Life or Death for Tivo

CUShane writes "The Washington Post is running an article on the patent case between Tivo and EchoStar regarding Tivo's DVR technology. The article states that Tivo has a better than 70% chance of winning, while a loss would basically doom the company. Is there a possibility that the patent system is working right in this case?" From the article: "TiVo attorney Morgan Chu has been arguing in court that TiVo's inability to turn a profit, despite the popularity of its product, is partially because of EchoStar's infringing on its patent. TiVo co-founder Michael Ramsay testified that he showed EchoStar executives the TiVo product and pursued a licensing deal with them, but that a deal was never struck even though EchoStar began selling its own DVRs that used technology very similar to TiVo's."

Comments

Nothing to see here.

[Tackhead]

Nothing to see here... delete recording? (Y/N)

/someone had to say it

Was anyone else surprised...

[Josh teh Jenius]

...to learn that TiVo hadn't turned a profit yet? I was.

Are there any other popular gadgets (besides blackberry) caught up in stuff like this?

Re:Was anyone else surprised...

[Serapth]

No, im not at all shocked Tivo hasnt turned a profit. Actually its one of those companies that came out of the dot com boom, but somehow didnt die. It started with great technology and no viable business plan. However with billions in venture capital backing it, it followed the grow big quick strategy. Downside being, they were taking a pretty serious hit for each unit sold.

So now that Tivo is an established brand they needed to retool there strategy from growth, to making money. Sadly sofar, they havent faired that well in the transition. Not to mention the number of competitors they have now they didnt (really) have then, Media Center, Myth TV, OnDemand Cable, etc...

I wouldnt be suprised to hear that Tivo REALLY needs to win this lawsuit, just for the funds it could bring in. Which is a shame as tech wise, tivo is a nice product. Just as a business plan... I wouldnt have touched it with a ten foot pole. Had they gone the Sceintific Atlanta (sp?) route and been a direct hardware provider to the major providers I could see them being a much more viable company today. But they fought tooth and nail to keep their own branding instead of being rebadged as a providers product and that decision is coming to bite them in the ass.

Let them die, for many reasons

[dada21]

I had the first Tivo of anyone I knew -- the day I first heard about it I picked one up. It was a great device for its time, but the recent Tivos I've experienced have no shown much improvement. It is my belief that patents stifle innovation, and they allow the patents holders to stick with the status quo longer than open competition would allow. There can be innovation without patents (PDF warning).

For Tivo to say that their livelihood is in a delicate position because of this patent is ridiculous. If they had protected this patent and EchoStar was never able to compete, all it would mean is that Tivo would have left their prices higher than the market would expect, and they'd still not do much to innovate and invent.

In order to bring a product to market, one must look at all sorts of requirements. Marketing, fast competition, consumer need, consumer affordability, and longevity. Not every product will succeed, and many will fail. The great part about failure is that, on a whole, consumers win out in the long run as other people innovate on top of the failure and release a product or service that is financially viable. Nowhere in the system is a patent system necessary, because there will always be people who want to make a product at a lower cost, even at no cost. Look at MythTV for proof, there, as well as any open source success story.

How many times must it be said that patents don't foster creation, they disrupt it. A monopoly is a monopoly, and the worst examples of monopoly are those that exist solely by using the force of government to back them up. In fact, I truly believe that no monopoly can exist without the myriad of government favoritistic laws and regulations that prevent the open competition that is created when restrictions are removed.

Think not of Tivo, think of the consumer that wins out in the end. This is all that matters in a market -- you should not enter a market without having an understanding of what it takes to survive, succeed and surpass your competition. If you think you can win by removing competition from the picture, you're ignoring the basic ideals of freedom that we're supposed to hold so close to our hearts.

I truly believe it is time for Tivo to close up shop. In the next 10 years, the DVR/PVR idea will be gone -- integrated into every bit of electronics we use, up to even cell phones. As bandwidth increases and costs decrease, the need to use a DVR/PVR will be reduced to those who just want to have the data in their home. Tivo (and EchoStar) will find themselves useless fast enough if they think this is a growing market.

Re:Let them die, for many reasons

[dada21]

You're right about the need for a simple box to time-shift recordings digitally. Yet Tivo is a huge barrier to entry for many low-budget manufacturers. A very close friend of mine is a "famous" importer of Chinese and Taiwanese goods, and he's shown me (in his home), a cheap-brand DVD player with an integrated DVR. The thing worked wonders, and I believe he said the cost would be under $39 to the consumer if it could get through all the patents it violated. I believe it would be even cheaper if the import tariffs were less, too.

With that, think of all the money consumers would save over the coercion-enhanced Tivo and other DVRs. The money you save not padding their pockets means more money you can spend on other things you want -- meaning more jobs created rather than profits enhanced artificially by government force.

