TiVo 2008 Annual Report Download - page 20

Table of Contents
that allegedly infringe the patents, and that such infringement is willful and ongoing. Under the terms of our agreement with Humax governing the distribution
of certain DVRs that enable the TiVo service, we are required to indemnify Humax against any claims, damages, liabilities, costs, and expenses relating to
claims that our technology infringes upon intellectual property rights owned by third parties. We intend to defend this action vigorously; however, we are
incurring expenses in connection with this lawsuit, which could become material in the future, and in the event there is an adverse outcome, our business
could be harmed. For a complete description of this lawsuit, please see our discussion under Item 3. "Legal Proceedings."
Pending intellectual property litigations. We are subject to a number of pending intellectual property litigations. We intend to defend these actions
vigorously; however we could be forced to incur material expenses in connection with these lawsuits and/or as a result of our indemnification obligations and,
in the event there is an adverse outcome in any of these cases, our business could be harmed. For more information on our pending intellectual property
litigations, please see our discussion under Item 3. "Legal Proceedings."
We have filed a patent infringement lawsuit against EchoStar Communications Corporation. We are incurring significant expenses as a result,
and an adverse outcome in the lawsuit could harm our business.
On January 5, 2004, we filed a complaint against EchoStar Communications Corporation (ECC) in the U.S. District Court for the Eastern District of
Texas alleging willful and deliberate infringement of U.S. Patent No. 6,233,389, entitled "Multimedia Time Warping System." On January 15, 2004, we
amended our complaint to add EchoStar DBS Corporation, EchoStar Technologies Corporation, and Echosphere Limited Liability Corporation as additional
defendants. We allege that we are the owner of this patent and further allege that the defendants have willfully and deliberately infringed this patent by
making, selling, offering to sell and/or selling digital video recording devices, digital video recording device software, and/or personal television services in
the United States. On April 13, 2006, the jury rendered a verdict in our favor for the amount of approximately $74.0 million dollars. On January 31, 2008, the
U.S. Court of Appeals for the Federal Circuit in Washington, D.C. unanimously ruled in favor of TiVo Inc. in connection with EchoStar's appeal of the
district court judgment of patent infringement against EchoStar with respect to several claims (so called software claims) of the patent, upholding the full
award of damages from the district court, and ordering that the stay of the district court's injunction against EchoStar's infringing digital video recorders that
was issued pending appeal will dissolve when the appeal becomes final. On April 11, 2008, the Federal Circuit denied EchoStar's combined petition for a
panel rehearing and en banc rehearing of the Federal Circuit's denial of their appeal of the district court's judgment. On October 6, 2008, the Supreme Court
denied EchoStar's writ of certiorari. On October 8, 2008, the Company received $104.6 million from EchoStar. On February 17, 2009, the U.S. District Court
held a contempt hearing in connection with EchoStar's alleged work-around of the Company's patent. We continue to incur material expenses in connection
with this lawsuit. For a complete description of this lawsuit, please see our discussion under Item 3. "Legal Proceedings."
Digital video recorders could be the subject of future regulation relating to copyright law or evolving industry standards and practices that
could adversely impact our business.
In the future, copyright statutes or case law could be changed to adversely impact our business by restricting the ability of consumers to temporally or
spatially shift copyrighted materials for their own personal use. Our business could be harmed as a result. In addition, we are aware that some media
companies may attempt to form organizations to develop standards and practices in the digital video recorder industry. These organizations or individual
media companies may attempt to require companies in the digital video recorder industry to obtain copyright or other licenses. Lawsuits or other actions taken
by these types of organizations or companies could make it more difficult for us to introduce new services, delay widespread consumer acceptance of our
products and services, restrict our use of some television content, increase our costs, and adversely affect our business.
A significant part of our installed subscription base results from our relationship with DIRECTV which we expect to continue to decrease in
the future due to DIRECTV's on-going support of a competing DVRs.
Although we are working with DIRECTV to develop a new high-definition DVR with TiVo for DIRECTV for launch in the future, DIRECTV does not
currently have the right to manufacture and distribute TiVo DVRs to DIRECTV subscribers. As a result of this and DIRECTV's support of a competing DVR
we expect the number of our DIRECTV with TiVo subscriptions to continue to decrease in the future. As a consequence of the loss of these future revenues
from these DIRECTV subscribers with TiVo service subscriptions, our business may be harmed.
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