TiVo 2006 Annual Report Download - page 22

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DIRECTV. The case is currently scheduled for trial in May 2007. If DIRECTV is found to have infringed the 746 Patent and Forgent is awarded damages for
such infringement, and it is determined that we are required to indemnify DIRECTV for all or a portion of such damages, our business could be harmed.
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. EchoStar is currently
appealing the verdict in the federal circuit. We could be forced 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 decrease in the future
due to DIRECTV's support of a competing DVR by NDS.
DIRECTV no longer has the right to manufacture and distribute TiVo DVRs to DIRECTV subscribers, As a result of this and DIRECTV's support of a
competing DVR by NDS we expect the number of our DIRECTV with TiVo subscriptions to decrease in the future. As a consequence of the loss of these
future high margin revenues from these DIRECTV with TiVo service subscriptions, our business may be harmed.
It may be difficult for us or investors to evaluate trends and other factors that affect our business due to the relatively new and highly
competitive nature of the DVR services product category.
DVR services are a relatively new and highly competitive product category and it may be difficult to predict the future growth rate, if any, or size of the
market, our products and services. We may be unable to accurately forecast customer behavior and recognize or respond to emerging trends, changing
preferences or competitive factors facing us. As a result, we may be unable to make
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