EchoStar DVR service still in play

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NEW YORK -- Shares of DVR pioneer TiVo Inc. fell sharply in after-hours trading Tuesday following a court ruling that allows satellite TV provider EchoStar Communications to continue to provide DVR service to customers while it appeals a patent-infringement verdict that TiVo won this year.

The U.S. Court of Appeals for the Federal Circuit on Tuesday granted EchoStar's request to stay a permanent injunction in a DVR patent-infringement case that TiVo won in April. The original patent ruling had included an order that EchoStar stop selling DVR service and shut down service for its approximately 4 million customers.

In August, EchoStar won a temporary stay of that ruling, and both sides ended up filing arguments for and against that stay. Tuesday's ruling further put the DVR order on hold until a ruling in the patent-infringement appeals process.

"We are confident that the jury's decision in TiVo's favor will be upheld once the Federal Circuit has the opportunity to review the entire record in this case," TiVo said Tuesday. "It is important to note that most injunctions in patent cases are stayed pending appeal, and the appeal itself will be decided on a totally different standard of review."

Meanwhile, EchoStar said it is "pleased the federal court found that EchoStar has a 'substantial case on the merits' and blocked the Texas decision for the duration of the appeal." It added that the news "reinforces our belief that the Texas court made significant errors during the trial process, and we look forward to complete vindication of our position."

After closing down 0.1% at $7.52 in regular trading, TiVo shares tanked as much as 6%-plus in after-hours following Tuesday's legal update.
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