NewsCorp-owned technology firm NDS Group stands accused in a billion-dollar lawsuit of helping to pirate the TV smart cards of Vivendi Universal subsidiary Canal Plus Group.
Both firms manufacture the smart cards that are inserted into television set-top boxes to enable the reception of pay-TV broadcasts, preventing non-subscribers from accessing such programming. London-based NDS is the market leader, with 27.3 million people around the world watching transmissions protected by its systems, while Canal unit Canal Plus Technologies claims 12.5m.
The suit, filed in the US District Court in San Jose, California, claims that NDS embarked on a major research operation in the late 1990s at its laboratory in Israel, involving “electrical and optical examination of the protected internal software code of the card using expensive machinery designed and operated to defeat Canal Plus Technologies’ protective measures.”
NDS’s objective was allegedly to break the code and make it available to counterfeiters by publishing it on the internet. In March 1999 it appeared on DR7.com, a site Canal claims is a popular destination for software pirates.
The suit follows an investigation by Canal lasting almost three years, after hordes of counterfeit cards hit the market in late-1999. The Vivendi unit is demanding over $1bn in damages, having decided that a civil action would be quicker than criminal proceedings.
NDS issued no comment on the lawsuit, while NewsCorp, which owns 80% of the defendant, declared that NDS management operates independently of the media mammoth.
Problems with counterfeiting have prompted Canal to organise replacement cards, which it will issue to subscribers over the course of 2002.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff