News

Jury Mulls Value of Satellite Pirates’ Booty

5/09/2008 8:00 PM Eastern

Eight jurors will mull hundreds of exhibits and four weeks of testimony, much of it from convicted satellite-signal thieves, to decide if EchoStar Communications met its burden to prove that NDS Americas Group was responsible for a wave of direct-broadcast satellite piracy in 2003 that caused up to $1 billion in lost profits.

The suit alleges that NDS Group, a conditional-access developer and a division of News Corp., used a crew of engineers dubbed the “Black Hat Team” to hack the satellite-TV provider’s security cards, and then was responsible for a leak of that information to pirate Web sites just days after a report on their work was completed. The original suit was filed by EchoStar (now Dish Network) in 2003,

NDS attorneys say the suit is really in retaliation for EchoStar’s failed bid to buy then-News Corp. division DirecTV, a failure which caused EchoStar to pay a $600 million breakup fee. Further, the defense added, EchoStar’s Dish Network service was frequently hacked, adding that information was seen on the Internet, describing weaknesses and a “back door” to Dish’s conditional-access system as early as 1998. One such post even claimed to have hacked into EchoStar’s own corporate FTP site to steal security information.

“EchoStar just wants someone to pay for their card swap,” said NDS attorney Darrin Snyder, noting an EchoStar executive testified that CEO Charlie Ergen thinks the hardware should “last forever.”

The trial has provided an intriguing peek into the hacking and anti-piracy communities, the borders of which were never quite clear. One firm’s pirate was another firm’s “consultant.”

Christopher Tarnovsky, whom EchoStar has alleged at trial was the Internet poster known as “Nipper” or “Nipper Clauz,” among other aliases, is a known pirate, but he also worked for NDS. However, his pay was issued by publisher Harper Collins, another News Corp. division. NDS’s CEO Abe Peled testified May 6 that this arrangement was to protect Tarnovsky’s identity from other pirates who might want to kill him. (Peled left the U.S. after an April 30 deposition, but returned to testify after the judge threatened to tell the jury he’d left without testifying in person.)

Tarnovsky, who testified, was fired by NDS shortly before his scheduled deposition in the case.

One of the pirates painted as a threat to Tarnovsky was Ron Ereiser, a Canadian pirate. He’s alleged to have provided thousands of pages of perhaps stolen internal NDS documents to EchoStar for its defense.

Ereiser’s current job? He’s being paid by NagraStar, the co-plaintiff in the case and the security partner of EchoStar, to set up an anti-piracy lab in Canada, according to testimony by NagraStar CEO Pascal Lenoir.

The jury will have to determine if EchoStar proved NDS violated two sections of the Digital Millenium Copyright Act, the Communications Policy Act of 1934 and two sections of the California Penal Code (the case has been argued in federal court in Santa Ana).

In the case of the federal counts, the jury will have to determine if the offenses occurred after the federal laws were in effect: Oct. 28, 2000, in the case of the DMCA and June 6, 2000, in the case of the update of the Communications Policy Act.

The will also have to decide on an NDS countersuit, determining whether EchoStar violated the California Uniform Trade Secrets Act by obtaining and using inside NDS documents.

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