think one persuasive reason: You make an example of one company to bring everyone else in line.

If someone steals from me, I'm not going to let them off by them just paying me for what they stole. I want it back, and I may choose not to let them actually buy one, ever. And if I accept monetary damages, it's going to be for far more than what it would have cost them to buy it the right way up front. Otherwise why would anybody pay full value up front if they knew they could try to steal it, then, if they ever got caught, just pay what they'd have paid in the first place. It's called punishment for bad behavior. It's the consequences of bad behavior.

Frankly, I don't see how anyone could trust Dish after going through this sort of thing with them. Licensing deal or not. Would you believe anything they tell you about subscriber data? Would you believe they ever would pay you what they're supposed to pay you? You'd be constantly fighting. There'd simply be no trust possible with them involved.

[ZeoTiVo]

TiVo has indicated they're not interested in a licensing deal with Echo and bristled when the court imply they do so. Then again, that could just be more posturing.

yeah, I think what is missed in all this is that DISH could be insisting to limit the licensing deal to just the models listed or any others TiVo could prove was also infringing which just means more years in court and a diminishing payment from DISH that just ends up hurting TiVo stock in the long run.

Now if Dish agreed to a broad licensing deal on all their DVRs then that would be good for TiVo but why would DISH do that? I was expecting TiVo asking for a few hundred million more and that the DVR models named be turned off. It seems like TiVo though has indeed put a full standalone sub cost per month on each DVR and then some value added on as well for lost market share.

I wonder how many other judges and lawyers are out there rooting for DISH to get hit with the full Billion.

[Davis Freeberg]

that is EXACTLY what they need in order to thrive. why would TiVo not want to add those subs to their current recurring revenue subs???

Exhale Howard, exhale, I see settlement as a 5% possibility at this point. TiVo wouldn't want to add the subs because their play here isn't for 6 million DVRs from Dish, it's for all 50 million that will be out there in two years. They'll end up getting paid by Dish, don't worry about that, only question is how. If they quietly do a licensing deal, what pricing power do they have when they are talking with Time Warner? If they obliterate Dish's entire business and put them into bankruptcy, they won't have any trouble raising their prices on the cable and satellite industry.

If you assume that the life of a DVR is 5 years, at the $3 settlement that you wanted it would barely earn TiVo $1 billion over the life of all 6 million DVRs. If they play this out in front of the judge and only end up with half the award but get the injunction on the DVRs, then they still collect for Dish's past sins and are armed with a bazooka to negotiate with. Over the years, TiVo has fought so hard with the cable and satellite companies, just to get a chance to offer their service on their platform that there's is no way that they'd pass up an opportunity to arm themselves, just for quick money from Dish. I know that it sounds anti-intuitive, but the best move they can make as a business is to get the precedent and then go back and renegotiate their contracts to reflect the value that they should have been earning from the beginning.

[jfh3]

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

TIVO INC.,

Plaintiff,

vs.

DISH NETWORK CORPORATION,

et al.,

Defendants.



CIVIL ACTION NO. 2:04-CV-01 (DF)

O R D E R

Before the Court is EchoStar’s Motion to Suspend Proceedings on TiVo’s Motion for Sanctions. Dkt. No. 957. Also before the Court are TiVo’s response and Echostar’s reply. Dkt. Nos. 962 and 963.

Having considered the arguments of counsel, all relevant papers and pleadings, the Court finds that EchoStar’s motion should be DENIED.

On June 2, 2009, the Court issued a memorandum opinion and amended final judgment finding EchoStar in contempt of this Court’s injunction. Dkt. Nos. 929 and 932. The Court, however, retained jurisdiction to enforce its order “including the award of monetary sanctions for EchoStar’s contempt . . . .” Dkt. No. 932 at 3. The Court placed the issue of contempt sanctions on
a briefing schedule and set the matter for hearing on July 28, 2009. Dkt. No. 930.

