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Canal+ and NDS in Countersuits

Vivendi Universal S.A. digital-television division Canal+ Group announced
Tuesday that it has filed suit against News Corp.'s NDS Group plc, alleging that
NDS cracked its digital-television-security code and published it on the

Canal+ estimated that damages exceeded $1 billion when counterfeiters
produced illegal smart cards after finding the code on Web sites they

The suit was filed Monday in the U.S. District Court for the Northern
District of California.

NDS issued a press release Tuesday stating that it had not yet been served
with the complaint and adding that it plans to file a counterclaim once it has
had a chance to review the complaint.

NDS called the Canal+ lawsuit 'outrageous and baseless,' and it said in the
press release that it remains committed to 'eradicating piracy from the
conditional-access industry.'

In a conference call with reporters Tuesday, Canal+ executive vice president
Francois Carayol alleged that NDS engineers in Israel deliberately set out to
break the security code on smart cards Canal+ used in Europe in 1998, then
published the code on Web sites frequented by hackers and counterfeiters in

The financial impact included lost business opportunities, damage to existing
customer relationships and the cost of implementing electronic countermeasures
to render the counterfeit cards inoperable, Carayol said.

In the United States, NDS provides conditional-access services for DirecTV

If the proposed merger between DirecTV parent Hughes Electronics Corp. and
EchoStar Communications Corp. goes through, the combined direct-broadcast
satellite company would likely adopt a single conditional-access system.

EchoStar spokeswoman Judianne Atencio said the merger-transition team has
made no decision regarding conditional-access plans following the