The U.S. Court of Appeals for the Federal Court has upheld a lower court's ruling that Charlie Ergen's EchoStar and DISH are still in violation of TiVo's patent, despite the companies' claims of major alterations to bypass TiVo's invention. The cost of the 2-1 ruling is likely to reach into the hundreds of millions ... and potentially beyond.

Not surprisingly, EchoStar/DISH hopes to keep the case alive in the courts. The company issued this statement shortly after the ruling: "We are disappointed in the Federal Circuit's split decision, but are pleased that Judge Rader agreed with our position. Therefore, we will be seeking en banc review by the full Federal Circuit. We also will be proposing a new design-around to the district court for approval. At this time, our DVR customers are not impacted."

Analysts at Stifel Nicolaus noted that EchoStar/DISH's request is "unlikely to succeed." In an even more ominous note, Bernstein Research analyst Craig Moffett noted: "The implications for Dish Network are enormous, and go far, far beyond the retrospective licensing fees and damages that will now be payable to TiVo. What is at stake is nothing less than their ability to continue to offer DVRs. And without DVRs... well, you can fill in the blank here, but it wouldn't be pretty."

TiVo said it would seek damages in excess of the $300M already awarded.

In response to the ruling, TiVo stock soared, closing the day up 61.9% at $16.53. Meanwhile DISH finished the day down 5.16% at $20.59 while EchoStar closed up slightly, 0.2% at $19.84.•