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NDS renews Canal Plus court battle

By Carlos Grande in London

Published: May 30 2002 0:42 | Last Updated: May 30 2002 0:42

NDS, a security software subsidiary of Rupert Murdoch's pay television empire, will on Thursday renew its fight to stop a $1bn lawsuit by Canal Plus, the pay television arm of Vivendi Universal.

NDS has asked a San Franciso court to dismiss claims that its employees sent cracked security codes for rival Canal Plus smart cards to internet pirates.

It has filed motions to have the action thrown out or moved to a court in Santa Anna, where NDS has a US office.

The hearing is the latest court battle in the suit, which threatens to pit the interests of Mr Murdoch against those of his pay television rival, Jean-Marie Messier, chief executive of Vivendi.

While neither Mr Messier nor Mr Murdoch is named in the suit, if the case comes to court it will not lack colour. Both Mr Murdoch's sons, James and Lachlan, are NDS board members. Further, one key Canal Plus witness runs a company that is 60 per cent owned by NDS. Senior News Corporation lawyers have also been involved in the NDS defence.

Canal Plus, which has pay television customers across Europe, is claiming $1bn in damages from NDS because of lost revenue from the spread of pirated smart cards. ITV Digital, the failed UK digital pay television company, was one of several companies using Canal Plus software badly affected by increased use of hacked cards.

The counterfeit cards became widely available in the UK, Italy and France, and allowed people to view premium sports, films and other channels without paying.

BSkyB, the UK satellite company controlled by Murdoch's News Corporation, uses NDS software on its cards and has not suffered digital piracy.

In a deposition to the court, Canal Plus claims to have evidence that NDS engineers in Israel deliberately cracked their competitor's code. One witness has alleged that NDS then arranged for the code to be published by Chris Tarnovsky, a west coast NDS employee, on a website, DR7.com, used by software pirates.

A second person - Gilles Kaehlin - claims Mr Tarnovsky did so on "instructions from his NDS superiors", according to court documents.

Neither witness will appear at the current hearing. Instead lawyers for both sides will argue over the legal grounds for the Canal Plus suit. NDS denies any wrongdoing. In a scathing preface to its court filings, it said: "Canal Plus designed its complaint to lay the blame for its financial woes publicly on NDS.

"While examining the truth of those allegations and the dubious connection between them and Canal Plus's business ineptitude must await another day, the time is now ripe to test the legal adequacy of Canal Plus's claims."

It has challenged the basis of the suit's claims under legislation covering unfair competition, interference and conspiracy.

It has also questioned whether the case should be heard in San Francisco which is home to neither company.

Last month Canal Plus began the costly process of replacing 12m smart cards worldwide with new ones. It said it was concerned that unless its suit succeeds, its new smart cards could be hacked too.

 

<small>[ 30-05-2002, 12:31: Bericht gewijzigd door: monderman ]</small>