Jan. 31 (Bloomberg) -- TiVo Inc., the pioneer of digital video recording, won an appeals court ruling that Dish Network Corp. infringed its patent on the technology. TiVo rose the most since March 2005.

The U.S. Court of Appeals for the Federal Circuit also upheld a $74 million damage award, which has since increased to $94 million. The lower court had ordered Dish to stop providing the DVR service, a decision put on hold pending appeal. Dish, formerly known as EchoStar Communications, has time for further appeals before the order is enforced and said customers won't be affected because of recent service changes.

``EchoStar's engineers have developed and deployed `next- generation' DVR software to our customers' DVRs,'' Dish spokeswoman Kathie Gonzalez said in an e-mailed statement. ``This improved software is fully operational, has been automatically downloaded to current customers, and does not infringe the TiVo patent at issue in the Federal Circuit's ruling.''

The decision means TiVo will get at least $100 million in cash, or about $1 a share, and ``more importantly, this win will provide strategic benefits and significant negotiating power'' with cable and satellite TV companies using DVR technology, Citigroup analyst Tony Wible wrote in a report today. TiVo Chief Executive Officer Thomas Rogers has been shifting the business from focusing on set-top boxes to licensing its software.

Agreements, Not Litigation

Rogers said in a Jan. 9 interview that a favorable ruling could lead to the uncovering of patent violations by other competitors. Rogers said TiVo would prefer to reach agreements rather that have more litigation. Comcast Corp. began offering its cable customers TiVo DVR service in the Boston area this month.

TiVo rose $1.97, or 29 percent, to $8.77 in Nasdaq Stock Market composite trading, giving the company a market value of $867.7 million. Dish fell 15 cents to $28.24 on the Nasdaq.

Current Dish customers can continue to use their DVRs ``without interruption or changes,'' Gonzalez said. She also said the Englewood, Colorado-based company will ask the Federal Circuit, which specializes in U.S. patent law, to reconsider today's decision.

Under U.S. patent law, TiVo, based in Alviso, California, can ask the judge in Marshall, Texas, to rule that the current version of Dish's DVR service also infringes the patent.

`False and Misleading'

``EchoStar has made a series of statements over the years related to the infringement of the TiVo patent that has turned out to be both false and misleading,'' TiVo said in an e-mailed statement. ``At this point it doesn't really matter what EchoStar says by way of further self-serving statements. It matters what the courts say -- and the courts have spoken.''

The Federal Circuit, located in Washington, upheld a jury's finding that Dish products infringed TiVo's patent related to software. It overturned a finding of infringement related to hardware and sent that aspect of the case back to the lower court for review.

The damage award covered past infringement. TiVo also can ask U.S. District Judge David Folsom in Texas to further increase the amount of money Dish owes to reflect the time the order against Dish's DVR service was put on hold.

TiVo's so-called time warp patent covers technology that lets users record a television program and play it back at the same time to allow, for example, instant replay or pausing. TiVo recorders also let television viewers skip advertisements.

Dish's appeal centered in part on how its devices store and access video and audio files compared with what is covered by the patent owned by TiVo.

The case is TiVo Inc. v. EchoStar Communications Corp., 06- 1574, U.S. Court of Appeals for the Federal Circuit. The lower court case is case is TiVo Inc. v. EchoStar Communications Corp., 04cv01, U.S. District Court, Eastern District of Texas (Marshall).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; William McQuillen in Washington at bmcquillen@bloomberg.net.

Last Updated: January 31, 2008 16:30 EST