TiVo 2006 Annual Report Download - page 38

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awarded by the jury, prejudgment interest at the prime rate through October 31, 2006 of approximately $5.6 million, and supplemental damages for
infringement through October 31, 2006 in the amount of approximately $10.3 million. The Court denied our request for enhanced damages and attorney's fees
and costs. The Court denied EchoStar's request to stay the injunction pending appeal. On October 3, 2006, the United States Court of Appeals for the Federal
Circuit stayed the district court's injunction pending appeal. On November 27, 2006, the district court denied all of EchoStar's post-judgment motions. On
January 23, 2007, the district court awarded the Company prejudgment interest and supplemental damages from August 1, 2006 through September 8, 2006 in
the amounts of approximately $790,000 and $3.5 million, respectively. On February 16, 2007, the United States Court of Appeals for the Federal Circuit
required EchoStar to file its opening brief by April 18, 2007. The Company plans to seek an enhancement of damages for willfulness, prejudgment interest,
attorney's fees and costs, and an injunction against the defendants' further infringement of the patent. The defendants' claim of inequitable conduct against the
Company remains pending. The Company is incurring material expenses in this litigation.
On April 29, 2005, EchoStar Technologies Corporation filed a complaint against TiVo and Humax USA, Inc. in the U.S. District Court for the
Eastern District of Texas alleging infringement of U.S. Patent Nos. 5,774,186 ("Interruption Tolerant Video Program Viewing"), 6,529,685 B2 ("Multimedia
Direct Access Storage Device and Formatting Method"), 6,208,804 B1 ("Multimedia Direct Access Storage Device and Formatting Method") and 6,173,112
B1 ("Method and System for Recording In-Progress Broadcast Programs"). The complaint alleges that EchoStar Technologies Corporation is the owner by
assignment of the patents allegedly infringed. The complaint further alleges that the TiVo and Humax have infringed, contributorily infringed and/or actively
induced infringement of the patents by making, using, selling or importing digital video recording devices, digital video recording device software and/or
personal television services in the United States that allegedly infringe the patents, and that such infringement is willful and ongoing. Under the terms of the
Company's agreement with Humax governing the distribution of certain DVRs that enable the TiVo service, the Company is required to indemnify Humax
against any claims, damages, liabilities, costs, and expenses relating to claims that the Company's technology infringes upon intellectual property rights
owned by third parties. On May 10, 2005, Humax formally notified TiVo of the claims against it in this lawsuit as required by Humax's agreement with TiVo.
On July 1, 2005, the defendants filed their answer and counterclaims. On May 10, 2006, the Court dismissed with prejudice, EchoStar's claim of infringement
against TiVo and Humax relating to patent 112 ("Method and System for Recording In-Progress Broadcast Programs") and claims 21-30 and 32 relating to
patent 186 ("Interruption Tolerant Video Program Viewing"). A claim construction hearing was held on May 11, 2006. On July 14, 2006, United States
Magistrate Judge Caroline M. Craven for the United States District Court, Eastern District of Texas, issued a stay of the case pending the United States Patent
and Trademark Office (USPTO) completion of proceedings with respect to TiVo's request for reexamination of the 186, 685, and 804 patents. The Company
intends to defend this action vigorously; however, it could be forced to incur material expenses in connection with this lawsuit and/or as a result of its
indemnification obligations and, in the event there is an adverse outcome, the Company's business could be harmed.
On August 5, 2004, Compression Labs, Inc. filed a complaint against TiVo Inc., Acer America Corporation, AudioVox Corporation, BancTec,
Inc., BenQ America Corporation, Color Dreams, Inc. (d/b/a StarDot Technologies), Google Inc., ScanSoft, Inc., Sun Microsystems Inc., Veo Inc., and Yahoo!
Inc. in the U.S. District Court for the Eastern District of Texas alleging infringement, inducement of others to infringe, and contributory infringement of U.S.
Patent No. 4,698,672, entitled "Coding System For Reducing Redundancy." The complaint alleges that Compression Labs, Inc. is the owner of this patent and
has the exclusive rights to sue and recover for infringement thereof. The complaint further alleges that the defendants have infringed, induced infringement,
and contributorily infringed this patent by selling devices and/or systems in the United States, at least portions of which are designed to be at least partly
compliant with the JPEG standard. On February 16, 2005, the Judicial Panel on Multidistrict Litigation consolidated this and seven other related lawsuits and
coordinated pretrial proceedings in the United States District Court for the Northern District of California, where pretrial proceedings are currently ongoing.
On January 31, 2006, the United States Patent Office granted a request for reexamination of the patent in question. On May 25, 2006, the
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