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TiVo, Dish Network and EchoStar settle dispute

May 2, 2011 |  8:34 am

Dish Network Corp. and its former EchoStar division agreed to pay TiVo $500 million to settle a long-running patent dispute involving digital video recorder technology.

Under terms of the settlement, Dish Network and EchoStar agreed to make an initial payment of $300 million, with the remaining sum distributed in six equal payments of $33 million through 2017. The companies agreed to dismiss any litigation connected with the dispute.

"There have been all kinds of questions and uncertainty as to whether our intellectual property had any real value," said TiVo Chief Executive Tom Rogers in an interview. "We have clearly answered that question."

News of the deal prompted an immediate bump in TiVo's stock price, which by midday EDT has been trading at more than $10 a share.

TiVo has aggressively sought to protect its pioneering DVR technology in the courts. TiVo sued Dish Network and EchoStar in 2004, claiming the companies infringed on its "Time Warp" patent, which relates to the technology that allows viewers to record, replay and fast-forward television programs. The company also has brought suits against AT&T and Verizon Communications Inc.

As part of the settlement, TiVo granted Dish Network and EchoStar, a maker of set-top boxes, a license to use the Time Warp technology.  An April 20 court ruling would have required Dish and EchoStar to disable the boxes and pay $90 million in damages to TiVo.

Rogers said TiVo will look to play a role in helping Dish Network promote the Blockbuster digital video service. The nation's second-largest satellite television provider completed its acquisition of the struggling chain last week, and Monday named a new president, Michael Kelly, Dish Network's former executive vice president of commercial services.

"[Dish Network] wants to develop [Blockbuster] into a major entertainment/digital franchise," Rogers said. "We had an existing relationship, providing Blockbuster to TiVo subscribers."

Ending the litigation allows Dish Network to focus on building its business. The pay-TV provider said it had gained approximately 58,000 net subscribers during the quarter that ended March 31, bringing the total number to 14.2 million.

-- Dawn C. Chmielewski