Updated from 8:18 a.m. EDT

TiVo

(TIVO) - Get Report

surged 14% after a federal judge ruled for the digital recording company in a patent dispute with

EchoStar

(DISH) - Get Report

, halting sales of certain EchoStar digital-video recorders and assessing the satellite broadcaster with $89.6 million in damages.

Alviso, Calif., TiVo had sued EchoStar in January 2004, alleging that EchoStar boxes infringed TiVo's time warp patent covering simultaneous playback and recording. EchoStar sank $1.10 to $31.65.

"TiVo is pleased that Judge Folsom has granted a permanent injunction against EchoStar's DVR products along with supplemental damages and interest," TiVo said in a statement. "This decision recognizes that our intellectual property is valuable and will ensure that moving forward EchoStar will be unable to use our patented technology without our authorization."

EchoStar pledged to appeal, though TiVo said an EchoStar motion to have the verdict stayed pending appeal was denied.

"This morning, EchoStar will ask the Federal Circuit Court of Appeals to block an injunction issued by a Texas Court yesterday, while EchoStar appeals that decision," the Engelwood, Colo., company said. "The Texas judge did not grant treble damages or attorney fees to TiVo, but he did let stand the jury decision that EchoStar digital-video recorders infringe a TiVo patent, and immediately enjoined continued sale of allegedly infringing DVRs. The injunction would also require that allegedly infringing DVRs in consumer homes be shut off within 30 days.

"We are pleased the Court concluded EchoStar did not act in bad faith and did not copy TiVo's technology, and we intend to continue our vigorous defense of this case," EchoStar said. "We believe that, for a number of reasons, the Texas Court should be reversed in all other respects on appeal. We also continue to work on modifications to our new DVRs, and to our DVRs in the field, intended to avoid future infringement. Existing DISH Network customers with DVRs are not immediately impacted by these recent developments, and we will keep consumers informed as events develop. We hope to have additional information for our customers very soon."

TiVo said it has a long list of licensees in the consumer electronics, cable and satellite markets, and "we will continue to license our technology under appropriate circumstances and arrangements. We will also continue to vigorously defend our intellectual property for the benefit of our licensees and shareholders."