EchoStar now asks the Court to suspend proceedings regarding sanctions in light of the Federal Circuit’s recent stay. Dkt. No. 957. EchoStar argues that, due to the Circuit’s stay, there is no basis at this time for any award of sanctions. Id. at 2. Moreover, EchoStar contends that judicial economy will be best served by delaying disposition of the issue. Id. at 3. In response, TiVo argues that the Circuit’s stay only covered this Court’s injunction and does not preclude this Court from going forward on the issue of contempt sanctions.

Having considered the Circuit’s stay order, the Court finds that the order does not preclude this Court from resolving the sanctions issue at this time. Instead, the Circuit merely stayed the injunction in this case and stayed this Court’s order that EchoStar take certain steps (i.e. disable DVR functionality) in light of the injunction. See Dkt. No. 956, Ex. 1. Furthermore, the Court finds that judicial economy is best served by having the benefit of any sanction ruling before the Circuit when it decides EchoStar’s appeal. The Court will, however, stay the enforcement of any sanction pending resolution of that appeal.

For the reasons stated above, EchoStar’s Motion to Suspend Proceedings on TiVo’s Motion for Sanctions (Dkt. No. 957) is hereby DENIED.

[MichaelK]

This isn't about either/or. It's about yes, both. The huge one-time amount is intended to be coercive - to force Dish to comply with the court's order to desist from continuing infringement. The logical outcome is for Dish to negotiate a licensing agreement, but I don't think Charlie's ever been accused of being logical.

The judge is likely to order a daily penalty until Dish either stops the infringing conduct or gets a licensing deal done. That penalty doesn't just evaporate when the deal gets done. And this is the part that Charlie's not used to dealing with. He's made a regular practice of letting 11th hour negotiations drag into overtime and just ignoring the fallout until the gets the terms he wants. But those deals don't involve an increasingly pissed off federal judge. Ignoring a judge's order isn't the same as ignoring complaining subscribers. Subscribers are fungible - there was a reasonable business case that the savings from the hardball tactics would offset the costs of the lost subscribers. The judge is going to levy the fine either way. It doesn't evaporate when a licensing deal is announced. And if Charlie tries to play the same negotiating game in this case, TiVo will own Dish by the time it's all over.


actually- if i recall this exact sort of thing is what happened with the distant networks. The LAW said that if DISH screwed the networks that DISH could no longer reboradcast distant networks. The courts found that dish screwed the networks and therefore could no longer sell distant networks. Dish settled with the netwroks (at least some) but the supreme court said tough crap you broke the law you can't sell the distant networks even if the networks say so.

At least that's how i seem to recall it went down.

But in classic DISH loophole finding they leased transponders to a third party and let that third party sell the distant networks so the law was circumvented.

ergen is scum.

[fallingwater]

http://www.zatznotfunny.com/2009-07/tivo-wants-1-billion-out-of-dishechostar/

http://static.zooomr.com/images/7797070_268fbcf20e.jpg

A billion here; a billion there; pretty soon it could add up to real money! :eek:

[vurbano]

Id like to see Charlie behind bars. I sure would be if I didnt half of the theft he does.

[Dan203]

A billion here; a billion there; pretty soon it could add up to real money! :eek:

It's funny, these days the words "$X billion dollars" are being tossed around so much I think we're getting desensitized to how much money it actually is.

Did I say funny, I meant scary.

Dan

[johnf@home]

I don't see why some people are suggesting that $1B is a ridiculously large amount.

Tivo have already been awarded two chunks of around $100M apiece, and that's not all of it; there are still ongoing infringements, and that's before the very real possibility that the current DISH DVRs will be ruled to also infringe the patents. If DISH loses on all counts the actual (not punitive) damages could easily add up to over $500M. If TiVo were to get punitive damages on top of that a $1B settlement could be a bargain.

[howard23]

Exhale Howard, exhale, I see settlement as a 5% possibility at this point. TiVo wouldn't want to add the subs because their play here isn't for 6 million DVRs from Dish, it's for all 50 million that will be out there in two years. They'll end up getting paid by Dish, don't worry about that, only question is how. If they quietly do a licensing deal, what pricing power do they have when they are talking with Time Warner? If they obliterate Dish's entire business and put them into bankruptcy, they won't have any trouble raising their prices on the cable and satellite industry.

