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DirecTV Loses Bid to Dismiss NDS Patent Suit

The dispute centers on production of an access card for the satellite-TV service.

March 25, 2003|From Bloomberg News

DirecTV, the largest U.S. satellite-television service, on Monday lost its bid to dismiss News Corp. unit NDS Group's claims that DirecTV infringed patents related to technology that controls programming access.

NDS, a maker of technology for TV set-top boxes, last year traded lawsuits with Hughes Electronics Corp.'s DirecTV, its largest client. The dispute concerns the conditional access card, made by NDS for DirecTV, which allows customers to receive programming from the satellite-TV service.

U.S. District Judge Audrey Collins in Los Angeles issued a preliminary ruling that DirecTV can't dismiss the NDS claims in the early stages of the case. NDS seeks compensatory and punitive damages as well an injunction prohibiting DirecTV and its chip manufacturer from producing a conditional access card.

"You only win on a motion to dismiss if you show there is no basis for any of their claims," Collins said. "You did not do that."

James DiBoise, a lawyer for DirecTV, said after the hearing that the motion would have been "a difficult one to win" and that the company expects to prevail in the case.

The judge's ruling "does not preclude us from using any of our defenses," he said.

El Segundo-based DirecTV in April said that it would make its own security technology and end its contract with NDS. Five months later, DirecTV accused NDS in a lawsuit of misappropriating trade secrets and fraud. NDS answered with a suit of its own, claiming that DirecTV has secretly been working to develop a knockoff of NDS' smart-card technology that violates NDS' patents.

Collins dismissed part of DirecTV's claims against NDS in January. She allowed several to stand, including breach of contract and breach of fiduciary duty.

Shares of Hughes Electronics fell 28 cents to $10.61 on the New York Stock Exchange. Hughes is a unit of General Motors Corp.

News Corp. controls about 80% of Staines, England-based NDS.

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