Appeals Court Affirms That Dish Must Disable DVRs In TiVo Case

The US Court of Appeals for the Federal Circuit upheld a lower court's ruling that Dish Network must disable its DVRs -- found to have infringed on a key patent owned by TiVo -- and must pay sanctions for violating prior injunctions to disable the equipment, as the parties' seven-year legal fight appears to be nearing an end. However, the court -- which considered the appeal en banc, as opposed to by a three-judge panel -- vacated the Texas district court's finding of contempt of the infringement provision of the permanent injunction, and vacated in part the damages awarded to TiVo for EchoStar's continued infringement.

"Faced with an imminent shut-down of millions of DVRs (the precise number has never been disclosed), we believe Dish will be faced with a gun-to-the-head settlement requirement," Sanford Bernstein senior analyst Craig Moffett wrote in a research note. Analysts have previously estimated Dish would be forced to pay a licensing fee of $1.75 to $3 per DVR in a settlement with TiVo. The total cost to Dish of disabling and replacing the infringing DVRs could run as high as $3 billion, according to Moffett, although he added that it's possible Dish has replaced some of the infringing DVRs already which would lower that figure.