• by David Goetzl  @dgoetzl, April 13, 2006

In a move that wards off a potential lawsuit, DirecTV has agreed to continue offering TiVo service for three more years.

The deal prevents TiVo from suing DirecTV for patent infringement regarding the new DirecTV-branded DVR, which the satellite operator launched last fall.

TiVo has sued DirecTV competitor EchoStar on those grounds, and the case is ongoing in a Texas court.

A DirecTV representative, Robert Mercer, declined comment on what role potential litigation may have played in the extension of the deal.

Although the agreement means DirecTV's 2 million TiVo customers will be able to continue with the service through 2010, the satellite operator will not add any new TiVo users after February 2007.

DirecTV no longer markets TiVo, and wants new customers to opt for its own DVR. That commitment is "as strong as it ever was, if not stronger," said DirecTV's Mercer.

The deal, however, gives DirecTV some time to persuade its TiVo users to switch to its own service. Had an agreement not been reached, DirecTV could have lost customers with a special affection for the TiVo service.

For TiVo, the agreement is at least a band-aid, since it allows its DirecTV users (which make up nearly half of its 4.4 million customers) to keep TiVo until at least 2010.

A TiVo representative declined comment.

Avoiding the potential loss of millions of customers seemed to soothe investors yesterday, as TiVo shares were trading up 7 percent at midday, near a 52-week high.

TiVo may also get a boost later this year when Comcast begins offering TiVo as an option to customers--a move that could show that TiVo still has brand equity even as generic DVRs proliferate.