If you assume that the life of a DVR is 5 years, at the $3 settlement that you wanted it would barely earn TiVo $1 billion over the life of all 6 million DVRs. If they play this out in front of the judge and only end up with half the award but get the injunction on the DVRs, then they still collect for Dish's past sins and are armed with a bazooka to negotiate with. Over the years, TiVo has fought so hard with the cable and satellite companies, just to get a chance to offer their service on their platform that there's is no way that they'd pass up an opportunity to arm themselves, just for quick money from Dish. I know that it sounds anti-intuitive, but the best move they can make as a business is to get the precedent and then go back and renegotiate their contracts to reflect the value that they should have been earning from the beginning.


OK Davis, after reading the court docs i agree that $3 is too little. but if you took the 1 billion and split that in half, say $500 mil then demand that Dish license ALL of their DVRs, not just those that infringe for say $5 per month each along with running the Tivo platform on them will give Tivo a lot more $$ than just a one time payment of even 1 billion when you include all the recurring revenues Tivo will derive from ad and research from their platform. Tivo will still be able to negotiate with those providers that they don't have deals with. they are not going to get $12-$13/ month from them even with a monster court award to waive! i believe it will be a more reasonable monthly fee. we can agree to disagree on that one though.

As far as renegotiating current contracts with DirectTV and Comcast i don't see how those deals can be changed until they are up for renewal. As it is Comcast roll out has been painfully slow so far. the piece of crap comcast DVR that i got free for a year isn't even worth using under those terms!

[Johncv]

What would happen if TiVo ended up owning Dish, but not E*? As I understand it E* that owns the satellites not Dish. Without the satellites owning Dish is worthless.

[Videodrome]

Dish should declare bankruptcy, and reopen until a new name. Then build a cheaper better DVR, and see what happens. I miss the replaytv days.

[SullyND]

Dish should declare bankruptcy

All the cool kids are doing it.

[nrc]

TiVo has indicated they're not interested in a licensing deal with Echo and bristled when the court imply they do so. Then again, that could just be more posturing.

I haven't seen that in any of the filings I've read. I've seen TiVo object to what is essentially forced licensing through being paid court ordered rates as Dish continues to drag their feet and delay.

There's really no benefit to TiVo in denying a license deal entirely. But the right to refuse such a deal is essential to getting fair value.

[marksman]

Just think of all the money TiVo could have made off their IP if they had managed their business properly. Sure a billion dollars would be nice, but it could have been so much more. I guess if you screw things up over and over even though you truly created something remarkable and life-changing, you can at least chase down others who steal from you.

I would much rather this be some trivial side note in the TiVo story instead of a potential life line that might determine the future and existence of the company down the road.

[Davis Freeberg]

$500 mil then demand that Dish license ALL of their DVRs, not just those that infringe for say $5 per month each along with running the Tivo platform on them will give Tivo a lot more $$ than just a one time payment of even 1 billion when you include all the recurring revenues Tivo will derive from ad and research from their platform. Tivo will still be able to negotiate with those providers that they don't have deals with. they are not going to get $12-$13/ month from them even with a monster court award to waive! i believe it will be a more reasonable monthly fee. we can agree to disagree on that one though.

Now we are starting to talk the same language. At a $5 licensing fee, we're talking $360 million a year in high gross margin revenue. At $7 though, TiVo would be picking up a little more than $500 million per year. I'm still holding out for the full $12 from a North Korea strategy, but would understand if TiVo found it hard to say no at these levels.

[Wil]

Just think of all the money TiVo could have made off their IP if they had managed their business properly. Sure a billion dollars would be nice, but it could have been so much more.I'm no great defender of the Tivo managements over the years, but maybe it's hard to sell your products when everybody is stealing your products?

[fallingwater]

It's funny, these days the words "$X billion dollars" are being tossed around so much I think we're getting desensitized to how much money it actually is.

Did I say funny, I meant scary.

