Dish/Echostar announce settlement of patent dispute!

Discussion in 'TiVo Coffee House - TiVo Discussion' started by snedecor, May 2, 2011.

  1. May 2, 2011 #1 of 37
    snedecor

    snedecor Member

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    Looks like Charlie got off cheap...

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    TiVo, DISH Network and EchoStar Announce Half-Billion Dollar Settlement of Patent Litigation

    ALVISO, CA and ENGLEWOOD, CO, May 02, 2011 (MARKETWIRE via COMTEX) --

    TiVo Inc. (NASDAQ: TIVO), DISH Network Corporation (NASDAQ: DISH), and EchoStar Corporation (NASDAQ: SATS) announced today that they have settled all of their ongoing patent litigation.

    Under the terms of the settlement, DISH Network and EchoStar agreed to pay TiVo $500 million, including an initial payment of $300 million with the remaining $200 million distributed in six equal annual installments between 2012 and 2017. TiVo, DISH Network and EchoStar agreed to dismiss all pending litigation between the companies with prejudice and to dissolve all injunctions against DISH Network and EchoStar.

    The parties also granted certain patent licenses to each other. TiVo granted DISH Network a license under its Time Warp patent (US Pat. No. 6,233,389) and certain related patents, for the remaining life of those patents. TiVo also granted EchoStar a license under the same '389 patent and certain related patents, for the remaining life of those patents, to design and make certain DVR-enabled products solely for DISH Network and two international customers. EchoStar granted TiVo a license under certain DVR-related patents for TiVo-branded, co-branded and ingredient-branded products.

    "We have tremendous respect for TiVo's management, and we have always said that regardless of the outcome of the case, there were many ways that we could work together with TiVo," said Charlie Ergen, Chairman and CEO of DISH Network. "The results of TiVo's formidable intellectual property enforcement program speak for themselves, and consequently, we are pleased to put this litigation behind us and move forward. Additionally, we believe that our agreement with TiVo provides us a competitive advantage as one of the few multichannel operators with rights to operate under TiVo's Time Warp patent, which ultimately will allow us to enhance the performance of our award-winning DVRs. We look forward to continuing to offer DISH Network customers the most choices in video service."

    "We are extremely pleased to reach an agreement with DISH Network and EchoStar which recognizes the value of our intellectual property," said Tom Rogers, president and CEO of TiVo. "The compensation from this settlement, including the resulting reduction in legal expenditures, puts TiVo in an enviable financial and strategic position. This settlement, which brings the total compensation paid by DISH Network for use of TiVo's '389 patent family to over $600 million, demonstrates the significant return afforded to our shareholders by diligent enforcement of TiVo's intellectual property rights. Those efforts will aggressively continue with other parties."

    In addition, TiVo will play a role in helping DISH Network promote the Blockbuster digital video service. Ergen added, "We are excited to work with TiVo to help develop our Blockbuster video service. Resolving the patent infringement case allows us to further engage with TiVo on a variety of exciting strategic initiatives, like Blockbuster, where we are uniquely positioned to collaborate."

    About TiVo Inc. Founded in 1997, TiVo Inc. (NASDAQ: TIVO) developed the first commercially available digital video recorder (DVR). TiVo offers the TiVo service and TiVo DVRs directly to consumers online at www.tivo.com and through third-party retailers. TiVo also distributes its technology and services through solutions tailored for cable, satellite, and broadcasting companies. Since its founding, TiVo has evolved into the ultimate single solution media center by combining its patented DVR technologies and universal cable box capabilities with the ability to aggregate, search, and deliver millions of pieces of broadband, cable, and broadcast content directly to the television. An economical, one-stop-shop for in-home entertainment, TiVo's intuitive functionality and ease of use puts viewers in control by enabling them to effortlessly navigate the best digital entertainment content available through one box, with one remote, and one user interface, delivering the most dynamic user experience on the market today. TiVo also continues to weave itself into the fabric of the media industry by providing interactive advertising solutions and audience research and measurement ratings services to the television industry. www.tivo.com

    TiVo and the TiVo Logo are trademarks or registered trademarks of TiVo Inc. or its subsidiaries worldwide. Copyright 2011 TiVo Inc. All rights reserved. All other trademarks are the property of their respective owners.

    About DISH Network DISH Network Corporation (NASDAQ: DISH), through its subsidiary DISH Network L.L.C., provides more than 14.19 million satellite TV customers, as of March 31, 2011, with the highest quality programming and technology with the most choices at the best value, including HD Free for Life. Subscribers enjoy industry-leading customer satisfaction, the largest high definition line-up with more than 200 national HD channels, the most international channels, and award-winning HD and DVR technology. DISH Network Corporation is a Fortune 200 company. Visit www.dish.com.

    About EchoStar Corporation EchoStar Corporation (NASDAQ: SATS), provides equipment sales, digital broadcast operations, and satellite services that enhance today's digital TV lifestyle, including products from Sling Media, Inc., a wholly owned subsidiary. Headquartered in Englewood, Colo., EchoStar has more than 25 years of experience designing, developing and distributing award-winning television set-top boxes and related products for pay television providers and is creating hardware and service solutions for cable, Telco, IPTV and satellite TV companies. EchoStar includes a network of 10 digital broadcast centers and leased fiber optic capacity. EchoStar also delivers satellite services through 10 satellites and related FCC licenses. For more information, please visit www.EchoStar.com.

    This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements by TiVo, DISH Network, and EchoStar relate to, among other things, TiVo's future aggressive enforcement of its intellectual property against other parties and the promotion and marketing of the Blockbuster digital video service by TiVo and DISH Network as well as other possible strategic initiatives between TiVo and DISH Network in the future. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "believe," "expect," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in development, competitive service offerings and lack of market acceptance, as well as the other potential factors described under "Risk Factors" in each company's public reports filed with the Securities and Exchange Commission, including each company's most recent annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Each company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. Each company disclaims any obligation to update these forward-looking statements.

