NDS, DirecTV trade punches over
conditional access tech

Duffy Hayes, CED
From the October 22th edition of CED Broadband Direct

One thing is for certain in the conditional access technology sector for DBS receivers: lawyers on all sides are getting paid.

The latest legal barb was launched today by NDS Limited, the technology unit of media monolith News Corp., against North American DBS provider DirecTV Inc. NDS filed the countersuit in response to a suit DirecTV initiated last September in U.S. District Court in Los Angeles. NDS supplies DirecTV with conditional access and security systems for its DBS receivers.

NDS’s suit, which also names two DirecTV subsidiaries -- a chip manufacturer and the manufacturer’s sales affiliate -- alleges that the parties “misappropriated NDS’s trade secrets and proprietary information, conspired to infringe NDS’s patents, colluded to create unfair competition, and breached agreements and licenses restricting the use of NDS’s intellectual property.”

In simpler terms, NDS claims that DirecTV has been developing a knock-off version of NDS’s latest generation smart card. The company also alleges that DirecTV has been leaking some of that smart card technology to pirate Web sites in an effort to establish cause for the satellite operator to breach agreements in place with NDS.

DirecTV countered that NDS’s allegations are “a desperate attempt to shift blame for its own gross misconduct and shortcomings onto its customer, DirecTV.” Though NDS’s countersuit is in response to a suit first initiated by DirecTV, no details about DirecTV’s specific allegations against NDS are available, as the complaint presently is under seal and DirecTV has declined to provide more detail.

For NDS, all this talk of patent infringement and surreptitious leaking of technology to pirate Web sites is a familiar refrain. In March, Vivendi Universal’s Canal Plus unit filed suit against NDS, claiming the company had hacked into the Canal Plus system, stolen the security code that makes up the Canal Plus CA technology, and then posted that information to a pirate site. However, that suit ended on Oct. 1 without resolution as a result of a deal struck as part of News Corp.’s agreement to buy Vivendi’s Italian pay-TV unit Telepiu for close to one billion euros.