Feds Probe Digital TV Piracy Furor

[Weazel]

The Justice Department is investigating allegations that a company controlled by Rupert Murdoch's News Corp. hacked a rival's protection technology and distributed the information on the Internet

 

The U.S. Attorney's office in San Diego served employees of NDS Americas, Inc. in Newport Beach with 31 subpoenas for documents last week, officials said Monday.

 

The Justice inquiry mirrors claims made earlier this year in a federal lawsuit filed in San Jose by Vivendi Universal's Paris-based Canal Plus Group, NDS said in a statement. Justice officials declined comment.

 

In a statement, NDS called the allegations "baseless" and blamed them on rivals seeking to harm the company. NDS officials said they intend to cooperate fully with federal investigators.

 

 

According to the complaint, NDS spent millions to crack the software in Canal Plus' smart cards, which, when installed in top-set boxes, allow subscribers to watch scrambled digital TV signals.

 

NDS broke the code on Canal Plus' smart cards in 1998 at a high-tech company facility in Haifa, Israel, the suit alleges, and gave it to Christopher Tarnovsky, an NDS employee and ex-hacker.

 

In 1999, the software code was published on a Canadian Web site frequented by digital pirates, leading to a flood of counterfeit smart cards in Italy, followed by counterfeits in other markets.

 

Canal Plus, the leading European pay-TV operator with a U.S. subsidiary in Cupertino, claims damages of more than $1 billion.

 

The Justice Department became involved in 2000 when U.S. drug enforcement agents in Texas intercepted packages sent from Canada to Tarnovsky that contained more than $40,000 hidden in electronic equipment, according to court documents.

 

Tarnovsky's San Diego attorney, Pamela Naughton said the allegations were false and contended that her client was framed.

 

"The government is being used by people in companies that have direct financial interests in opposing NDS and they're using my client to do this," Naughton said Monday.

 

Tarnovsky, who lives in San Diego County, held top-secret clearances when he worked on satellites for the Army, Naughton said. Today, he is helping NDS make their newest smart cards invulnerable to hacker attacks, she said.

 

NDS, which is 80 percent owned by News Corp., makes smart card technology used in more than 27 million TV sets worldwide.

 

Vivendi and News Corp. agreed last week to suspend the lawsuit. News Corp. is acquiring a major stake in Vivendi's Italian pay-TV unit for $882 million and Vivendi will drop its suit.

 

But EchoStar Communications Corp. filed a motion to intervene late last month. Littleton, Colo.-based EchoStar, the No. 2 satellite broadcaster, claims that NDS and Tarnovsky also hacked its security system.

 

News source: Yahoo News