TV Codes Disclosure Alleged

A cadre of engineers employed by a subsidiary of News Corp. Inc. cracked the security codes of a rival’s satellite TV descrambler, leading to their dissemination on the Internet by a man described as well-known hacker, according to new court documents.

The documents were filed in connection with a lawsuit brought against News Corp subsidiary NDS Group by Vivendi Universal’s Canal Plus Group, which alleges that disclosure of the codes undermined the company’s sale of “smart cards.” Canal is seeking more than $1 billion in damages.

In a sworn declaration, a consultant for security software manufacturer NDS said the codes were put into a document circulated among company employees. Consultant Oliver Kommerling said it was then agreed that the codes should be provided to NDS employee Chris Tarnovsky for publication on the Web. In its litigation, Canal Plus has identified Tarnovsky as “a well-known pirate within the hacker community.”

NDS has denied the allegations against Tarnovsky and other company employees, calling the Canal lawsuit “outrageous and baseless.” A spokesman for the parent firm, Rupert Murdoch’s News Corp., said the company does not comment on pending litigation.

The warring companies, controlled by two of the world’s biggest entertainment conglomerates, make “conditional access software” that is used to prevent people from watching pay-per-view and other premium programming for free.

After the code was published on a Web site allegedly frequented by counterfeiters in March 1999, the market was flooded with phony smart cards, Canal alleges, describing the breach as part of an illegal conspiracy to undercut a competitor.

The Kommerling declaration was one of half a dozen Canal filed this month to expedite the discovery process in the case, which is being heard in federal court in San Jose. Canal is anxious to speed the suit because the company is introducing a new generation of smart cards and wants to protect their security.

In another declaration, Canal security executive Gilles Kaehlin said that man who allegedly placed the codes on the Web, Tarnovsky, admitted to him in a meeting in London last summer that “NDS was responsible for the ‘dump’ and publication of the Canal Plus Rom code on the DR7 Web site.”

A federal judge will hold a hearing on Canal’s motion for expedited discovery Thursday.