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TiVo Inc. faces the possibility of having to defend a multimillion-dollar verdict it won in a patent infringement suit against EchoStar Communications Corp. while defending the validity of its patent on digital video recording technology. On April 13, a federal jury in Marshall, Texas, awarded California-based TiVo nearly $74 million after finding that Colorado-based EchoStar, the parent company of the DISH Network satellite TV provider, had infringed on TiVo’s “multimedia time warping system.” In May 2001, the U.S. Patent and Trademark Office issued TiVo a patent on the time-warp technology for digital video recorders (DVRs) that allows viewers to pause, rewind, and fast-forward live television shows. However, TiVo faces a fight over the validity of its patent. Acting on a request filed last year by EchoStar, the PTO ordered a re-examination of TiVo’s patent on Dec. 15, 2005, according to the Patent Office’s Web site. That is something that happens often, David McCombs, chairman of the State Bar of Texas Intellectual Property Section, says of EchoStar’s request that TiVo’s patent be re-examined. “Re-examination as a strategy in patent litigation is becoming much more common,” says McCombs, a partner in the Dallas office of Haynes and Boone. David Parker, a partner in and head of the intellectual property section at Fulbright & Jaworski in Austin, says some attorneys use that strategy to try to introduce PTO determinations that patents should be re-examined into evidence before a jury. If the request for re-examination is done early enough in litigation, the defense may also persuade the judge to stay the suit, says Parker, who teaches patent strategy as an adjunct professor at the University of Texas School of Law. Parker says a re-examination is one of the few procedures available in the Patent Office through which patent owners, third parties, or the PTO commissioner can raise questions as to whether a patent should have been issued. In the re-examination, which is an administrative proceeding, a hearing officer determines whether the patent is novel with respect to inventions and scientific publications that came before it, called “prior art,” says Parker. If the hearing officer finds a patent is not novel, Parker says, he issues a rejection. The patent owner has an opportunity to file a response and evidence supporting the position that the patent is novel. If unconvinced, the hearing officer will issue a final rejection, which the owner can appeal to the PTO’s Board of Patent Appeals and Interferences. That board, made up of three administrative patent judges, then decides whether to affirm or reverse the hearing officer’s decision, Parker says. The patent owner can appeal the board’s decision to the U.S. Court of Appeals for the Federal Circuit. In January 2004, TiVo filed suit against EchoStar in the U.S. District Court for the Eastern District of Texas in Marshall. EchoStar filed its request for re-examination of TiVo’s patent in October 2005. Parker says EchoStar did not attack all of TiVo’s patent claims in its request for a re-examination. But all of the claims that were the subject of TiVo’s suit against EchoStar are involved in the re-examination, he says. FAVORABLE JURISDICTION Patent attorney David Judson, a Dallas solo practitioner, says the jury’s verdict favoring the plaintiff in TiVo Inc. v. EchoStar Communications Corp. was not unexpected. “It’s a very pro-patent-owner jurisdiction,” Judson says. Sam Baxter, lead counsel for TiVo and a principal in McKool Smith in Marshall, says his client filed the suit in the Eastern District because “they have good, common-sense juries,” and good judges, and because the district is known for its speedy trials. The verdict gives TiVo leverage as it seeks licensing fees from other companies that use its technology, Baxter says. But if the PTO hearing officer invalidates TiVo’s patent claims in the re-examination, TiVo could be unable to seek licensing fees for the technology. Parker says TiVo still would have a patent, but the patent would be much narrower than it is now. In its suit, TiVo had sought $87 million in damages from EchoStar. However, Baxter says, TiVo had a “marking problem.” To win damages in a patent infringement suit, the plaintiff must have marked its product with its patent number. While TiVo had marked some of its products with the patent number, it had not marked all of its products, he says. “I think the jury decided the best thing to do was to be conservative and to start [calculating damages] when we filed the suit,” Baxter says. Harold McElhinny, lead counsel for EchoStar and a partner in Morrison & Foerster in San Francisco, declined comment on the case. In a written statement released April 13, EchoStar calls the jury’s verdict “the first step in a very long process” and says it believes TiVo’s patent is “overly broad” given the technology that existed when TiVo filed its patent. “We believe the decision will be reversed either through post-trial motions or on appeal,” EchoStar says in the statement. While U.S. District Judge David Folsom, who presides over TiVo, could find that the evidence doesn’t support the jury’s verdict, that’s unlikely, says Parker. In his experience, Parker says, judges typically are reluctant to substitute their judgment for the judgment of the jury, which is the fact-finder in a case. Under 35 U.S.C. ��284 and 285, Folsom could triple the award to TiVo because the jury found EchoStar willfully infringed on the patent. Folsom also could grant TiVo’s request for an injunction to prevent EchoStar and its affiliates from using the technology. FAST FORWARD EchoStar could appeal an adverse judgment to the Federal Circuit — the same court where TiVo would have to appeal if the Board of Patent Appeals and Interferences affirms a rejection of TiVo’s patent. Parker says if TiVo appeals the PTO board’s decision in the re-examination process to the Federal Circuit, the court likely won’t decide the issue for at least two years. But the Federal Circuit potentially could hear an appeal of Folsom’s judgment by EchoStar and issue a decision within a year. If that happens, Parker says, TiVo has the advantage. Parker says if the Federal Circuit affirms the judgment in TiVo but ultimately rules against TiVo on its patent, the company still would have an enforceable judgment. “The whole process is a little wacky,” says Matthew Zinn, TiVo’s general counsel. But Zinn says TiVo isn’t concerned about the re-examination of its patent. He says it’s practically automatic that if someone requests a re-examination of a patent, the PTO will conduct the re-examination. Zinn says the Patent Office has said only that it will look at TiVo’s patent. “That doesn’t mean anything,” he says.
Mary Alice Robbins is a reporter for Texas Lawyer , the ALM publication, based in Dallas, in which this article first appeared.

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