Dan

What would be both funny and scary would be determining the number of posters on these boards actually running their own businesses, considering the great talent many Board posters apparently believe they have for charting business strategies. :rolleyes:

[ZeoTiVo]

What would be both funny and scary would be determining the number of posters on these boards actually running their own businesses, considering the great talent many Board posters apparently believe they have for charting business strategies. :rolleyes:

If I was running my own business, I would not have time for posting here. :D As it is I value family time over having my own business. My Dad used to say "Owning your own business is great, you get to choose when to put in the 80 hours a week you need to do to make a go of it."

[bkc56]

For the uninformed (like me) who haven't been following all this, could someone summarize in a few sentences just what Dish is doing/copying in their DVRs that infringes on Tivo?

[fallingwater]

Not exactly but here's a good start for you!
http://www.tivocommunity.com/tivo-vb/showthread.php?p=3908579#post3908579

[Davis Freeberg]

For the uninformed (like me) who haven't been following all this, could someone summarize in a few sentences just what Dish is doing/copying in their DVRs that infringes on Tivo?

TiVo actually has a lot of different patents that they could have sued Dish with, but this one relates to the process a DVR uses when it's recording and playing back content. Specifically, Dish isn't allowed to let you watch live television, while a program is recording or while you're playing back a recorded program.

Since most of us like to wait at least 20 minutes for a program to start so that you can fast forward through the commercials or at least like watching recorded TV during prime time while other shows are recording, one can understand why Dish would be reluctant to remove this technology from their DVRs. There is a way for Dish to record multiple copies of the same program and then use the different streams to create a legal playback system, but it involves using high end microchips that you'd tend to find in a computer vs. the low end chips that are in CE gadgets. It also takes up quite a bit more hard drive space.

[dcstager]

Look at how much money they get when some housewife file shares a copyrighted song? The lawsuit could bankrupt Dish. Then Tivo takes over I guess and owns their company and maybe we'll see a whole new company that sells DVRs and Satellite. They'll have the Directv and Dish covered with a Tivo product.

[MichaelK]

For the uninformed (like me) who haven't been following all this, could someone summarize in a few sentences just what Dish is doing/copying in their DVRs that infringes on Tivo?

No expert but the short version from my understanding is that anyone could build a dvr with expensive hardware but tivo figured out a smarter way to do it using much cheaper hardware. Dish has been found to infringe that patent.

More complicated version (so more likely to be wrong from my novice point of view)- is that tivo some how parses or indexes the data to make trick play and other navigation work with much less robust hardware and they patented it that. I believe that dish has been found to be copying that.

[ZeoTiVo]

Specifically, Dish isn't allowed to let you watch live television, while a program is recording or while you're playing back a recorded program.

No expert but the short version from my understanding is that anyone could build a dvr with expensive hardware but tivo figured out a smarter way to do it using much cheaper hardware. Dish has been found to infringe that patent.

More complicated version (so more likely to be wrong from my novice point of view)- is that tivo some how parses or indexes the data to make trick play and other navigation work with much less robust hardware and they patented it that. I believe that dish has been found to be copying that.

yes - it is specifically that process of parsing the data to add add indexes for easier playback with cheaper hardware. DISH was found to have infringed the software and hardware in a lower court in TX but on appeal the hardware part was said to have used the wrong legal test to determine infringement and was set aside for the lower court to use the correct legal test. Tivo chose to just go forward with the software infringement to keep things rolling. TiVo could go abck and pick up the hardware infringement part again if it desires to.

bottom line - Dish or anyone else could have a DVR that plays back while recording - they just can not do it the same way TiVo does.

[samo]

If I was running my own business, I would not have time for posting here. :D As it is I value family time over having my own business. My Dad used to say "Owning your own business is great, you get to choose when to put in the 80 hours a week you need to do to make a go of it."
There is no problem with running business and have quality family time. You just have to do it right. I'm running 4 businesses and have plenty of time to post here and for my family. Key word - "Good employees" :)

[samo]

What would be both funny and scary would be determining the number of posters on these boards actually running their own businesses, considering the great talent many Board posters apparently believe they have for charting business strategies. :rolleyes:
Free advise to the billionaires or to the company that seeks billion dollars in damages on the Internet forum is not scary - it is just funny, perhaps stupid.