In the latest stipulation TiVo admitted they knew the design around since 2006, they never said they only knew the design around was for just the "new" DVRs, because E* had always told them the design around was for all the 8 named DVRs.
To eliminate any need for further discovery relating to such topics, TiVo stipulates that TiVo became aware of EchoStar’s design-around efforts on or about the date the first EchoStar Statement was made, specifically August 9, 2006; and TiVo became aware of other EchoStar Statements on or about the dates they were made, specifically November 7, 2006, March 1, 2007, May 10, 2007, August 9, 2007, November 9, 2007, February 26, 2008 and May 12, 2008.
August 9, 2006
November 7, 2006
March 1, 2007
May 10, 2007
August 9, 2007
November 9, 2007
February 26, 2008
May 12, 2008
From the 9 November 2007 quarterly 10-Q filing:
During April 2006, a Texas jury concluded that certain of our digital video recorders, or DVRs, infringed a patent held by Tivo. The Texas court subsequently issued an injunction prohibiting us from offering DVR functionality. A Court of Appeals has stayed that injunction during the pendency of our appeal.
In accordance with Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies” (“SFAS 5”), we recorded a total reserve of $94 million in “Litigation expense” on our Condensed Consolidated Statement of Operations to reflect the jury verdict, supplemental damages and pre-judgment interest awarded by the Texas court through September 8, 2006. Based on our current analysis of the case, including the appellate record and other factors, we believe it is more likely than not that we will prevail on appeal. Consequently, we are not recording additional amounts for supplemental damages or interest subsequent to the September 8, 2006 judgment date. If the verdict is upheld on appeal, the $94 million amount would increase by approximately $35 million through the end of 2007.
If the verdict is upheld on appeal and we are not able to successfully implement alternative technology (including the successful defense of any challenge that such technology infringes Tivo’s patent), we will owe substantial additional damages and/or license fees and we could also be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers. In that event we would be at a significant disadvantage to our competitors who could offer this functionality and, while we would attempt to provide that functionality through other manufacturers, the adverse affect on our business could be material.
On July 30, 2007, the Patent and Trademark Office (“PTO”) issued a “final office action” rejecting as invalid all of the hardware claims that Tivo asserted against us at trial and which the jury found we had infringed. The PTO did not reject the two software claims that Tivo asserted against us at trial and which the jury found we had infringed. Tivo can appeal the final office action. We believe that we do not infringe any of the claims asserted against us.
What a difference three months makes. On the 9 November 2007 report, there was no mention of a design around, yet it was already completed to the adjudged receivers. On the 26 February 2008 report, DISH/SATS finally mentions that the design around is in place on all DVR's, almost 10 months after the last of the adjudged DVR's received a design around.
From the 26 February 2008 yearly 10-K filing:
On January 31, 2008, the U.S. Court of Appeals for the Federal Circuit affirmed in part and reversed in part the April 2006 jury verdict concluding that certain of our digital video recorders, or DVRs, infringed a patent held by Tivo. In its decision, the Federal Circuit affirmed the jury’s verdict of infringement on Tivo’s “software claims,” upheld the award of damages from the district court, and ordered that the stay of the district court’s injunction against us, which was issued pending appeal, will dissolve when the appeal becomes final. The Federal Circuit, however, found that we did not literally infringe Tivo’s “hardware claims,” and remanded such claims back to the district court for further proceedings. We are appealing the Federal Circuit’s ruling.
In addition, we have developed and deployed ‘next-generation’ DVR software to our customers’ DVRs. This improved software is fully operational and has been automatically downloaded to current customers (the “Design-Around”). We have formal legal opinions from outside counsel that conclude that our Design-Around does not infringe, literally or under the doctrine of equivalents, either the hardware or software claims of Tivo’s patent.
In accordance with Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies” (“SFAS 5”), we recorded a total reserve of $128 million in “Litigation expense” on our Consolidated Balance Sheets to reflect the jury verdict, supplemental damages and pre-judgment interest awarded by the Texas court. This amount also includes the estimated cost of any software infringement prior to the Design-Around, plus interest subsequent to the jury verdict.
If the Federal Circuit’s decision is upheld and Tivo decides to challenge the Design-Around, we will mount a vigorous defense. If we are unsuccessful in subsequent appeals or in defending against claims that the Design-Around infringes Tivo’s patent, we could be prohibited from distributing DVRs, or be required to modify or eliminate certain user-friendly DVR features that we currently offer to consumers. In that event we would be at a significant disadvantage to our competitors who could offer this functionality and, while we would attempt to provide that functionality through other manufacturers, the adverse affect on our business could be material. We could also have to pay substantial additional damages.
It was because the Court of Appeals upheld the verdict in late January 2008 that DISH/SATS finally admitted the design around was implemented on all DVR's.
Does anyone think TiVo will use DISH/SATS SEC filings as the basis for their knowledge of the design around, and then use all those filings to prove DISH/SATS was not forthcoming about the design around?
Please stop trying to revise history.
That is wholly incorrect.
In fact the current judge's order is based on TiVo's proposed modifications to the judge's initial bench order. And again TiVo never proposed to separate the DVRs placed in use before the injunction from the ones placed after the injunction.
From the filing before the 4 September 2008 status hearing, TiVo mentions that those sold with new software can also be found in contempt, which means there was a dividing line between those that had old software and those that had new software. In the lead-up to the 30 May 2008 status hearing, TiVo had also mentioned they were going after the install base which had the offending software, of course separating that from versions being sold now. And in the motion for damages, there are three distinct classes of each model which TiVo has requested compensation: those adjudged as infringing before 8 September 2006 which contained the old software, those which received the old software after 8 September 2006 and those which only ever received the new software.
Judge Folsom's order is to determine the status of colorable difference and continuing infringement of eight models of DVR's. There obviously is a dividing line as that means DVR's sold with the new software were never adjudged, yet these are being evaluated as well.
Again, please stop trying to revise history.
Edited by Greg Bimson, 07 February 2009 - 04:09 PM.