TiVo, EchoStar case ends with $500 million payout

After several years of litigation, the patent-infringement case that TiVo launched against Dish Network and EchoStar has come to an end.

Dish Network and EchoStar have agreed to pay TiVo $500 million to settle the case, including an upfront payment of $290 million from Dish and $10 million from EchoStar. Between 2012 and 2017, the companies will pay TiVo the remaining $200 million in equal installments. The parties also agreed to eliminate all pending litigation between them.

The battle between the companies started in 2004 when TiVo claimed EchoStar, which was Dish Network's parent company before the satellite provider was spun off in 2007, violated its "multimedia time warping system patent." That patent covers how DVR users can watch one program while another is recorded.

Several court rulings surfaced over the years, including one in 2006 that resulted in TiVo being awarded $73.9 million in damages and another in 2009 that bumped that amount to $200 million. Along the way, Dish and EchoStar pledged to keep the battle going.

But after Echostar lost a key ruling last month in the U.S. Court of Appeals, the end seemed closer. Still, EchoStar said at the time that it planned to bring the case to the U.S. Supreme Court. And until it could do that, it was planning to seek a stay of injunction.

For its part, TiVo felt vindicated. The company said last month that after a long wait, it finally had the ruling it needed to ensure it could receive the damages it has been seeking for years.

"We look forward to the permanent injunction against EchoStar and Dish Network finally being enforced with respect to the DVRs they must now disable," TiVo said in a statement at the time. "This ruling also paves the way for TiVo to receive substantial damages and contempt sanctions regarding the DVRs that EchoStar and Dish Network failed to disable."

Last month, EchoStar said that most of the allegedly infringing devices included in the lawsuit were already updated. EchoStar added that if necessary, it could "work as quickly as possible to upgrade the remaining customers to our current-generation DVRs, as these are not an issue in the ruling."

Following this settlement, however, the company won't need to worry about that any longer.

Aside from doling out cash, Dish Network agreed to license TiVo's Time Warp patent, among others, "for the remaining life of those patents." TiVo also granted EchoStar patents to aid that company in designing and developing "certain DVR-enabled products solely for Dish Network and two international customers." TiVo was granted an EchoStar license for "certain DVR-related patents for TiVo-branded, co-branded and ingredient-branded products," the companies said.

Including the licensing fees, the total amount of funds TiVo will receive in the settlement will exceed $600 million.

Amid all the litigation, it seems Dish Network hasn't been affected so much--at least not yet. Earlier today, the company announced its first-quarter results. The company saw its revenue increase by 5.5 percent to $3.22 billion, compared with the first quarter of 2010. Its net income was $549 million, up from the $231 million in the same period last year.

Looking ahead, TiVo doesn't seem ready to slow down. CEO Tom Rogers said that the victory against Dish and EchoStar proves his firm's "diligent enforcement of TiVo's intellectual property rights." And it plans to take that fight to other companies.

"Those efforts will aggressively continue with other parties," Rogers said. He didn't say where TiVo might be focusing its legal efforts next.