EchoStar Wins Battle, Loses War In News Corp. Unit Piracy Case

Santa Ana, Calif.—A California jury Thursday found that NDS Group Americas, a division of News Corp., had violated a pair of piracy laws by hacking EchoStar Communications’ conditional access system, however it only awarded $1,500 in statutory damages—a far cry from the $1 billion in damages EchoStar had been seeking.

EchoStar (now Dish Network) alleged that NDS Group in 2003 reverse-engineered its "smart cards" then leaked the hacking information on the Internet. EchoStar asserted the company sought to improve its position as a system security provider by diminishing the reputation of NagraStar LLC, EchoStar's security provider.

EchoStar owns 50% of NagraStar.

EchoStar could opt to accept the statutory damage award or the actual damages. But the latter award was even smaller: $46.95 for each of the two counts the jury believed EchoStar had proved.

The jury felt EchoStar had met its burden of proof that NDS violated an anti-piracy section of the Cable Communications Policy Act and California state law against piracy. The award represents the cost of a single piece of EchoStar's anti-theft system. The jury voted no damages for co-plaintiff Nagrastar.

In prepared e-mail statement, EchoStar officials sounded both vindicated and dejected by the jury’s decision.

“We are pleased that after four weeks of testimony on all the facts, the jury concluded that NDS violated the Federal Communications Act and the California Penal Code,” the company said in the statement. “We will continue to vigorously prosecute those individuals and companies that engage in stealing our satellite signals. While we are disappointed in the jury’s damages award, we are pleased that NDS will be responsible for our attorney fees in this case, and that we were completely vindicated on NDS' meritless counterclaims."

Darrin Snyder, one of the attorney's for NDS, said "NDS is pleased with the jury verdict."

The trial put an end to the lie that NDS had any responsibility for piracy at EchoStar, he said, adding the jury's verdict was consistent with the evidence.

Late Thursday afternoon, company officials offered a more detailed and celebratory statement:

"Today the jury in the Federal Southern California District Court overwhelmingly exonerated NDS Group companies in the lawsuit brought by Echostar and Nagrastar, a joint venture company between Echostar and Kudelski Group," NDS officials said in the statement. "NDS is pleased that the four-week long trial in which NDS faced baseless allegations, widely repeated and exaggerated to suggest the involvement of our majority shareholder News Corporation, has ended in a resounding affirmation of NDS and its business ethics and proper conduct."