EchoStar is in contempt of a permanent injunction against using some of TiVo's technology and must pay the DVR pioneer $103.1 million plus interest, a court ruled Tuesday.
The ruling and harsh rebuke against EchoStar from U.S. District Court Judge David Folsom might lead to Dish Network having to disable millions of customers' DVRs or quickly strike a licensing arrangement with TiVo.
Courts ruled five years ago that EchoStar was infringing TiVo's DVR software technology, and EchoStar paid TiVo—after a few years of legal wrangling—more than $100 million. Since then, EchoStar and Dish have split into two companies, and EchoStar has argued that an injunction ordering it to disable DVRs was immaterial because it already delivered new software to DVRs used by Dish customers.
Folsom saw it differently.
"By not disabling DVR functionality in adjudged receivers that had been placed with end users, EchoStar failed to comply with the plain language of this court's order," he wrote.
The judge noted that EchoStar had an opportunity to ask the court to modify its order but did not do so.
"Instead of requesting review of this court's order by itself or another court, EchoStar merely ignored this court's order because it subjectively believed it to be improper or overly broad," Folsom wrote. "This cannot be allowed."
EchoStar said Tuesday that it will ask for a stay of the injunction, as it has successfully in the past. The satellite provider added that it has "strong grounds for appeal" and assured Dish customers with DVRs that they "are not immediately impacted by these recent developments."
TiVo shares soared as much as 40 percent in after-hours trading when the judge's opinion was made public. Dish shares sank 7 percent, and EchoStar shares were unchanged.
TiVo argued that it deserves $220.3 million from EchoStar for the period during which the most recent stay was in effect; EchoStar countered with an award of $16.4 million.
In getting to his $103.1 million figure, Folsom established a royalty rate of $1.25 a month for the 20 months EchoStar should pay TiVo for each of about 4.1 million infringing DVRs. Interest could push the award to $190 million.
"EchoStar has escaped this court's injunction for over two years, and further delay will be manifestly unjust to TiVo and cause TiVo substantial harm," Folsom wrote.
He added that EchoStar "is required to inform this court of any future attempts to design around" TiVo's patent.