EchoStar Piracy Trial Against Murdoch Unit Kicks Off

Author:
Updated:
Original:

Nearly five years after filing suit, EchoStar Wednesday went to trial regarding its allegations that a News Corp. subsidiary hacked into the Dish Network’s encrypted “smart cards,” allowing people to pirate satellite programming.

A trial on EchoStar’s lawsuit against NDS Group kicked off in the U.S. District Court, Central Division of California, in Santa Ana.

EchoStar claims that NDS—a New Corp. unit that supplies encryption security for the smart cards, or access cards, that prevent people who have not paid for satellite programming from receiving it—put a hacker on its payroll to crack the security code for EchoStar’s smart cards, which control access to Dish Network programming.

In its litigation, EchoStar charges NDS with copyright infringement, unfair competition, misconduct, and mail and wire fraud. In a counterclaim, NDS has denied EchoStar’s allegations.

But now a jury will weigh both sides of the case, in a trial that’s expected to take several weeks.

The case may eventually shed light on the past relations of two media titans: Charlie Ergen, founder and CEO of EchoStar, which has now officially taken on the name Dish Network, and News Corp. chairman Rupert Murdoch. Ergen is listed as a witness for the trial.

Back in 1997, Ergen and Murdoch talked about merging their satellite assets, but Murdoch dashed the deal over whose smart card would be used, according to a published report Tuesday in The Australian Financial Review.

Many of the filings in the case have been sealed, but according to The Australian, EchoStar is seeking $1 billion in damages.

In a bizarre and complex tale, EchoStar alleges in its complaint, which has been amended several times, that around 1998 NDS hired noted satellite hackers and pirates, including a man named Christopher Tarnovksy, to work for it.

“NDS made the calculated decision to hire the ‘worst’ and most well-known satellite pirates and hackers in the world in an effort to establish and maintain ‘control’ over the compromising of its CAS (conditional access system) product as well as its competitors’ technology,” EchoStar said in its suit.

The satellite company claimed that NDS thought “if it could control hackers, and breaches of its encryption security…as well as orchestrating breaks in its competitors’ security systems,” NDS’s technology would seem superior.

At the time, NDS was competing for business with a rival smart-card provider, NagraStar, which is owned by EchoStar and the Kudelski Group.

According to EchoStar’s filings, Tarnovsky developed a device in 1999 that could reprogram EchoStar access cars, so pirates could access Dish Network programming without authorization, for free. Tarnovksy called this reprogramming device “the stinger,” according to EchoStar’s suit.

NDS and Tarnovksy conspired to put pirated EchoStar access cards into the black market, and created a distribution network for illegally altered access cards and other devices designed to hack into the satellite provider’s security system, the suit charges.

NDS, through Tarnovksy, sold pirated and altered EchoStar access cards and signal-theft devices; would alter cards sent in; and supplied technical support for altered cards, the lawsuit claims.

In December 2000 in two Web postings, Tarnovksy published EchoStar access-card codes that compromised 7.6 million cards that were in circulation, which “rendered a global card-swap by plaintiffs (EchoStar) unavoidable,” according to the suit.

In its counter claim and other legal filings, NDS denies EchoStar’s allegations.

“The undisputed evidence proves the plaintiffs have grossly overstated the scope and effect of the December 2000 postings,” NDS said in legal filings.

NDS said it hired Tarnovsky as part of its lawful efforts to stop the pirating of its own encryption technology.

EchoStar “will never succeed in proving that NDS” was responsible for the December Web postings, NDS said in its legal papers.

Related