EchoStar Communications went to court against a California set-top distributor that it claimed is stealing its signals, using “pirate software” in a pervasive scheme that allegedly brings unauthorized Dish Network programming to an estimated 2 million homes.
“With the Internet as a sword, pirates developed a new way to steal Dish Network programming by using so-called free-to-air receivers,” EchoStar said in a 19-page copyright suit filed earlier this month in U.S. District Court in the Southern District of California.
The lawsuit was filed July 13 by EchoStar and its NagraStar unit, which provides Dish’s descrambler microprocessor “smart cards,” against FTA set-top distributor Viewtech of Oceanside, Calif., and its founder and president, Jung Kwak.
Viewtech couldn’t be reached for comment Monday. But a lawyer who identified himself as counsel for Viewtech posted a letter on EliteCoders claiming that the company and Kwak will “vigorously defend” themselves “against the baseless claims” made by EchoStar and NagraStar.
“None of Viewtech’s distributors, dealers or customers are named or even identified in the allegations of the complaint, or on any other list,” attorney Manuel de la Cerra said in his letter on the Web site. “The Federal Court has not been asked, nor has it given any interim relief whatsoever, to either EchoStar or NagraStar. Viewtech and Mr. Kwak are confident that they will prevail as the lawsuit proceeds, and they will keep all of you informed of any significant developments in the future.”
In a new twist, the suit claimed that pirates are now not only loading illegal pirate software onto FTA receivers so that customers can get Dish service free, but are also “distributing the requisite piracy technology and information to select individuals on Web sites or Internet discussion forums, who then offer the pirate software to consumers for download.”
The suit, alleging violations of state and federal law, asks the court: to issue an injunction to bar Viewtech from trafficking in FTA receivers and pirate software; for an order impounding all electronic copies of the software; for damages; and for an accounting and restitution by Viewtech for all of the gain and profit it derived by its allegedly illegal actions.
FTA set-tops can receive satellite signals that are either not scrambled or are scrambled but are available free-of-charge, typically ethnic and religious programming.
But EchoStar charged in its lawsuit that makers of FTA receivers have found a way to circumvent Dish’s access-security system by developing “firmware and components within each unit that will accept and receive illegal pirate software … Once this technology is downloaded or ‘flashed’ into the FTA receiver, the unit will illegally receive Dish Network programming.”
The suit alleged that commercial pirates have acquired, modified and sold FTA receivers by acquiring them direct from a manufacturer, loading or “flashing” the pirate software, and ultimately selling those receivers to “consumer pirates on the Internet.” The new twist is offering the pirate software for download.
“The distribution, sale and use of FTA receivers for piracy pose a serous threat to EchoStar and NagraStar,” according to the suit.
Viewtech is one of the top four FTA sellers, according to a report on FTA set-tops by The Carmel Group, “in large measure because of its superior customer service and support.”
The report estimated that FTA pirates have distributed their illegal services and products to an estimated 2 million households in the United States and Canada. EchoStar has 13 million legal subscribers.
EchoStar’s suit specifically alleged that the satellite equipment distributed by Viewtech “contains computer firmware and components designed to accept the download of pirate software created solely for ‘Viewsat’ branded FTA receivers. Once flashed with this technology, these FTA receivers can and will illegally receive Dish Network programming.”
The suit charged that Viewtech’s authorized dealers advertise and promote these Viewsat-branded FTA receivers on several popular Web sites.
“These Web sites not only provide consumers with illegal pirate software, but offer instruction and information used to unscramble and steal Dish Network programming,” the suit said.
In its report, The Carmel Group said that when No. 1 direct-broadcast satellite provider DirecTV cracked down on piracy in 2004, those pirates then turned their attention to “the now more vulnerable Dish Network.”
The FTA units are selling at about $200, putting retail sales for the items at about $350 million, according to The Carmel Group.
“In short, the FTA today in North America is big business,” the analyst said in its report.
The three biggest distributors of the FTA units -- Pansat, Coolsat and Fortec -- have distributed an estimated 1.4 million set-tops, representing sales of more than $200 million since 2004, The Carmel Group said.
“Whichever manufacturer provide the best piracy support, best features and functions at a price below $200 per FTA unit is going to sell a lot of FTA units,” The Carmel Group said. “This means companies like Dish Network in the United States and Bell ExpressVu in Canada are losing a lot of subscriber revenue … the FTA manufacturers and others associated with the multichannel-TV-piracy business are delivering a lot of illegal gains.”
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