TiVo Inc. v. EchoStar Corp.: TiVo Wins Five Year Battle Over Patent Infringement with EchoStar

TiVo Inc. v. EchoStar Corp., No. 2009-1374 (E.D. Tex., March 4, 2010)

Slip Opinion

The United States Court of Appeals for the Federal Circuit affirmed a decision by the United States District Court for the Eastern District of Texas, which had found EchoStar in contempt of a permanent injunction order that was issued by the court in an earlier judgment in which two types of EchoStar receivers were found to infringe on TiVo’s time-shift technology patent. The order had required EchoStar “to stop making, using, offering to sell, and selling the receivers”  and “to disable the DVR functionality in existing receivers, with the exception of select receivers that had already been placed with its subscribers.”

The Federal Circuit held that the district court did not abuse its discretion in holding contempt proceedings for adjudicating the continued infringement of EchoStar’s redesigned receivers, nor did it commit clear error in finding continued infringement by these receivers. It also held that the district court’s injunction was clear enough to provide reasonable notice of the order to disable the DVR function in all infringing receivers, and upheld the provision of the injunction requiring EchoStar to notify the court of additional redesign attempts and to seek approval before executing a design-around.

Bloomberg and the Associated Press provide overviews of the case.  Gordon Patent Cases summarizes some of the legal issues in the decision, and Beta News provides a detailed comparison of the majority and dissenting opinions.

In holding that a contempt proceeding was proper and that EchoStar had once again infringed on TiVo’s patented technology, the Federal Circuit conducted a two part analysis. First, it affirmed the district court’s decision that a contempt proceeding was the appropriate forum due to the lack of any “substantially open questions of infringement” that would render a new trial necessary. The court noted that the “presence of a new issue does not necessarily preclude the district court from making use of a contempt proceeding to determine continued infringement”, indicating that the redesigned products do not have to allegedly infringe in the same way as was previously found in order for a contempt proceeding to be appropriate. The court also rejected EchoStar’s good faith argument, stating that “a lack of intent alone cannot save an infringer from a finding of contempt”.

Second, the court upheld the district court’s finding that EchoStar violated the order due to its failure to completely disable the DVR functionality on eight of its existing receivers and due to the failure of its two modifications to render the redesigned product different enough to avoid infringement. Specifically, the court rejected EchoStar’s argument that it had eliminated the infringing parsing function as well as the blocking function because the receivers contained other components that would continue to infringe on TiVo’s patented DVR methods. The Federal Circuit reviewed the district court’s factual findings of continued infringement based on a standard of clear error and found that there was “clear and convincing evidence” that showed that both EchoStar receivers continued to infringe on TiVo’s patent technology.

In finding EchoStar in violation of the disablement provision, the court dismissed EchoStar’s assertions regarding the manner of disablement as irrelevant and found that EchoStar had “ample notice of what it had been ordered to do”. The court also declined to consider whether the scope of the injunction regarding the disablement was overbroad, because EchoStar failed to appeal the injunction before it was found to be in contempt. The district court had also amended the injunction order to require EchoStar to seek preclearance of any future redesign attempts. The Federal Circuit upheld this amendment, stating that district courts should be given wide discretion in “fashion[ing] . . . injunction[s] tailored to prevent or remedy infringement”.

In his dissent, Judge Rader held that EchoStar’s “good faith design-around effort” deserved a new trial to litigate the infringement question. To support his holding, Rader argued that the court’s injunction was overly broad and ambiguously worded. He also emphasized the differences between theories of infringement, claim constructions, parties’ positions, and structures of the original and redesigned receivers.

This decision resolves a five year dispute between TiVo and EchoStar over time-shift patent infringement. The court’s holding will substantially restrict EchoStar’s ability to compete in the field of time-shift technology as well as boost TiVo’s competitive advantage and control of the time-shift market.