It's good to see TiVo (NASDAQ:TIVO) flex its patent-saddled biceps every once in a while. The digital video recording pioneer won a permanent injunction against Dish Network parent EchoStar (NASDAQ:DISH), with the U.S. District Court ordering EchoStar to pay TiVo roughly $74 million in damages and cease from selling DVRs in this country that infringe on TiVo's Time Warp patent.
That patent, issued to TiVo five years ago, covers many of the processes that we've come to associate with DVRs, including pausing live television, as well as simultaneously storing and playing back programs.
The awarded damages are nice, but the implications are even nicer.
Shares of TiVo have been stuck in the single digits for years as investors grapple with the percolating potential of DVRs, which is offset by red ink because of costly hardware subsidizing by TiVo, as well as by the attack of the clones. Even a company like DirecTV (NYSE:DTV) that was once the ideal partner in populating homes with TiVo systems eventually resorted to pitching its own knock-off model.
TiVo may be one of the coolest recommendations in the Motley Fool Stock Advisor newsletter service, but its pitiful performance has also made it a major laggard on the otherwise buoyant scorecard.
This morning's announcement may not change that overnight, but it will give clones more reasons to worry. Cable and satellite television giants like Comcast (NASDAQ:CMCSA) and DirecTV already have licensing deals in place where folks can opt for TiVo functionality on their cookie-cutter DVRs, with TiVo raking in royalties. More players may lean that way.
TiVo has always been the only brand name that matters in DVR technology, even if only a shrinking majority of new DVR installations are actual TiVo boxes. If this is the kind of ruling that inspires more companies to play nice with TiVo and provide it with the means to cash in on high-margin licensing royalties, maybe we won't be that far away from seeing TiVo in the double digits again after all.
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Longtime Fool contributor Rick Munarriz has been a TiVo user for ages. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Rick does not own shares in any of the companies in this story. The Fool has a disclosure policy.
