EchoStar Pays NDS $18.9M To Resolve Hacking Litigation

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EchoStar paid $18.9 million to NDS to close the books on a nearly a decade-old case in which the satellite TV operator accused NDS of compromising Dish Network's conditional-access system, after the U.S. Supreme Court declined to review the case in January.

Separately, last week Cisco Systems announced a $5 billion bid for NDS, a provider of conditional-access solutions and middleware software for pay TV operators worldwide.

EchoStar Communications sued NDS in 2003 seeking up to $2 billion, alleging NDS was responsible for hacking into the conditional-access system developed by NagraStar, a joint venture between EchoStar and Kudelski Group, by reverse-engineering smartcards and leaking the information on the Internet.

In May 2008, a California jury found that NDS violated antipiracy laws by hacking the EchoStar CA system but awarded EchoStar only $1,500 in statutory damages. The court found that EchoStar was entitled to a permanent injunction prohibiting NDS from compromising EchoStar's security system.

In August 2010, the Ninth Circuit Court of Appeals upheld the district court's finding that NDS had violated antipiracy laws. However, the appeals court awarded NDS $18 million in the case, ruling that "EchoStar did not succeed 'on any significant issue' or 'achieve any of the benefit it sought in bringing suit' under the Communications Act."

On Jan. 17, the Supreme Court denied of EchoStar and Dish's petition to review the case. NDS said it received payment of $18,935,399.49 from EchoStar on March 9, a sum that included district court fees and costs, appellate court fees and costs, and interest.

In a statement, NDS executive chairman Abe Peled said, "This brings an end to this long drawn-out process in which we vehemently denied all allegations of piracy which were made against us over a decade ago. Piracy is an issue throughout the industry and injurious to all in the value chain; it is only with the active antipiracy efforts of companies such as ourselves that the pay-TV industry is able to evolve and continue to enable people to enjoy premium TV viewing."

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