Re:Let them die, for many reasons

[glindsey]

I've had a TiVo for nearly as long as you've stated, and I believe that the percentage of people who "just want to have the data in their home" is far higher than most people estimate. I don't want giant media corporations telling me when and where I can watch things; I want to possess the data so I can view it whenever and wherever I desire. Likewise, consider the number of people who purchase DVDs of television series, many of which are still rerunning in syndication today; people do this because they want their own copy.

On the other hand, consider "personal" video recorders that store the content upstream, at the provider's location. They choose when and which content is available. They choose whether you can fast-forward through commercials in it. They choose how many times you can view it, or how long it is available. And, of course, if you cancel your subscription, you lose it all.

No thank you.

Re:Let them die, for many reasons

[dvnelson72]

Your positions sounds like someone who has never had an innovative idea that you tried to market AND as someone who wants to use other people's ideas freely.

If you have ever gone to big companies with a big innovation that you need them to fund or license, then you would know that patents are vital to your protection. Secrecy only travels so far. How do you market a concept without sharing it?

If you want to convince me that Tivo's patent is too broad and should not be eligible for a patent, I'll listen and I may agree. But the anti-innovation crowd tends to think everything should be free because ideas cannot be owned. Raise the red flag and tell me that I can't own my property either because the earth is owned by all of us. It's anti-capitalistic b.s.

Download your stolen movies and mp3s. Steal technology from little guys trying to carve a niche. Tell yourself that patents stiffle innovation.

Then, when you have your big idea, come crying to someone else about Microsoft stealing it without paying you.

Re:Let them die, for many reasons

[dada21]

Your positions sounds like someone who has never had an innovative idea that you tried to market AND as someone who wants to use other people's ideas freely.

The opposite is true. For the past 10 years or so I've positioned myself in the Chicago consulting market as the guy who gives away ideas -- many of them. I find that I'd rather have others put the ideas into action so that I can profit from the final product. Google my name (Adam Dada) and you'll find a few magazines I've been quoted in, usually promoting my old main skill: pushing corporations to try new things and regard all competition as healthy.

Some of my businesses have failed, mostly because of irresponsibility. Why should Tivo patent their ideas when I couldn't in most of my businesses? When I opened retail stores, should I have a "protection" over others from copying my store layout and products at a cheaper price? When a plumber enters a market, should his new found technique to fix a leak faster and cheaper be limited only to him? I believe in letting people use their labor as they see fit -- even if it means they're selling themselves too cheaply.

If you have ever gone to big companies with a big innovation that you need them to fund or license, then you would know that patents are vital to your protection. Secrecy only travels so far. How do you market a concept without sharing it?

Just coming up with an idea is not enough to bring it to market. Bringing an idea to market requires many people to implement all sorts of labors to finalize a product. If you can't do it cheaper and faster than the next guy, your idea is likely not ready to be brought to market. Look at all the ridiculous patents on every cell phone that comes out -- every one has a new patent pending. Yet all cell phones are basically alike, so these patents only seem to prevent new people from entering the market.

I've gone to very big companies (again, some can be found through googling me) with ideas, and many of them continue to hire my company to introduce something new to a given market, especially large but stagnant ones. You'd be amazed at how many CEOs will listen to a great idea even if it means their competition will quickly copy it. You'd also be amazed at how many MBAs hate new ideas with new competition -- I believe this is part of the problem. Business school graduates believe in the textbook, entrepreneurs believe in hard work and strong customer service. In the end, having a product means nothing if the customer can not use it to save them money or time over the price they paid.

Then, when you have your big idea, come crying to someone else about Microsoft stealing it without paying you.

Actually, I used run an idea website that has had numerous inventions "stolen" from it and I'm more than happy about it because I can profit from the creations. I must e-mail Google twice a month with a new idea for them to use (not that they have even listened necessarily), and I work hard to get my ideas out without attributing my name to them. I just want emerging markets to take advantage of, leave the coding and technology developing to those who have the desire to bring ideas to fruition. An idea is worthless without all the other parts: marketing, manufacturing, support, production, warehousing, analysis, customer sales, etc. Every piece of the puzzle is more important than the idea itself.

Re:Let them die, for many reasons

[Surt]

The problem people are having with patents is that:
a) nearly all of them are too broad
b) nearly all of them are trivial
c) there's no sense of proportion

And my guess is that you're speaking as someone whose ideas have never been squashed by an obviously bogus patent.

The problem we have with a, is that patents cover too much. Even a vaguely similar idea gets covered, and you wind up paying money to someone who had nothing to do with your innovation.

The problem with b is, you come up with some simple product that no one is marketing, and start selling it, only to have the patent holder come knocking for a piece of your action, and surprise surprise the patent office has granted a patent on your idea, even though it was so obvious you wouldn't have even considered patenting it yourself. Furthermore, there's no allowance for independent invention, so even if you got to your idea completely on your own, if you got there a day late that idea belongs to someone else.

