Dish Network granted stay in TiVo ruling

— Dish Network Corp. said Wednesday that a federal appeals court has temporarily set aside a lower court's ruling that favored TiVo Inc. in a long-running patent infringement lawsuit between the two companies.

On Tuesday, the U.S. District Court of the Eastern District of Texas found Dish to be in contempt of a permanent injunction on TiVo's digital video recorder Time Warp technology, which lets viewers pause, rewind and fast-forward live shows. Judge David Folsom ordered Dish to pay TiVo $103 million plus interest in damages.

But the appellate court in Washington stayed the ruling, pending an appeal by Dish. The satellite TV provider said it has "strong grounds" for an appeal and customers can continue using their DVRs.

TiVo sued Dish in 2004, alleging that Dish infringed on its DVR technology. Dish lost and was ordered to pay $105 million to TiVo. While the case was on appeal, Dish designed a modified software that it downloaded to customers' DVRs.

But TiVo said the workaround software still infringed on its patent and asked the district court for a permanent injunction. Judge Folsom agreed with TiVo and awarded it damages.

Tuesday's ruling was the "the most decisive setback yet in protracted litigation" between Dish and TiVo, said Standard & Poor's analyst Tuna Amobi in a research note. He kept his "strong sell" rating on Englewood, Colo.-based Dish.

Shares of Alviso, Calif.-based TiVo fell by 35 cents, or 3.3 percent, to $10.35 after hours Wednesday. The stock surged by 53 percent in the regular session. Dish was up 7 cents to $15.63 after hours, after falling nearly 10 percent during the day.