Supreme Court Rejects Dish Petition in NDS Hacking Case
The U.S. Supreme Court denied Dish Network’s petition that it review an appeals court decision awarding NDS $17.9 million in attorneys fees. The fees were granted by U.S. District Judge David Carter, Los Angeles, following a month-long trial in 2008 in which a jury awarded Dish Networks $1,500, not the $1.6 billion it sought from NDS for allegedly hiring hackers to crack its encryption system.
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The 9th U.S. Circuit Court of Appeals in 2010 upheld Carter’s decision, awarding NDS $17.9 million for fees and releasing $4.3 million in NDS funds held in escrow. Dish filed the petition with the Supreme Court in October. EchoStar originally sued NDS in 2002, but Dish inherited the case along with other suits as part of the 2008 spinoff of EchoStar as a hardware business.
The Supreme Court’s ruling was an “endorsement to the hard work of valued employees,” NDS Executive Chairman Abe Peled said in a statement. In suing NDS, Dish sought to “remove a formidable competitor” from the market, Peled said. “NDS vigorously defended the allegations made against it, establishing that NDS played no part in the compromise of Dish’s security system,” he said. NDS will “continue to pursue” an additional $1.7 million in attorney’s fees, interest and costs, Peled said. A Dish spokesman declined to comment.
Dish sued NDS in 2002, claiming it worked with alleged hackers Christopher Tarnovsky and Oliver Kummerling two years earlier to break Dish’s conditional access code. Dish accused NDS of violating the Digital Millennium Copyright Act and federal anti-racketeering law violations for seeking to get the ROM and EPROM codes for conditional access cards. NDS failed in 1998 to get Dish to switch from its supplier -- Kudelski Group’s NagraStar -- and responded by hiring “well-known satellite pirates,” Dish said.
NDS thought if it controlled the hackers and breaks in its security, its product “would appear superior” in the conditional access market, Dish said. The hackers reverse- engineered the security cards and posted the code on the Internet. NDS also supplied conditional access cards to DirecTV, which at the time the suit was filed, were “widely hacked and pirated,” Dish said. Dish had sought $823 million in disgorgement penalties, $184.8 million in damages and lost profits and $1 billion in statutory damages. Dish claimed it spent $94 million to replace all access cards with new versions that used a different encryption technology.