The problem with c is, even if the patent covers only a tiny portion of your device, you can be extorted for basically everything. It doesn't come to that, but the patent holder typically will pick up more than a 'fair' share of the profits.

All in all, the patent system is so broken right now, we would be better off without it entirely. Which is not to say that some middle ground position might not be even better.

We call that "Forum Shopping"

[TubeSteak]

That TiVo sued EchoStar in tiny Marshall, Texas, was no accident, said Bradford Lyerla, intellectual property attorney and partner with Marshall, Gerstein & Borun, a specialty firm in Chicago. Juries there, Lyerla said, find in favor of the plaintiffs in patent trials about 80% of the time.
...
"TiVo has a great jury story," Lyerla said. "If TiVo loses, it could be the end of them. That creates greater sympathy on the part of the jury."

The patent system has nothing to do with this.

This story is entirely about the jury. A jury can decide a case any which way they like, no matter what the law says (see jury nullification)

+1 to Tivo for manipulating the system.

Re:We call that "Forum Shopping"

[nickname225]

I am an attorney - and this issue of Jury nullification is not entirely true. It's true that in U.S. Criminal cases (where double jeopardy applies) a jury can effectively nullify a law with a finding of not guilty. In civil cases, it's not so easy. A judge in a civil case can overturn a jury finding and render a Judgment notwithstanding the Verdict (JNOV in Lawyerspeak). It's exactly what it sounds like - the jury can find for one party and the judge can decide that the jury is wrong and find for the other side. It's not done too commonly - and judges don't have a completely free hand - the standard is something like "No reasonable jury could reach this verdict". Of course, it's reviewable on appeal - and in the U.S. we are hesitant to over rule a jury - but if the jury just ignores the law a judge will not stand by.

Patent Solution -- 3 year limit

[Deeper Thought]

I propose we shorten the lifetime of technology patents to 3 years, non-renewable.
20 years is crazy!

What is the duration in other countries?

This page The Optimal Lifetime of a Patent is interesting. They say the lifetime should vary based on a cost/benefit analysis. I would guess that the "optimal term" is closer to 3 years than 20 years for most computer/electronics patents.

Nope, IP patents are still dumb.

[Just Some Guy]

Is there a possibility that the patent system is working right in this case?

I know we all love TiVo and all, but it looks like their patent is on simultaneously watching and recording TV.

You know, like you used to do when you watched one channel and had your VCR record another.

Or like when you watch streaming media in your web browser and it continues to buffer even when you hit "pause".

Basically, this is yet another stupid IP patent (is there another kind?), even if we like the company trying to enforce it.

Re:I Think This Can Be Summed Up In Five Words

[LunaticTippy]

You just supplied the perfect defense for echostar.

Tivo owners are very loyal/rabid about Tivo. I worked at echostar during a bad time in my life, and got dozens of calls about our PVR. Everyone was disappointed or angry that it wasn't a tivo, they wanted tivo, why wasn't it like tivo, etc.

Echostar just needs to play a few hundred of these calls to prove that their PVR is nothing. like. tivo.

If you think the whole Mac/PC beef is religious in nature, try the Tivo/anything else one.

Re:Wait, so what was the patent?

[Em Ellel]

According to TFA, they hold a patent on watching one show and recording another at the same time?

I dunno about you guys, but I've had a VCR that could do that since before anyone had come up with the name "TiVo".

really? You had a VCR that lets you watch one tape while recording another show to same tape? I do not think there was a single device with single media that allowed you to do this until tivo.

-Em

Re:I Think This Can Be Summed Up In Five Words

[Digital Pizza]

If you think the whole Mac/PC beef is religious in nature, try the Tivo/anything else one.

Ain't that the truth.

Go to an online TiVo forum and ask about feeding your TiVo listings from XMLTV rather than subscribing. Bask in the hostility.

Here's a hint: google for "oztivo", "tivocanada", and "service emulator". Learn perl. Then lament the fact that you'd be sued and lynched if you ever told anyone how you did it.

(This is all hypothetical, of course.)

Patents, Fairness and Innovation

[saterdaies]

There's a lot of talk about patents and I don't like much of it. It's very ideologically driven with little regard for the facts.

The field of economics believes that people respond to incentives. By giving someone a patent on something, you are ensuring that, for a limited time, they are able to secure most of the "social benefit" of that invention less the "social cost" of developing and producing it. For example, let's say that Tivo spent $100 million "inventing" their product - assuming they were truly innovative and that this is an actual invention. Then let's say that it costs $200 to build a Tivo - the cost of the hardware, marketing, labour used in assembly, shipping, the works. Clearly, Tivo can't sell units for $200 and turn a profit - in fact, they can't sell them for $201 and turn a profit unless they sell over 100 million units (which would cover the R&D).

