EchoStar: ‘Win some, lose some’

EchoStar and sister company Dish Network on April 20 lost the latest round of its long-running litigation with DVR-technology company TiVo. The US Court of Appeals said that EchoStar continued to infringe TiVo’s patents, and found the company in contempt. TiVo’s stock price rocketed by more than 32 per cent, and most analysts agree that the end of the legal battle – which started in 2004 – could now be in sight.

The consensus is that EchoStar’s Dish Network will end up paying damages to TiVo and licensing their technology. “Faced with an imminent shut-down of millions of DVRs, we believe Dish will be faced with a gun-to-the-head settlement,” said Bernstein Research analyst Craig Moffett in a research note. Moffett suggested that shutting down and replacing older EchoStar set-top boxes could cost the broadcaster $3 billion.

Naturally, Dish Network said it would be seeking a further review of the case, and a stay of the injunction. Indeed, its decision may not be so foolish given that the Appeal Court is asking the lower court to reconsider how it reached its decision, and specifically whether Dish’s ‘work-around’ solution still continues to infringe TiVo’s patents.

Meanwhile, in another court (in San Diego) Dish Network won a $214.9 million judgement against Viewtech Inc and the company’s founder Jung Kwak. Kwak is currently serving 18 months in jail having pleaded guilty to charges related in hacking Dish’s encryption systems. Judge Roger Benitez said Viewtech’s sale of more than one million code-cracking satellite boxes left him no choice but to order the company to pay the massive amount, since the Digital Millennium Copyright Act calls for statutory damages between $200 and $2,500 for each piracy device sold. Viewtech is bankrupt, and the court permitted Dish to seize Kwak’s assets.

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