The U.S. patent office rejected two patent claims by video recording technology company TiVo in a battle with Dish Network and EchoStar over digital video recorders.
TiVo said it would press on with its legal fight but its shares fell 5.5 percent on Tuesday to close at $7.70.
It has accused EchoStar, maker of digital set-top boxes and spun off by pay-television provider Dish, of infringing technology used in TiVo's Time Warp software, which allows users to record one television program while watching another.
While TiVo is disappointed with this recent PTO office action, this is just one of several steps in the review process. We will continue to work with the PTO to explain the validity of the claims under review, the company said in a statement.
But Dish said it was pleased, since the patent claims rejected by the U.S. Patent and Trademark Office were the same ones that were found to have been infringed in federal court.
Although TiVo had won that infringement fight, Dish and EchoStar then designed a work-around. TiVo in turn said the work-around infringed its technology and accused them of contempt.
The U.S. Court of Appeals for the Federal Circuit has agreed to hear the contempt case en banc, which means the full panel of judges.
EchoStar's financial liability in the case is limited to $5 million under the terms of its spinoff from Dish.
TiVo also has lawsuits against AT&T Inc, Verizon Communications Inc and Microsoft Corp.
The case is TiVo Inc vs EchoStar Corp, U.S. Court of Appeals for the Federal Circuit, No. 09-1374.
(Reporting by Diane Bartz; Editing by Tim Dobbyn)