Now, let's say that there aren't copyright laws for a second and that I can load Tivo software on a box I make (which costs me $200 to make) and start selling them. I can sell at a price a lot less than Tivo can because I don't have to recoup R&D costs of $100 million. This is why software patents are a little more tricky. In the real world, I would have to develop an alternative to the Tivo software which would cost me money, but probably less than the $100 million it cost Tivo since I would be duplicating an already existing piece of software which is substantially easier to do.

Looking at more mechanical things, one can easily see how they work and duplicate the design and the "inventing" company goes out of business - sort of.

There are a lot of people who argue that being first to market is enough of an advantage. An economist wouldn't. Yes, being first to market will provide one's company with a good amount of the social benefit of an invention, but not all of it (patents don't give you all either, but more) and so there is less incentive to invent and less invention than is socially beneficial happens.

I hate to use caps, but I must stress this: WITHOUT PATENTS, THERE IS LESS INVENTION THAN THERE SHOULD BE.

So patents do help correct for that market failure, but they also have detrimental effects. The one that bothers me the most is that patents give a monopoly. For the non-economists, monopolies charge higher prices and deliver fewer units because it is more profitable for them to sell fewer at a higher price. Basically, if I can make a pen that everyone wants and I have a patent on it, I might have a choice of selling 1 million units at $10 per pen or 5 million units at $1 per pen - by selling less units, I get double the money! This won't happen in a competitive market because with more firms selling, it becomes more profitable to sell more units because the more the firms, the fewer of those $10 buyers we each get.

Of course, the natural outgrowth of this monopoly pricing is questioning whether companies are able to capture more money than the social benefit through this system because of above market pricing. Maybe.

Then we get into the "standing on top of giants" problem. Patents mean that you can't stand on giants for a period of time (I actually don't know the exact amount of time, but I think it's about 20 years). So patents retard one's ability to build on the inventions of yesterday.

So, patents encourage and discourage innovation, but is that why the majority of people are in favor of them? No. People see them as fair. People have an "I created this, it's mine" mentality. If you invented something, would you want other people ripping it off? If you wrote a song, would you like others passing it off as theirs - or worse, that their version was better? Ideally, you probably would - it would encourage the type of amazing developments that we see with things like the Creative Commons, but you probably won't feel that way and I don't believe in trying to convert people to different philosophies.

In the end, we mig

Tivo is Dead

[sheldon]

Companies are starting to offer DVR technology in other devices now. LG has it in a television and a DVD recorder. There are plenty of Windows Media Center PCs being sold these days, etc.

The problem with Tivo is the subscription service. First, the cost, second the fact that you need a phone line. It's inconvenient, and the subscription fee is a hidden cost for buyers. I even had Tivo with my DirecTV service in my old house, and I had to pay an extra $5.95 for it. That's ridiculous.

They ought to figure out a way to make it work just like a standard VCR easily and foolproof, and then license the technology to anybody and everybody who wants to build it into their existing devices. TV's could have a DVR built in for an extra $100. Why not?

The fact that they haven't realized this yet is evidence that their business acumen isn't very innovative.

Re:Tivo is Dead

[LordKronos]

With the exception the Series 1 units (and even then, I think it might only be a subset of Series 1 units), a TiVo without the service is essentially a doorstop. No manual recordings allowed.

The patent in question

[angle_slam]

I hate the way the news media covers cases like this because they never do something simple, like tell you what patent number is at issue. So this is a mere educated guess, but I think the patent in question is 6,233,389.

Here's claim 1:

1. A process for the simultaneous storage and play back of multimedia data, comprising the steps of:
accepting television (TV) broadcast signals, wherein said TV signals are based on a multitude of standards, including, but not limited to, National Television Standards Committee (NTSC) broadcast, PAL broadcast, satellite transmission, DSS, DBS, or ATSC;
tuning said TV signals to a specific program;
providing at least one Input Section, wherein said Input Section converts said specific program to an Moving Pictures Experts Group (MPEG) formatted stream for internal transfer and manipulation;
providing a Media Switch, wherein said Media Switch parses said MPEG stream, said MPEG stream is separated into its video and audio components;
storing said video and audio components on a storage device;
providing at least one Output Section, wherein said Output Section extracts said video and audio components from said storage device;
wherein said Output Section assembles said video and audio components into an MPEG stream;
wherein said Output Section sends said MPEG stream to a decoder;
wherein said decoder converts said MPEG stream into TV output signals;
wherein said decoder delivers said TV output signals to a TV receiver; and
accepting control commands from a user, wherein said control commands are sent through the system and affect the flow of said MPEG stream.

Re:I Think This Can Be Summed Up In Five Words

[Anonymous Coward]

Your analogy is busted. Someone asking how to use the hardware they purchased independant of the service is different than asking how to get the Tivo service from Tivo the company without paying.