DISH Network and parent company EchoStar have agreed to a half-billion dollar settlement with TiVo over litigation regarding DVR patents. A couple weeks ago, a federal appeals court decision ordering DISH and EchoStart to shut down DVRs due to their infringement upon TiVo patents was upheld.

It’s worth noting that this would have only affected older models of DISH DVRs, and the company said it would work to replace those still in use by customers. Now, here’s what the two parties have worked out, per an announcement released this morning:

Under the terms of the settlement, DISH Network and EchoStar agreed to pay TiVo $500 million, including an initial payment of $300 million with the remaining $200 million distributed in six equal annual installments between 2012 and 2017. TiVo, DISH Network and EchoStar agreed to dismiss all pending litigation between the companies with prejudice and to dissolve all injunctions against DISH Network and EchoStar.

The parties also granted certain patent licenses to each other. TiVo granted DISH Network a license under its Time Warp patent (US Pat. No. 6,233,389) and certain related patents, for the remaining life of those patents. TiVo also granted EchoStar a license under the same ‘389 patent and certain related patents, for the remaining life of those patents, to design and make certain DVR-enabled products solely for DISH Network and two international customers. EchoStar granted TiVo a license under certain DVR-related patents for TiVo-branded, co-branded and ingredient-branded products.

“We have tremendous respect for TiVo’s management, and we have always said that regardless of the outcome of the case, there were many ways that we could work together with TiVo,” said Charlie Ergen, Chairman and CEO of DISH Network. “The results of TiVo’s formidable intellectual property enforcement program speak for themselves, and consequently, we are pleased to put this litigation behind us and move forward. Additionally, we believe that our agreement with TiVo provides us a competitive advantage as one of the few multichannel operators with rights to operate under TiVo’s Time Warp patent, which ultimately will allow us to enhance the performance of our award-winning DVRs. We look forward to continuing to offer DISH Network customers the most choices in video service.”

“We are extremely pleased to reach an agreement with DISH Network and EchoStar which recognizes the value of our intellectual property,” said Tom Rogers, president and CEO of TiVo. “The compensation from this settlement, including the resulting reduction in legal expenditures, puts TiVo in an enviable financial and strategic position. This settlement, which brings the total compensation paid by DISH Network for use of TiVo’s ‘389 patent family to over $600 million, demonstrates the significant return afforded to our shareholders by diligent enforcement of TiVo’s intellectual property rights. Those efforts will aggressively continue with other parties.”

Interestingly, the DISH and TiVo have formed a partnership in which they will work together to promote Blockbuster services (the company was recently acquired by DISH). “We are excited to work with TiVo to help develop our Blockbuster video service,” said Ergen. “Resolving the patent infringement case allows us to further engage with TiVo on a variety of exciting strategic initiatives, like Blockbuster, where we are uniquely positioned to collaborate.”

It will be interesting to see how another DISH collaboration – one with Google develops in the coming months. Recent reports indicate that Google is working on a new version of Google TV, which may be displayed as early as next week, at Google I/O, the company’s developer conference.

DISH was a launch partner for Google TV, announced at last year’s Google I/O event. Since its launch, sales of Google TV devices have been less than impressive. You must remember, however, that Google TV is a platform, as opposed to a device. If Google can continue to make the right partnerships, it may be harder to count the platform as dead in the water. If Google is able to follow Netflix’s lead (or even that of its own Android mobile OS) and get Google TV on a wide range of devices, it should have a better adoption rate. Android integration is supposed to get ramped up, so that should help. It could, in turn, help DISH Network as well.