US Patent and Trademark Office (PTO) has rejected two claims in Tivo's "time-warp" DVR technology patent due to prior art. Dish Network has stated that the invalid claims are the ones which Tivo has accused it of infringing in an ongoing legal battle which began in 2004. TiVo has stated that the PTO's ruling is separate and apart from Appeals Court matters and that it would appeal the validity of its claims to the PTO.
Previous rulings in the Dish/Tivo case have mostly found in favour of Tivo. Dish is currently appealing the latest decision in the dispute and the PTO's findings could help Dish's case. Tivo can appeal the PTO's findings but if the invalidity of Tivo's claims is upheld it's difficult to see Tivo ultimately winning its case against Dish.
If Tivo was to win the case it could provide a basis to reposition itself as an intellectual property (IP) licensor for DVR and move away from its flagging subscription service product. At the end of 2006 Tivo had 4.4m subscribers to its DVR service but this has fallen to 2.6m at the end of 2009. This is in heavy contrast with the number of US pay TV DVR subscribers, which has more than doubled from 15m to 35m over the same period.
Whilst the PTO's findings cast serious doubt over the viability of moving into DVR licensing, Tivo has already made moves to capitalise on another core part of its subscription product: the EPG. Tivo's EPG integrates web based on demand content with linear broadcast TV using proprietary search and recommendation technologies. The optimal integration of web and TV content has yet to be found by traditional B2B TV technology vendors and is generating market entry opportunities. Pay TV operators and consumer electronics (CE) vendors are seeking to augment and differentiate their traditional TV products with content from the web. Tivo has already taken advantage of this by entering both the pay TV and CE markets via deals for its EPG with UK cable operator Virgin Media and Insignia, a US TV set vendor owned by Best Buy.