The lawsuit claims that an NDS employee then leaked the cracking
codes to a hacking web site called DR7.com which fuelled a
proliferation of counterfeit smart cards being sold in pubs, clubs
and at market stalls. According to The Guardian, ITV Digital claims
to have lost £100 million as a result of the piracy. Around 100,000
counterfeit cards are said to be in circulation in the UK.
NDS specialises in the conditional access technology used in
television set-top boxes. It yesterday rejected the allegations as
“outrageous and baseless” and said it plans to counter-sue once it
has had an opportunity to fully review Canal Plus' suit.
NDS President and CEO Dr Abe Peled denied his company had any
involvement with the significant piracy problem Canal Plus has
suffered since 1999. Dr Peled said:
“That problem is due solely to the inferior
nature of Canal Plus' conditional access technology, the failure of
its business plan to contain measures to protect against piracy and
its failure to deal with piracy once it began</>
”The clear evidence is that the pirate
community targeted Canal Plus early in 1998 and succeeded without
any help from anyone, particularly NDS. All smart cards can be
hacked if left in the field long enough, which is why NDS' business
plan calls for periodic replacement of cards. NDS also designs its
system to permit electronic counter measures to be sent over the
air to disable counterfeit cards. Canal Plus' card has not provided
effective counter measures.
NDS claims that it was approached by Canal Plus in December 2001
with a view to a merger. NDS describes this as an acknowledgement
by its rival of the “inferiority” of its conditional access
technology. It adds that Canal Plus “attempted to use these
baseless allegations to gain leverage in the negotiations.”
NDS also claimed in a statement:
“For the past year, Canal Plus has been
trying (without success) to hire away the very employee they claim
gave their code to DR7. In fact, their own lawyer has been involved
in this poaching process, despite the fact that the employee is
under contract with NDS. Why would Canal Plus want to hire a person
they claim was involved in such activity? NDS intends to
counterclaim against Canal Plus for this tortious conduct as well
as tortious interference with other employment and contractual
relationships of NDS.”
Dr Peled concluded:
"This lawsuit is a blatant attempt by Canal
Plus both to deflect criticism of its new generation card, which is
not believed to be state of the art, and to shift blame for its
inadequate technology and its past losses."
Canal Plus is owned by Vivendi Universal, a media rival to
Rupert Murdoch. Murdoch’s son Lachlan is a director of NDS;
Murdoch’s company, News Corporation, owns 80% of the shares in NDS.
Its technology is used in 27 million pay TV set-top boxes
worldwide. Its only significant rival is Canal Plus with
smart card technology used in 12.5 million set-top boxes worldwide,
including those of News Corporation’s rival digital TV
companies.
