Dish Network and its sister company EchoStar must cough up an extra $200 million to TiVo for continuing to offer DVR functionality in their set-top boxes after being slapped with a court injunction.
The award comes after TiVo successfully argued to a Texas judge in June that EchoStar was in contempt of an order to disable its digital video recording technology that allegedly violates a TiVo patent.
After Echo had lost the original infringement case filed by TiVo in 2004, the company tried reprogramming its set-top boxes with a workaround for the disputed technology. But the court ruled that EchoStar's changes weren't suitably different to avoid the injunction.
TiVo then argued it was entitled to all of EchoStar's DVR profits made during the period it was in contempt of the injunction - a figure TiVo estimated is at least $974.5m.
EchoStar countered that it had acted in good faith to redesign the set-top boxes and that sanctions are unwarranted in the case. It said any harm to TiVo would be fully compensated by a jury's previously decided infringement fine of $1.25 per customer per month, for a total of $114.8m extra damages.
On Friday, US District Judge David Folsom said he was unconvinced by either party's suggested awards: "On the one hand, EchoStar's suggested $1.25 royalty rate is inadequate. It would merely extend the jury's royalty over the contempt period, effectively turning this Court's injunction into a compulsory license," the judge said.
"On the other hand, TiVo's suggested disgorgement of nearly $1 billion is unreasonable under the circumstances of the case," he added.
Instead, Folsom decided a rate of $2.25 per DVR subscriber per month was appropriate, for an estimated total of $192.7m. Combined with the original damages, Echo must pay TiVo about $390m.
Dish said while it would appeal the ruling, it was pleased the court didn't agree with TiVo's request for a $1bn fine.
EchoStar advertisements ruled 'distasteful'
Judge Folsom also registered his disapproval that Dish Network had begun running an ad campaign touting its DVR service as "better than TiVo" while continuing to violate the TiVo patent.
Folsom called the advertisements "distasteful" in his ruling, but said the company may have genuinely believed in its design-around efforts. ®