TiVo 2006 Annual Report Download - page 37

Table of Contents
• fluctuations in the market prices generally for technology and media-related stocks;
• fluctuations in general economic conditions;
• fluctuations in interest rates;
• market conditions affecting the television and home entertainment industry and the technology sector;
• fluctuations in operating results; and
• additions or departures of key personnel.
The stock market has from time to time experienced extreme price and volume fluctuations, which have particularly affected the market prices
for emerging companies, and which have often been unrelated to their operating performance. These broad market fluctuations may adversely affect the
market price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
Our corporate headquarters, which houses our administrative, sales and marketing, customer service and product development activities, is located in
Alviso, California, under a lease that expires on January 31, 2010. We believe that we may need to expand our corporate facilities to meet our office space
needs in the next several years as we currently utilize approximately 95% of our total office space. Our current facilities lease obligations are subject to
periodic increases and we believe that our existing facilities are well maintained and in good operating condition. The Company also has an operating lease
for sales and administrative office space in New York.
ITEM 3. LEGAL PROCEEDINGS
Intellectual Property Litigation. In September 1999, TiVo received letters from Time Warner, Inc. and Fox Television stating that TiVo's
personal television service exploits these companies' copyrights without the necessary licenses. The Company believes that the TiVo service does not infringe
on these copyrights and believes that there will not be an adverse impact as a result of these letters.
On January 5, 2004, TiVo filed a complaint against EchoStar Communications Corporation 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, the
Company amended its complaint to add EchoStar DBS Corporation, EchoStar Technologies Corporation, and Echosphere Limited Liability Corporation as
additional defendants. The Company alleges that it is the owner of this patent, and further alleges 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 favor of the Company in the amount of approximately $74.0 million dollars.
The jury ruled that the Company's patent is valid and that all nine of the asserted claims in the Company's patent are infringed by each of the accused
EchoStar products. The jury also ruled that defendants' willfully infringed the patent. On May 16, 2006, the USPTO issued its first Office Action in response
to a request by the defendants for reexamination of the 389 patent. The USPTO reexamined all 61 claims set forth in the 389 patent, confirming the validity of
the majority of the claims, including two of the claims that the defendants have been found to have willfully infringed, and rejecting some of the claims. TiVo
intends to vigorously defend the validity of the rejected claims. On August 17, 2006, the Court denied the defendants' remaining defenses, and granted our
motion for permanent injunction to prevent EchoStar Communications Corporation from making, using, offering for sale or selling in the United States the
following EchoStar DVRs: DP-501, DP-508, DP-510, DP-721, DP-921, DP-522, DP-625, DP-942, and all EchoStar Communications Corporation DVRs that
are not more than colorably different from any of these products. The Court also ordered ECC to pay TiVo approximately $74.0 million in damages as
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