CORRECTED - Closing arguments as DISH Network, NDS trial ends

(Shows DirecTV was formerly owned by News Corp)

By Tori Richards

SANTA ANA, Calif., May 7 (Reuters) - DISH Network Corp has engaged in the same kind of satellite television piracy that it accused News Corp unit NDS Group of in a lawsuit, a lawyer for NDS argued on Wednesday during closing arguments in the case.

Attorney Darin Snyder told the jury in his closing remarks that DISH (DISH.O) employed an infamous hacker and attempted to crack the encryption codes of rivals in the satellite TV business.

DISH has sued NDS NNDS.O in a corporate espionage case that has the potential for damages of $1.6 billion if a jury finds against the News Corp NWSa.N unit and awards punitive damages.

Jury deliberations were set to begin in the high-profile case as early as Thursday morning.

"The plaintiffs are doing the same with practically everything they're complaining about with NDS," Snyder said. "They had a multi-million-dollar project where they tried to break into a Motorola (black) box."

Snyder said DISH employed convicted hacker Ron Ereiser, who had been caught trying to steal the codes of formerly News Corp-owned DirecTV.

NDS employed several hackers, including Christopher Tarvnosky, who was keeping tabs on Ereiser in a sting operation titled "Johnny Walker," according to testimony during the one-month trial in Santa Ana, California.

In her closing argument, DISH attorney Wade Welch countered by asserting that Tarnovsky's real role was to hack into DISH's network and flood the market with "smart cards" that unscrambled the satellite signal when placed in a black box.

DRAGGING THE MARKET DOWN?

Trial testimony showed that NDS employed several engineers in an Israeli lab and dubbed the group "The Black Hat Team." Their mission was to extract codes from rival systems. According to testimony, more than 100,000 DISH cards were produced that Tarnvosky sold for $350 each.

NDS officials denied producing the cards and testified that they used engineers for reverse technology, which is standard in the industry.

But DISH charges that the result was not a better NDS product, but rather they "chose to drag the market down because they couldn't compete. So they hired the world's two best hackers."

Welch pointed to a trial exhibit that was a confidential NDS report he described as a "how-to" manual for hacking. Then he went through a series of Internet posts and e-mails where the compromised DISH code was discussed.

Snyder argued that the manual was created as a prevention measure so NDS could save itself from pirates. He called DISH's allegations "lies" and pointed to NDS's aggressive track record in ferreting out pirates and prosecuting them.

In fact, NDS has such an aggressive investigative team that they were able to find a piracy ring in Canada that was the culprit for DISH's hack, Snyder said.

"All of these things are legitimate activities, there's nothing wrong," he said.

The suit was originally brought by EchoStar Communications, which later split into two companies, DISH and EchoStar Corp, with DISH now being the primary plaintiff. (Editing by Dan Whitcomb and Braden Reddall)