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Supreme Court Declines To Hear EchoStar Appeal In NDS Suit

The U.S. Supreme Court last week denied a petition by EchoStar and Dish Network to review a decision in their litigation alleging NDS hacked into the satellite TV operator's video-encryption system, putting an end to the nearly nine-year-old case.

EchoStar Communications sued NDS in 2003 seeking up to $2 billion, alleging NDS was responsible for compromising the conditional-access system developed by NagraStar, a joint venture between EchoStar and Kudelski Group, by reverse-engineering smartcards and leaking the information on the Internet.

In May 2008, a California jury found that NDS violated piracy laws by hacking the EchoStar conditional-access system but awarded EchoStar only $1,500 in statutory damages.

In August 2010, the Ninth Circuit Court of Appeals awarded NDS $18 million in the case, ruling that "EchoStar did not succeed 'on any significant issue' or 'achieve any of the benefit it sought in bringing suit' under the Communications Act."

The Supreme Court's Jan. 17 denial of EchoStar and Dish's petition released $4.3 million of NDS's funds held in escrow pending the appeals. NDS said it is seeking an additional $1.7 million in attorney's fees, costs and interest.

"In May 2008 we were overwhelmingly exonerated by the jury following trial and are gratified that the Supreme Court denial can now be recognized as conclusive validation that we were not involved in compromising the EchoStar platform, putting firmly to rest the unsavory insinuations made during this court case which we believe were designed to malign NDS's reputation," NDS executive chairman Abe Peled said in a statement.

Dish and EchoStar, which split into two independent companies in 2008, declined to comment. Kudelski-owned Nagra also declined to comment.

In the 2008 decision, the jury said EchoStar had met its burden of proof that NDS violated an antipiracy section of the Cable Communications Policy Act and California state law against piracy. However, the award represented the cost of a single piece of EchoStar's conditional-access system.

Peled claimed the lawsuit was "an effort to thwart competition and deflect attention from a fundamentally flawed technology and strategy pursued by EchoStar and NagraStar."

NDS, a provider of conditional-access systems and TV middleware based in the U.K., is owned by the Permira Funds and News Corp. The company, which has more than 5,000 employees worldwide, went private in 2008.