DISH And EchoStar Settle Patent Litigation With TiVo, Agree To Pay $500 Million

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DISH Network and EchoStar this morning announced that they’ve agreed to pay TiVo $500 million to settle all of their ongoing patent litigation with the digital video recorder company.

Under the terms of the settlement agreement, DISH and EchoStar will initially cough up $300 million, with the remaining $200 million distributed in six equal annual payments between 2012 and 2017.

The companies have agreed to dismiss all pending litigation with prejudice, and to dissolve all injunctions against DISH and EchoStar.

In addition, TiVo granted DISH a license under its Time Warp patent and certain related patents, for their remaining lives. Time Warp is technology that essentially allows users to record one TV program while watching another.

TiVo says it will also play a role in helping DISH Network promote the Blockbuster digital video service (DISH just acquired substantially all of the assets of Blockbuster, which went belly up in September 2010, for roughly $228 million in cash).

TiVo also granted EchoStar a life-long license under the same patents, to design and make certain DVR-enabled products solely for DISH Network and two international customers.

EchoStar, in turn, granted TiVo a license under certain DVR-related patents for TiVo-branded products.

TiVo originally sued DISH and EchoStar back in 2004 over its patented DVR technology back when the two were still a single company. They won the suit, but the court decided in May 2010 to reconsider its verdict. Two weeks ago, a federal appeals court then moved to uphold the ruling that EchoStar infringed TiVo patents, which ultimately led to today’s announcement. TiVo will hold a conference call at 9:00 AM ET today to discuss the agreement.

In related news, DISH Network this morning reported its first quarter 2011 financial results (net income of $549 million on revenues of $3.22 billion) and announced that Michael Kelly has been named president of its new subsidiary Blockbuster.

EchoStar also announced quarterly earnings this morning: net income of $17 million on revenues of $480 million.