Dish Network Corp. is in federal court in Santa Ana, Calif., this week seeking damages from a News Corp.-owned company that allegedly enabled individuals to pirate Dish satellite-TV signals.
Opening arguments in the case were Wednesday, with the Douglas County- based company claiming that NDS Group hacked Dish’s security cards in set-top boxes, resulting in $90 million in damages from pirated signals.
U.K.-based NDS provides encryption technology for DirecTV, the nation’s largest satellite-TV provider and Dish’s main rival. The company says it did nothing illegal.
Industry watchers and trade publications are calling the case the largest industrial espionage case to go on trial in the U.S.
In a court filing, Dish alleges NDS Group — on the verge of losing its contract with DirecTV in the late 1990s — hired hackers to crack Dish’s security cards supplied by NagraStar. Dish owns a 50 percent stake in Douglas County-based NagraStar.
Dish alleges that NDS built a state-of-the-art laboratory in Israel for the hackers. In addition to trying to undermine Nagra Star’s products, the hackers posted information on how to crack Dish Network set-top boxes in 2000 and sold rigged equipment through other deals, said Wade Welch, an attorney for Dish, during opening arguments.
“Rather than coming up with a better product, they chose to tear our product apart,” he said.
It cost Dish about $90 million to replace all the cards over a three-year period, Welch said. The company sued in 2003.
“NDS has done nothing to illegally harm or damage EchoStar (now Dish Network),” Richard Stone, an attorney for NDS, said in his opening statement. “All NDS has done is to compete hard but fair in the marketplace.”
Theft rings that steal satellite signals primarily targeting Dish have distributed “services and products to an estimated 2 million” households in the U.S. and Canada, according to a 2007 report by The Carmel Group. Many “cracked” set-top boxes are sold online for about $250, it said.
Dish chairman and chief executive Charlie Ergen is on the witness list, but it’s unclear whether or when he will testify. The trial is expected to last about four weeks.
Dish Network has more than 13.8 million customers.
The Associated Press contributed to this report.
Kimberly S. Johnson: 303-954-1088 or kjohnson@denverpost.com
