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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 Nevadacorporation; 2. EchoStar DBS Corporation, aColorado corporation; 3. EchoStar TechnologiesCorporation., a Texas corporation; 4. EchosphereL.L.C., a Colorado limited liability company;5.EchoStar Satellite L.L.C., a Colorado limitedliability company; and 6.EchoStar Corporation, aNevada corporation.

Defendants.

No. 2-04cv01 DF(Judge Folsom)

DEFENDANTS REPLY IN SUPPORT

OF THEIR MOTION TO SUSPEND

PROCEEDINGS ON TIVOS

MOTION FOR SANCTIONS IN VIEW

OF THE FEDERAL CIRCUITS STAY

ORDER

Further briefing and a hearing this month on TiVos motion for contempt sanctionsis no

longer appropriate in light of the stay order of the United StatesCourt 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.

TiVos characterization of this potential outcome as remote ignores the fact that Federal

Circuit has already necessarily found, by granting EchoStars stay motion, that EchoStar has

shown it has at least a substantial case on the merits. (Defendants Mot. to Suspend

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Proceedings on TiVos Mot. for Sanctions [Dkt. 957], Ex. A (July1, 2009 Order) at 2.) The

Federal Circuits finding undermines the premise of TiVos sanctions motion, which casts

EchoStar as a deliberate wrongdoer with no reasonable basis for believing that it had complied

with the injunction.

Even if TiVo prevails on appeal, aspects of the Federal Circuits ruling could affect the

appropriate remedy. TiVos sanctions motionrelies on specific findings that may not remain

intact even if the Federal Circuit affirms this Courts conclusion that EchoStar did not comply

with every provision of the injunction. If so, any briefing, argument, or ruling on the issue of

sanctions in advance of the Federal Circuits decision would need to be revisited. Deferring

sanctions proceedings until after resolution of the expedited appeal would avoid such

inefficiency.

TiVos 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. This

simplistic retort ignores the substantial work of this Court reviewing briefing, case law, and

complicated financial evidence that will be required for consideration of TiVos motion,

which seeks nearly $ 1 billion in contempt sanctions. TiVos argument that the Court has

already definitively decided not to suspend sanctions briefing is likewise without merit. It is

unquestionably within the Courts discretion to suspend the briefing schedule.

TiVo further objects to deferring sanctions proceedings because it will delay a

determination of sanctions and reward EchoStar for its ongoing violation of TiVos patent

rights and its flouting of this Courts orders. (TiVos Opp. to EchoStars Mot. to Suspend

Proceedings on Sanctions [Dkt. 962] at 3.) But the predicate for contempt sanctions the

orders holding EchoStar in contempt and enjoining EchoStar was stayed because EchoStar

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has demonstrated at least 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) andBrown v. Braddick, 595 F.2d 961 (5th Cir. 1979), undermine

EchoStars position, but that is not so. In both cases the Fifth Circuit explained that, given the

absence of a stay during the relevant time period, the district court properly conducted

proceedings to enforce its order during the pendency of the appeal. See Revie, 834 F.2d at 1205;

Brown, 595 F.2d at 965. Here, by contrast, there is a stay in effect.

Lastly, TiVos analogy to the stay of damages trials fails. The authority that TiVo cites

makes 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 topermita 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, the

predicate contempt finding has itself been stayed and called into question. Because TiVos

sanctions motionrelies on specific findings made in that order, it is inextricably intertwined with

the 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 TiVos assertions, EchoStar requested a stay of the Order as well.(TiVos Opp. to EchoStars Mot. to Suspend Proceedings on Sanctions [Dkt. 962], Ex.B(EchoStars Stay Motion) at 3.) Moreover, the operative language is that of the Federal Circuitsstay order, which plainly stays both the contempt and injunctive aspects of that order.(Defendants Mot. to Suspend Proceedings on TiVos Mot. for Sanctions [Dkt. 957], Ex.A(July1, 2009 Order) at 1.)

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EchoStar respectfully submits that the Court should defer any further litigation of

sanctions, including vacating the remaining briefing and the scheduled hearing, pending the

Federal Circuits resolution of the expedited appeal.

DATED: July 13, 2009 Respectfully submitted,

By: /s/Rachel Krevans

Rachel Krevans (Pro Hac Vice)Scott Llewellyn (ProHac Vice)MORRISON & FOERSTER LLP425 Market StreetSan Francisco, California 94105-2482

Telephone: (415) 268-7000Facsimile: (415) 268-7522

Attorneys for EchoStar Defendants

Of Counsel:Damon YoungYOUNG PICKETT & LEEPost Office Box 18974122 Texas BoulevardTexarkana, Texas 75504Telephone: (903) 794-1303Facsimile: (903) 792-5928

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CERTIFICATE OF SERVICE

This is to certify that a copy of the foregoing document was served on all parties by

electronic filing and service on July 13, 2009.

/s/Rachel Krevans