For digital video recorder designers Friday August 18 may go down in history as a dark day. A U.S. Circuit Court judge in East Texas upheld an April jury decision that EchoStar, parent of the popular Dish satellite-TV service, had violated patents awarded to TiVo in their DVR set top boxes.
At issue was not TiVo's clever user interface (by contrast EchoStar's is quite clunky) or anything else that most designers would think of as TiVo-specific. Rather, it was something much broader, more basic, and what most engineers would probably consider rather essential to the proper functioning of any DVR: the ability to simultaneously record and play--that is, writing to the hard drive while reading from the same drive.
The jury awarded TiVo some $89 million in damages, although they said EchoStar acted in good faith when designing their set top boxes. An initial order to immediately de-activate some four million EchoStar DVR boxes was delayed, pending an appeal.
If the jury's decision continues to be upheld, the effects for set top box industry can be devastated. A patent-holder is under no obligation to license their intellectual property, and TiVo can ultimately require that not just EchoStar, but also DirecTV, Scientific Atlanta, Motorola, Pioneer, and every other manufacturer and service provider for cable-TV and satellite-TV boxes will have to recall their products or disable the ability to play and record simultaneously.
Or switch to TiVo branded service.
If that happens, TiVo would have a virtual monopoly on the DVR market.
It wouldn't be the first time that a single company essentially locked up a major aspect of interactive TV with aggressive patent litigation. That was precisely Gemstar's strategy, with the electronic program guide (EPG). Gemstar has claimed, through a variety of lawsuits, their patents (purchased, incidentally, from the now-defunct StarSight) essentially cover the very idea of the EPG. A few years back, in fact, they sued TiVo, resulting in an out-of-court settlement. That settlement, of course, was not just monetary but insured that TV Guide (Gemstar's EPG) would be a part of TiVo products.
Similarly, this is likely TiVo's ultimate plan: Rather than forcing EchoStar, DirecTV, Time Warner, Comcast and everyone else from marketing set top boxes with built-in DVRs, they want all these companies to switch to TiVo's branded DVR service.
In the ten short years since DVRs first appeared on the market, we've already seen innovation stifled to the point where there's been practically nothing new for quite a while, other than upgrading to HDTV. RePlay, the most innovative company in the field, following a Hollywood-backed lawsuit and bankruptcy ultimately stopped making set top boxes completely last December.
Now TiVo threatens to really put the nail in the coffin of any future DVR innovation. Isn't the ability to simultaneously record and play on a hard disk really a generic capability of any DVR?
The U.S. patent office has issued several notorious patents over the past few years of comparable outrageousness -- the infamous Amazon "one click ordering" patent comes to mind, as well as the one in the pre-Internet early 90s that gave Compton's a patent on the very concept of hyper-linking and multimedia.
The entire set top box manufacturing industry should get behind EchoStar and support their appeal. Fortunately, EchoStar has historically spent heavily on legal expenses (including another, unrelated current battle over transmission of distant signals.)
But with so much of this industry now based outside the U.S., and much of it in Asia beyond the reach of U.S. patent law, there's also the distinct possibility that this will play out globally as a local story. Whether TiVo really has the muscle, legal or otherwise, to create a worldwide monopoly on DVRs is doubtful.
EchoStar says they're going back to the drawing boards to design a DVR disk drive system that doesn't violate TiVo's patent. Good luck to them. If the patent could be interpreted as applying only to a certain technique for simultaneous record and playback, and not the broad concept, then perhaps the chilling effect on the set top box industry won't be so severe. But note that when TiVo was first introduced, back around 1997, they explained that they had designed their split-screen EPG specifically to work around Gemstar's patents. It hardly prevented Gemstar's suit.
Meanwhile, there's another highly contentious technology that some cable-TV companies have just recently introduced which might offer a true alternative: network DVR service, in which the hard drives are located not in the customer's set top box, but in big servers at the cable system's head end. Just one problem with this approach: Hollywood has already started filing lawsuits.
DVRs are clearly a very litigious product category. Watch out.