Federal Circuit Hints at TiVo-EchoStar Split Decision
Judges pushed a TiVo lawyer well past his time limit, as they asked whether claim language could have prejudiced a jury against EchoStar in the Texarkana, Tex., U.S. District Court. But while hitting TiVo with the most questions in the Thursday oral argument, the Federal Circuit U.S. Appeals Court hinted a split decision was likely, focusing more on the term “separated” than two others disputed by EchoStar and floating questions about an affirm-in-part’s impact on verdict terms.
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EchoStar disputes a lower court’s claim construction for three terms: “separate,” “assemble” and “extracting data from physical data source.” The suit involves technology behind TiVo devices’ record and playback capabilities. In district court, TiVo alleged EchoStar’s combo PVR/satellite receiver infringed its patent for time-shifting and one for a method of recording one show while watching another. An April 2006 decision awarded TiVo $74 million and enjoined the EchoStar device. EchoStar appealed to the Federal Circuit and won a temporary stay.
The hearing centered on the lower court’s definition of “separate.” EchoStar lawyer Donald Dunner argued that the accepted claim construction prejudiced a jury into deciding an EchoStar device using a Broadcom chip infringed a TiVo patent. The definition should have specified that the TiVo invention sends two MPEG streams, one audio and one video, from the hard drive to a digital-to-analog decoder, Dunner said. That would have inoculated EchoStar’s device against charges that it infringes, since it sends only one MPEG stream, he said. TiVo lawyer Seth Waxman argued the device still infringes because the stream still “logically” is separated into audio and video, and would be separated by the decoder regardless. But Dunner said “separation” is physical, not logical.
Judge Bryson asked Waxman if the claim language’s use of the phrase “a stream” could have led the jury to believe both TiVo and EchoStar’s devices used only one stream, hurting EchoStar’s ability to show differentiation. If so, the “separate” definition could be considered “mangled,” he said. Not so, said Waxman. Articles “a” and “an” do not necessarily indicate singularity, he said. In addition, specifications and testimony should have be adequate to inform the jury that TiVo’s device used two streams, not one, he said.
The court hinted that it might reach a split decision. Judges Bryson and Jay Plager floated hypothetical questions asking lawyers what should happen to damage awards and the injunction if the court only affirmed in part the lower court decision. Damages shouldn’t shrink in such a scenario, TiVo lawyer Seth Waxman. The lower court never was told to base damages on how many claims were infringed, he said. Dunner disagreed, explaining that the claims involved different devices with different sales. If one device was found not to infringe, the appeals court should remand verdict terms to district court, he said.
A quick decision isn’t likely, and might not come for three to nine months, by which time EchoStar could settle the dispute before then, Bear Stearns said. “Given that it is likely that the appeals court may be positively inclined towards TiVo’s claims, at least in part, the chances of a settlement appear higher.”
“We believe we'll be vindicated,” EchoStar associate general counsel Jeff Blum said after the hearing. Waxman declined comment.