TiVo shares fall on court delay in Dish suit

U.S. District Judge David Folsom late Thursday ordered a bench trial for Feb. 17 and 18 to determine whether Dish's new software for its digital video recorders violates TiVo's patents that allow playback of live TV.

Dish was quick to claim victory, saying in a statement that it is "pleased that the district court did not find us in contempt on the face of the injunction."

TiVo objected, saying that "contrary to EchoStar's statement yesterday, the court did not rule on TiVo's pending motion for contempt of the injunction."

The delay is "likely to be viewed as a setback for TiVo," said analyst Todd Mitchell of Kaufman Bros. in a research note.

While the judge's decision can be interpreted as part of a methodical process to prevent another appeal from Dish, it could also be argued that scheduling a hearing is a "good indication he thinks there is some validity to (Dish's) claim," Mitchell said.

He cut his target price on TiVo to $8 from $12 but reiterated his 'Buy' rating.

TiVo, which makes digital video recorders that can play back live TV, sued Dish in 2004, claiming infringement on its Time Warp technology. In 2006, a Texas jury ruled against Dish, which was known as EchoStar Communications Corp. at the time. An injunction was stayed pending appeals.

In April, Dish lost the case on appeal. When the U.S. Supreme Court declined to hear the case, Dish paid TiVo nearly $105 million in damages plus interest last month.

In the meantime, Dish already downloaded new software to its DVRs that it said does not infringe on TiVo's patent. In response to statements to the contrary by TiVo, in May Dish asked a Delaware court to declare that its new software does not infringe the patents.