TiVo wins court ruling over Dish

Stock jumps 62% following latest decision

A federal appeals court has handed TiVo another victory in its long-running patent feud with Dish, one that was so significant that it propelled its stock 62% higher on Thursday.

The latest decision in the 6-year-old case determined that a Texas court was correct when it declared Dish was violating a permanent injunction against DVRs that infringe TiVo's patents.

TiVo says that the ruling paves the way for it to receive another $300 million. That's on top of the more than $100 million Dish has already paid TiVo.

Plus, says TiVo, since the $300 million only covers Dish's use of patent-infringing DVRs through July 1, it will pursue further damages covering the past eight months, which one analyst said could be worth another $320 million.

The thought of TiVo possiby collecting $620 million -- and of Dish being forced to now pay a recurring licensing fee to TiVo -- had investors snapping up TiVo stock on Thursday. In trading that was 40 times its usual volume, TiVo shares leapt $6.32 to $16.53, a 52-week high. Dish shares dropped $1.12 to $20.59.

Dish had maintained that in the midst of the trials, hearings and appeals -- most of which were decided in TiVo's favor -- it had delivered new DVR software to the infringing DVRs. Not good enough, said two members of a three-judge panel, because such design-arounds should be approved by courts beforehand.

Dish said it will seek an en banc review by the full federal circuit and that it will propose a new design-around to the district court for approval. It also said that, "at this time," its DVR customers aren't impacted.

Analyst Tony Wible of Janney Montgomery Scott predicted that Dish has only 30 days to land a licensing deal with TiVo or risks having to shut down its DVRs. He figures, since Dish has lost its leverage, a sizable $3 per Dish DVR fee isn't out of the question. As many as 8 million Dish subscribers use DVRs that infringe TiVo patents.

Wible told clients Thursday to keep buying TiVo stock, which he thinks could rise as high as $26.50 a share, depending on how things play out in the next three months or so.

In August, TiVo also sued AT&T and Verizon claiming the DVRs their customers use for U-verse and FiOS, respectively, infringe TiVo's patents.
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