The Virginia Business Litigation Blog
TiVo won its patent infringement case against EchoStar, DISH, and affiliated companies back in 2006, obtaining a ruling that EchoStar’s digital video recorder (“DVR”) violated certain claims of U.S. Patent No. 6,233,389, owned by TiVo, and obtaining an injunction against future patent violations. In response to the ruling, EchoStar developed a supposed “workaround.” On June 2nd, 2009, the court held that the workaround did not cure the infringement. The court held them in contempt of court for violating the injunction and again ordered them to stop using TiVo’s technology.
EchoStar, the company behind the DISH Network satellite television service, designs digital video recorders that it provides to customers who subscribe to its satellite T.V. service. TiVo’s ‘389 Patent relates to a similar system that allows for simultaneous storage and playback of television signals from sources such as cable and satellite providers.
At the conclusion of the 2006 trial, the jury found that EchoStar’s DVR receivers infringed nine claims of the ‘389 Patent, either literally or under the doctrine of equivalents. After the verdict, EchoStar and its engineers went to work redesigning their DVR machines to avoid infringing the ‘389 Patent. Two years later, TiVo moved to hold EchoStar in contempt, arguing that the redesigned DVR’s continued to infringe TiVo’s patent.
The seminal case governing contempt proceedings in patent cases is KSM Fastening Systems, Inc. v. H.A. Jones Company, Inc., 776 F.2d 1522 (Fed. Cir. 1985), which held that a contempt proceeding for violation of an injunction issued in a patent case, “while primarily for the benefit of the patent owner, nevertheless, involves also the concept of an affront to the court for failure to obey its order.” The KSM case also held that contempt is to be viewed as a “severe remedy” which should not be employed if there is any doubt with respect to whether the defendant has violated the terms of the injunction.
Despite EchoStar’s allegations that it had changed 5,000 of the 10,000 lines of DVR source code and that it had spent over $700,000 in its redesign efforts (neither allegation of which the court found to be relevant to its analysis), the court found that (1) any differences between the product found earlier to be infringing and the redesigned DVR were “no more than colorable” and that (2) the redesigned DVR machines continued to infringe on TiVo’s patent. (Note: TiVo also pointed out that EchoStar spent much more–approximately $50,000,000–on its “Better than TiVo” advertising campaign, though the court didn’t find that fact particularly relevant, either). Consequently, the court held EchoStar in contempt of its permanent injunction.
The court deferred ruling on monetary sanctions, but expect the eventual award to be substantial. “The harm caused to TiVo by EchoStar’s contempt is substantial,” the court wrote. “EchoStar has gained millions of customers since this Court’s injunction issued, customers that are now potentially unreachable by TiVo.”