In Patent Case, TiVo Claims Most DVRs Use Its Technology

In patent case, TiVo says it owns the technology behind most DVRs.

ByABC News
August 30, 2009, 9:33 PM

— -- TiVo is so well known as the pioneer of digital video recorders that many people mistakenly call any DVR a "TiVo." But if the company has its way, that perception may soon have the support of law, which could dramatically reshape the TV business.

That includes a function called the "time warp" that controls everything from fast-forward and rewind to the ability to view the beginning of a TV show as the DVR records the ending.

Competitors "are pushing (DVR) technology as a competitive differentiator to grab customers," says Matthew Zinn, TiVo's general counsel. "That irreparably harms TiVo, because those customers tend not to switch providers."

TiVo has a lot riding on the outcome. It has watched its subscriptions fall 31% since the beginning of 2007, to 3.1 million, as cable and satellite companies marketed less expensive DVRs.

If it wins its patent cases, "there's a high probability that (anyone offering a DVR) will have to pay TiVo licensing fees," says Lazard Capital Markets analyst Barton Crockett.

More to the point, he adds: "If TiVo lost, it would be a $4 stock. If they won, it could be in the high 20s." Shares closed Friday at $10.

TiVo has had the upper hand, so far. A Texas jury upheld its patent claims in 2006. Dish paid TiVo $105 million after the No. 2 satellite company failed to get the decision overturned later that year at a federal district court there.

That was just the beginning. The court ordered Dish to stop serving about 4 million of its DVRs. To avoid that costly prospect, Dish deployed DVR technologies that it said didn't involve TiVo's patents.