Intellectual Property Law

An American hacker who is at the core of a piracy trial against a Rupert Murdoch subsidiary, testified this week that he created pirating software for the company but did not use it to sabotage the company's rivals.

Earlier this week I laid out the case against NDS Group, a UK-Israeli firm and a majority-owned subsidiary of Murdoch's News Corporation. The company is accused of reverse-engineering access cards created by competitor NagraStar in order to provide pirates with counterfeit cards. EchoStar's Dish Net used the NagraStar cards, and the counterfeit cards allegedly allowed pirates to access  Dish Network pay-TV content for free.

Christopher Tarnovsky, who acknowledged receiving cash payments of more than $20,000 concealed in CD and DVD players, said he regularly received payments from the HarperCollins publishing company for ten years. HarperCollins is also owned by Murdoch's News Corporation. But he says he was paid to develop a pirating program to make DirecTV more secure, not to sabotage rival systems. DirecTV used access cards made by NDS Group. Its cards had been hacked and pirated since 1997.

EchoStar and NagraStar contend that after NDS's cards were cracked, the company reverse-engineered NagraStar's card, then hired hackers and pirates to create cards that circumvented the access controls in EchoStar's pay-TV system. The company claims it lost $900 million as a result of the pirating.

NDS has acknowledged that it reverse-engineered NagraStar's cards but denies it released any information or cards to pirates.

Tarnovsky acknowledged in his testimony that he created a "stinger" program for NDS that could communicate with any smartcard but said it was not used to reprogram NagraStar's cards. According to allegations in the court documents, the stinger program was set up to program a set number of cards at a time. Tarnovsky is accused of providing the program to distributors who would create a specified number of cards, but then would have to come back to Tarnovsky to have him make adjustments to allow it to produce more cards -- presumably after the distributors paid him a percentage of the sales from the first batch of cards sold.

Tarnovsky maintains that he did nothing wrong and is being set up.

The trial is continuing in Santa Ana, California.

See also:

• Rupert Murdoch Firm Goes on Trial for Alleged Tech Sabotage