TiVo 2009 Annual Report Download - page 23

Table of Contents
We have filed patent infringement lawsuits against Verizon and AT&T. We are incurring significant expenses as a result, and an adverse
outcome in either lawsuit could harm our business.
On August 26, 2009, we filed separate complaints against AT&T Inc. and Verizon Communications, Inc. in the United States District Court for the
Eastern District of Texas for infringement of the following three TiVo patents: U.S. Patent Nos. 6,233,389 B1 ("Multimedia Time Warping System"),
7,529,465 B2 ("System for Time Shifting Multimedia Content Streams"), and 7,493,015 B1 ("Automatic Playback Overshoot Correction System"). Our
complaints seek, among other things, damages for past infringement and a permanent injunction, similar to that issued by the United States District Court,
Eastern District of Texas against EchoStar. On January 15, 2010, Microsoft Corporation moved to intervene in the action filed against AT&T Inc.
On February 24, 2010, Verizon answered our August 26, 2009 complaint and Verizon asserted counterclaims. The counterclaims seek declaratory
judgment of non-infringement and invalidity of the patents we asserted against Verizon in the August 26th complaint. Additionally, Verizon alleged
infringement of U.S. Patents: 5,410,344 ("Apparatus and Method of Selecting Video Programs Based on Viewers' Preferences"), 5,635,979 ("Dynamically
Programmable Digital Entertainment Terminal Using Downloaded Software to Control Broadband Data Operations"), 5,973,684 ("Digital Entertainment
Terminal Providing Dynamic Execution in Video Dial Tone Networks"), 7,561,214 ("Two-dimensional Navigation of Multiplexed Channels in a Digital
Video Distribution System"), 6,367,078 ("Electronic Program-Guide System with Sideways-Surfing Capability"). On March 15, 2010, Verizon filed an
amended answer further alleging infringement of U.S. Patent No. 6,381,748 ("Apparatus And Methods For Network Access Using A Set Top Box And
Television"). Verizon seeks, among other things, damages and a permanent injunction. On March 17, 2010, Verizon filed a motion to transfer the proceedings
to the United States District Court for the District of New Jersey.
On January 19, 2010, Microsoft Corporation filed a complaint against us in the United States District Court for the Northern District of California for
infringement of the following two patents: U.S. Patent Nos. 6,008,803 ("System for Displaying Programming Information") and 6,055,314 ("System and
Method for Secure Purchase and Delivery of Video Content Programs"). The complaint seeks among other things, damages and a permanent injuction.
On March 12, 2010, AT&T Intellectual Property I, L.P., and AT&T Intellectual Property II, L.P. ("AT&T") filed a complaint against us in the United
States District Court for the Northern District of California for infringement of the following four patents U.S. Pat Nos. 5,809,492 ("Apparatus and Method
for Defining Rules for Personal Agents"), 5,922,045 ("Method and Apparatus for Providing Bookmarks when Listening to Previously Recorded Audio
Programs"), 6,118,976 ("Asymmetric Data Communications System"), and 6,983,478 ("Method and System for Tracking Network Use"). The complaint
seeks, among other things, damages for past infringement and a permanent injunction. We continue to incur material expenses in connection with the AT&T,
Verizon, and Microsoft lawsuits. Please see our discussion under Item 3. "Legal Proceedings" for additional information on our pending litigation.
EchoStar has filed a second re-examination with United States Patent and Trademark Office ("PTO") regarding our Time Warp patent. On
August 3, 2009, the PTO issued a preliminary rejection of certain claims in our Time Warp Patent which we intend to defend, but the invalidation of
the Time Warp patent would adversely impact our business.
On August 3, 2009, the United States Patent and Trademark Office ("the PTO") issued an office action in a second reexamination filed by EchoStar
preliminarily rejecting Claims 31 and 61 of the Time Warp patent as obvious in light of two references previously considered by the PTO in the first
reexamination. We intend to defend this action and the validity of the rejected claims in the PTO reexamination vigorously; however, we are incurring
material expenses in connection with this re-examination, and in the event there is an adverse outcome such as the Time Warp patent being invalidated and we
are unable to license or enforce it in the future, our business could be harmed. At this time, we are unable to estimate the likelihood of an adverse outcome or
the extent to which our business would be harmed by an adverse outcome.
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.
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