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Patent Office Rejects TiVo Claims, Sends Stock Lower

Tuesday, 8 Jun 2010 | 4:22 PM ET
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The U.S. Patent and Trademark Office issued a ruling against TiVo, over its rights to patent technology in the middle of a legal battle with Dish Network and EchoStar .

The PTO finds that TiVo's two software claims were invalid in light of two pieces of previous patents. Those two patent claims are the same ones that a 2006 jury found that Dish and EchoStar infringed.

TiVo stock closed the day 5.5 percent lower, while EchoStar and Dish both ended slightly higher.

The Patent and Trademark ruling comes as a U.S. appeals court reviews TiVo's legal case that charges Dish and EchoStar with patent infringement. At stake in that case: over $400 million dollars in patent infringement fees for Dish and EchoStar, though Dish carries greater liability. Here's my blog on the May court ruling to re-hear the DVR patent dispute.

This battle is far from over, but today's ruling certainly is a negative TiVo, but the DVR company points out that the PTO proceeding is separate and does not impact the appeals court verdict. TiVo can also appeal any ruling from the patent office to a board within the PTO, or to the Federal Circuit.

EchoStar and Dish emphasize that the claims that the Patent Office rejected are the very same claims that the federal court is reviewing—indicating that an optimistic outlook for the judicial verdict.

Tivo's Statement:

"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. It is important to note that TiVo received a "final action" holding several claims invalid during EchoStar's first reexamination request at this juncture only to have the PTO ultimately uphold the validity of all claims of the patent.

Moreover, the PTO proceeding is separate and apart from the ongoing litigation against EchoStar and does not impact the current United States Court of Appeals en banc review of the district court's finding of contempt against EchoStar and the related injunction."

The statement from EchoStar and Dish:

"We are pleased the Patent and Trademark Office issued a Final Office Action maintaining its rejection of the software claims of TiVo's patent. These software claims are the same claims that EchoStar was found to have infringed in the contempt ruling now pending for en banc review by the Federal Circuit. In the Final Office Action, three examiners of the PTO considered TiVo's response and, in a detailed 32-page decision, finally concluded that the software claims were unpatentable in view of two prior art references."

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.