The NDS Group, a conditional access company now under attack by its clients and competitors, has filed a federal lawsuit against DirecTV, contending that the satellite-to-home service has appropriated its trade secrets.
The sealed legal action countersued DirecTV, two of its subsidiaries and an unnamed chip manufacturer. NDS, based in London, makes encryption technology used to protect satellite programming from piracy. The NDS system has been implemented by using “smart” cards.
DirecTV recently announced plans to implement its own smart cards and drop NDS as its supplier. DirecTV also filed a lawsuit, sealed for secrecy, charging NDS with breach of contract, fraud and misappropriation of trade secrets.
The DirectTV/NDS suit-countersuit came after Canal Plus, also a conditional access system supplier for pay television, sued NDS accusing the company of aiding television pirates in stealing Canal Plus-protected programming. That suit, still pending, was later joined by Echostar Communications.
NDS has denied all allegations. Though the details of the countersuit have not been made public, NDS said in a statement that DirecTV and the chip manufacturer misappropriated NDS' trade secrets and proprietary information, conspired to infringe NDS' patents, colluded to create unfair competition and breached agreements and licenses restricting the use of NDS' intellectual property.
“For at least two years DirecTV has been secretly working with the chip manufacturer to develop a knock-off of NDS’ latest generation smart card for DirecTV that infringes NDS' patents and misappropriates its technology,” NDS said in the statement.
NDS claims that DirecTV induced the chip manufacturer to breach its agreements with NDS and that DirecTV has been leaking confidential information related to NDS’ smart card to pirate Web sites to give DirecTV an excuse to break its agreements and unveil its competing knock-off smart card.
DirecTV said it expected the countersuit.