    SOURCE: TiVo
     
  2. May 2, 2011 #2 of 37
    ghuido

    ghuido New Member

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  3. May 2, 2011 #3 of 37
    parzec

    parzec Wizard of Oz

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    I thought it was $300 Millions upfront with $200 Million paid out over time.
     
  4. May 2, 2011 #4 of 37
    aaronwt

    aaronwt UHD Addict

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    So did Dsih buying Blockbuster become a catalyst for this in some way? Since Blockbuster is available on Series 3 and Series 4 TiVos.
     
  5. May 2, 2011 #5 of 37
    morac

    morac Cat God TCF Club

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    While TiVo did get some money out of this (minus whatever lawyer fees they've been paying for the last 8 years), it doesn't really feel like a win for TiVo since it's a one time boost.

    Most likely most of it will be pooled into funding the other pending law suits with the remaining to keep the company afloat since subscriber revenue is way down.
     
  6. May 2, 2011 #6 of 37
    rifleman69

    rifleman69 Member

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    TiVo lost out, they realized they couldn't afford to go much longer with Charlie's stall tactics and settled for much less.
     
  7. May 2, 2011 #7 of 37
    Bierboy

    Bierboy Seasoned gas passer

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    Aren't the patents some kind of victory for TiVo?
     
  8. May 2, 2011 #8 of 37
    Mike Pfeifer

    Mike Pfeifer What?

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    There's been a few job ads on twitter from Tivo recently, so hopefully it means they are investing in the advancement of the company and its products now.
     
  9. May 2, 2011 #9 of 37
    rainwater

    rainwater Active Member

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    TiVo got validation of their patents with Dish/Echostar forced to do a cross patent deal. This will help TiVo in the long run if they pursue this against other manufacturers.
     
  10. morac

    morac Cat God TCF Club

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    Kind of. TiVo is basically getting $300 million in damages for DISH's use of TiVo's patents up till now (that was awarded previously as part of the law suit) and $200 from DISH until they expire in 2017. That's about $33.3 million a year or approximately $1.75 per DISH subscriber per year. But in return, TiVo will basically give DISH free advertising.


    From what I can tell from the press releases here's what TiVo and DISH each get.

    TiVo gets:
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    $500 million ($300 million up front and remaining $200 over course of the next 6 years)
    Use of DISH's patents (whatever those are as they aren't listed)

    DISH gets:
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    Use of TiVo's Timewarp patent plus related patents
    Advertising as TiVo will promote the Blockbuster digital video service (via gold stars I guess)
     
  11. morac

    morac Cat God TCF Club

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    Well TiVo's patents have been validated a number of times during the course of the law suit already so that really had nothing to do with the settlement. It was the recent ruling that Dish violated the injunction that likely pushed the settlement. Since Dish and TiVo settled, the suit never went to conclusion so it was never determined how many of Dish's DVRs actually violated the patent. I remember reading it would cost Dish around $500 million to replace all the existing violating DVRs (not including the $300 million they owed TiVo) so Dish actually ended up making out better by settling with TiVo.

    As for pursuing other manufacturers, TiVo's patents expire in 2018. If the other law suits draw out as long as the TiVo/Dish one, the patent will actually expire before they conclude. Assuming they don't settle, the other companies may end up paying damages, but they won't end up paying licensing fees. Also remember Microsoft is counter-suing TiVo so the two might just agree to settle with a cross license agreement.
     
  12. orangeboy

    orangeboy yes, I AM orangeboy!

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    To me, it seems this settlement is an anticlimactic end to a long, drawn out process.
     
  13. morac

    morac Cat God TCF Club

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    What kind of ending were you hoping for? A fight to the death between Ergen and Rogers? :p
     
  14. orangeboy

    orangeboy yes, I AM orangeboy!

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    I don't know if I have an answer to that. $500 million is certainly a lot of money, but I thought the number would be higher.
     
  15. rainwater

    rainwater Active Member

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    Part of that deal is the licensing of Dish/Echostar's patents which certainly has value for TiVo. You can't just look at the cash value in this deal.
     
  16. orangeboy

    orangeboy yes, I AM orangeboy!

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    I just listened to the conference call that discusses the settlement, and the patents that TiVo is (now) licensed for relate only to Dish's DVR "elements". They may indeed hold some value, but not nearly as much as Dish's Sling technology. I did learn however that Dish will be licensing the Time Warp (and family) patents for all current and future DVRs. I was under the impression that the license would only be for those DVRs that infringed.
     
  17. trip1eX

    trip1eX imo, afaik, feels like to me, *exceptions, ~aprox

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    It's ~50% of Tivo's market cap.
     
  18. stevel

    stevel Dumb Blond TCF Club

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    The license simply means that TiVo won't sue Dish for infringement, not that Dish will deliberately include any TiVo technology in their DVRs. This is a very common sort of agreement between companies.
     
  19. Dan203

    Dan203 Super Moderator Staff Member TCF Club

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    I'm just glad it's over. Hopefully this means TiVo will get back to actually writing software instead of spending all their money on lawyers.

    Dan
     
  20. nrc

    nrc Cracker Soul

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    Given how much TiVo's position appeared weakened by the latest ruling this seems like a pretty good outcome for TiVo. They were at risk of getting very little additional return on their litigation the way things stood. Instead they got a substantial cash settlement, a cross-licensing deal, and they're free to pursue their other cases with no further concerns from Dish.
     

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