News

EchoStar Wins Piracy Case

5/16/2008 8:00 PM Eastern

After five years of haggling and a one-month trial, satellite-TV provider Dish Network received a verdict in its favor on two counts related to the piracy of its conditional-access system, but the eight-person jury opined the digital broadcast satellite company suffered only $1,500 in statutory damages.

The picture was worse if the company had accepted the jury's actual damages assessment, which it reached after one day of deliberations: $45.69 for each of the two counts. That's the cost of one smart card.

Attorneys for Dish, formerly EchoStar Communications, exited the U.S. District Court here quickly, referring any questions regarding the verdict or a possible appeal to the corporate offices. In a press release later in the day, the company said it was pleased with the victory, alluding to the counts the jury agreed attorneys had proven.

“We are pleased that after four weeks of testimony on all the facts, the jury concluded that NDS violated the Federal Communications Act and the California Penal Code. We will continue to vigorously prosecute those individuals and companies that engage in stealing our satellite signals,” the statement said.

“While we are disappointed in the jury's damages award, we are pleased that NDS will be responsible for our attorney fees in this case, and that we were completely vindicated on NDS's meritless counterclaims.”

NDS's legal team was ebullient. Attorney Darrin Snyder said the jury's verdict followed the evidence and it “put an end to the lie” that NDS had anything to do with EchoStar's piracy.

The verdict came only after one more controversy. There was the possibility of a mistrial once the EchoStar legal team notified the court that one of its attorneys spoke briefly to a juror on May 13.

When quizzed by the judge May 15, the juror explained that she had forgotten that she was to appear in a first-floor jury room, not in the ninth-floor courtroom, and had asked EchoStar attorneys why she was locked out of the courtroom. Judge David O. Carter determined that, in his opinion, the contact had not been prejudicial to the case. He allowed the verdicts to be read as planned.

EchoStar and NagraStar sued NDS in 2003, alleging the wave of piracy that hit the direct-broadcast satellite company to that point was attributable to hacking information distributed widely on the Internet. In court, testimony affirmed that NDS engineers in Haifa, Israel, did reverse engineer satellite-TV smart cards, but those workers stressed they had not leaked any information. NDS, in final arguments, noted that EchoStar hacking information has been available on the Internet since 1996 and that the company itself noted in Securities & Exchange Commission filings in the late 1990s that it might have to swap out security smart cards if the hacking continued.

EchoStar did swap out more than 9 million smart cards in 2003, a process EchoStar said cost the company and NagraStar $93 million.

NDS had brought a counterclaim alleging EchoStar violated California's Trade Secrets Act. NDS alleged EchoStar used stolen internal documents in its case. But that charge was not proven, the jury ruled.

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