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1
sf 
-
2712168
 
IN THE UNITED STATES DISTRICT COURT
 
FOR THE EASTERN DISTRICT OF TEXAS
 
MARSHALL DIVISION
 
TiVo Inc., a Delaware corporation,
 
Plaintiff,
 v.1.
Dish Network Corporation,
a Nevada
c
orporation
; 2. EchoStar DBS Corporation, a
Colorado corporation; 3. EchoStar TechnologiesCorporation., a Texas corporation;
4. Echosphere
L.L.C.
, a Col
orado limited liability company;5.
 
EchoStar Satellite L.L.C.,
a Col
orado limitedliability company; and 6.
 
EchoStar Corporation, a
Nevada corporation.
 
Defendants.
 
No.
2-
04cv01 DF
 (Judge Folsom)
DEFENDANTS’
REPLY IN SUPPORT
OF THEIR MOTION TO SUSPEND
PROCEEDINGS ON
TIVO’S
MOTION FOR SANCTIONS IN VIEW
OF THE FEDERAL CIRCUIT’S STAYORDER
 
F
urther briefing and a hearing
this month
on TiVo’s
motion for contempt
sanctions
 
is
no
longer appropriate
in light
of the
stay
order of the U
nited States
 
Court of Appeals for the Federal
Circuit
.
TiVo
does not and
cannot deny that if EchoStar prevails
on appeal, there
will
be no basis
for contempt sanctions, and any briefing or consideration of that issue would be for naught.
TiVo’s characterization of this potential outcome as “remote” ignores the fact that Federal
Circuit has already necessarily found, by granting EchoStar’s stay motion, that EchoStar has
shown it has at l
east a “substantial case on the merits.” (Defendants’ Mot. to Suspend
 
 
2
sf 
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2712168
 
Proceedings on TiVo’s Mot.
for Sanctions [Dkt. 957]
,
Ex. A (July
 
1, 2009 Order
)
at 2.) TheFederal Circuit’s finding undermines the premise of TiVo’s sanctions motion, which casts
Echo
Star as a deliberate wrongdoer w
ith no reasonable basis for
believing that it had complied
with the injunction
.E
ven if TiVo prevails on appeal, aspects of the Federal Circuit’s ruling could affect theappropriate remedy. TiVo’s sanctions motion
 
relies o
n specific findings that may not remain
intact even if the Federal Circuit
affirms this Court’s conclusion
that EchoStar
did not comply
with every provision of the injunction.
If so, any briefing, argument, or ruling on the issue of 
sanction
s
in advance o
f the
Federal Circuit’s decision
would need to be revisited.
 
Deferring
sanctions
proceedings
until after resolution of the expedited appeal would avoid suchinefficiency.
TiVo’s response on the issue of judicial economy is that the
sanctions
hearing set for later
this month
will be short because each side was allotted only 30 minutes for argument. Thissimplistic retort ignores the substantial
work of this Court
— reviewing briefing, case law, and
complicated financial evidence
—
that will be
required
for consideration of TiVo’s motion,
which seeks
nearly $ 1 billion in contempt sanctions
. TiVo’s argument that the Court hasalready definitively decided not to suspend sanctions briefing
is likewise without merit. It is
unquestionably within the Court’s
discretion to
suspend the briefing schedule.
TiVo further objects to deferring sanctions proceedings because it will delay adetermination of sanctions and “reward EchoStar for
its
ongoing violation of TiVo’s patent
rights and its flouting of this Court’s
orders.” (
TiVo’s Opp. to EchoStar’s Mot. to SuspendProceedings on Sanctions [Dkt. 962] at 3.) But the predicate for contempt sanctions
—
theorder
s
holding EchoStar in contempt and enjoining EchoStar
—
was stayed because EchoStar
 
 
3
sf 
-
2712168
 
has demonstrated at le
ast a substantial case on the merits.
1
Moreover, delay will be minimal,
given that the Federal Circuit has expedited the appeal.
 
TiVo claims that the two Fifth Circuit rulings that EchoStar cited,
United States v. Revie
,834 F.
2d 1198 (5th Cir. 1987) and
 Brown v. Braddick 
, 595 F.2d 961 (5th Cir. 1979)
,
undermine
EchoStar’s position, but
that is not so. In both cases
the Fifth Circuit explained that,
given theabsence of a stay
during the relevant time period
 ,
the district court properly conductedproceedi
ngs
to enforce its order during the pendency of the appeal.
See Revie
,
834 F.2d at 1205
;
 Br 
own
,
595 F.2d at 965. Her
e, by contrast, there is a stay in effect.
 
Lastly, TiVo’s analogy to the stay of damages trials fails. The authority that TiVo citesmake
s clear that a court has the discretion to stay damages trials pending appeal.
See In re
Calmar, Inc.
, 854 F.2d 461, 464 (Fed. Cir. 1988) (“
it is clear that the purpose of the legislation,[28 U.S.C.]
§ 1292(c)(2),
allowing interlocutory appeals in patent cases was to
 permit 
a stay of a
damages trial”
) (emphasis in original)
. Furthermore, there are
good
reasons for deferring
contempt sanctions proceedings that do not apply
to
damages trials. As noted above, thepredicate contempt finding has itself been stayed and called into question. Because TiVo’s
 
sanctions motion
 
relies on specific findings made in that order, it is inextricably intertwined withthe issues now on appeal. In addition, because the injunction has been stayed, it would
be
improper at this juncture
to impose sanctions as a means of coercing
compliance.
1
Contrary to TiVo’s assertions, EchoStar requested a stay of the “Order” as well.(TiVo’s Opp. to EchoStar’s Mot. to Suspend Proceedings on Sanctions [Dkt. 962],
Ex.
 
B(EchoStar’s Stay Motion) at 3.) Moreover, the operative language is that of the Federal Circuit’sstay order, which plainly stays both the contempt and injunctive aspects of that order.(Defendants’ Mot. to Suspend Proceedings on TiVo’s Mot. for Sanctions [Dkt. 957],
Ex.
 
A
(July
 
1, 2009 Order) at 1.)
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