TiVo said on Thursday U.S. regulators have validated its digital video recorder patent claims against EchoStar Communications, sending TiVo shares up more than 23 percent.In the latest move in a long-standing dispute between TiVo and EchoStar, which runs the Dish satellite TV system, the U.S. Patent and Trademark Office upheld TiVo's claim to a "Time Warp" patent which lets TV viewers record one program while playing back another and pause live television.
TiVo shares were already higher amid speculation by Wall Street analysts that it would succeed outright in the legal battle, and on the heels of a more-positive-than-expected financial forecast for its fourth quarter.
Back in October 2006, a U.S. appeals court judge stayed a permanent injunction that would have barred EchoStar from selling digital video recorders after it lost a patent infringement suit filed by TiVo. That stay gave EchoStar the right to continue selling its DVRs during appeal.
TiVo said it now hopes that U.S. federal courts will uphold the earlier court judgment and reinstate the injunction.
"Today's decision by the PTO brings us another step closer to ending EchoStar's continued infringement," TiVo said in a statement.
An EchoStar representative said the company was disappointed by the decision, but it still hopes to prevail. "The decision...does not impact in any way our pending appeal to the Federal Circuit," the company said. "We are hopeful that the Federal Circuit will reverse the district court and find that we do not infringe TiVo's patent."
Earlier, analysts at JPMorgan upgraded TiVo to "overweight" from "underweight," saying that it now saw a good chance that TiVo ultimately would win its patent appeal with EchoStar.
"We engaged outside counsel with patent expertise, who attended the appeal hearing and reviewed the filings and advised us that in their opinion TiVo stands a 70 percent chance of winning," Barton Crockett, an analyst at JP Morgan, said in a note to clients.
Shares in TiVo climbed $1.41 to $7.39 on Nasdaq in late afternoon trade. EchoStar shares were off 6 cents to $42.78.
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