TiVo Does the Time Warp Again

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Justice can be slow, but it's finally smiling kindly on TiVo's (Nasdaq: TIVO  ) intellectual property.

The U.S. Patent and Trademark Office has reaffirmed TiVo's patent infringement claims against EchoStar (Nasdaq: SATS  ) , once again opening the door for a nine-figure reward in TiVo's favor.

The case's chewy center is TiVo's Time Warp patent, which is essentially at the heart of any time-shifting digital video recorder. TiVo partners Comcast (Nasdaq: CMCSA  ) and DirecTV (NYSE: DTV  ) have opted to license the technology through TiVo, but DISH Network's (Nasdaq: DISH  ) original parent has defiantly marketed its own DVR without TiVo's blessing.

This is a big deal for TiVo, and yesterday's 10% late-afternoon pop on the news confirms the magnitude. If TiVo can't enforce its intellectual property, cable and satellite television providers may choose to walk away. On its own, TiVo is struggling to retain its subscriber base. TiVo's audience has shrunk from 3.1 million to 2.4 million accounts over the past year, and it has rattled off six straight quarterly losses.

Yesterday's patent decision is final. EchoStar can't appeal the ruling. However, the U.S. Court of Appeals for the Federal Circuit must still enforce the injunction against EchoStar.

EchoStar is likely to pay, or at the very least settle with TiVo. Nearly every legal decision has gone in TiVo's favor during this lengthy process. Getting this decision out of the way will provide comfort for DISH Network customers who fear disruptions in their DVR service. Beyond the monetary booty, TiVo can also use the opportunity to focus on growing its subscriber base.

TiVo boxes are popular with couch potatoes who want to zap through commercials during pre-recorded shows. The company probably wishes that it could have fast-forwarded through the years of legal wrangling, but at least all that waiting seems to have paid off.

What will it take for TiVo to win back its mojo? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz thinks life is too short to not fly past unwanted commercials on TV. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2010, at 3:18 PM, ndabunka wrote:

    It's not JUST DISH network that is impacted. The judgment was also against AT&T and Verizon for variations they have illegally deployed, right? When is the Court of Appeals suppose to make this one "really" final? Yes, I am a TIVO stock holder.

  • Report this Comment On October 08, 2010, at 10:56 AM, superinvestorman wrote:

    As a long time TIVO owner, and a huge fan of the Rocky Horror Picture Show, I just thought that headline was a riot.

    I am also a long time TIVO stockholder and am really looking forward to seeing the government punish those who steal others technology. Why would people be willing to spend time and resources developing new products if anyone can come along and steal their work?

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