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By Sonya Rabbitte, 12 March 2002 17:45

NEWS French digital TV giant Canal Plus is taking its Rupert Murdoch-backed competitor NDS to court, accusing it of stealing its encryption code and flooding the European and Malaysian markets with pirated smartcards. The lawsuit claims NDS deliberately cracked Canal Plus's digital television signal and published the code on Canadian website DR7.com, where it was picked up by international counterfeiters. Canal Plus, owned by French media group Vivendi, claims it has lost up to $1bn, after criminal groups targeted its customers with fake smartcards which allowed users to view subscription channels for free. Canal Plus maintains it has proof that NDS deliberately sabotaged its security code in a bid to damage its market lead following a two year investigation. While the company did not specify how many customers may have been affected, it hinted at many millions. Francoise Carayol, executive vice president of Canal Plus, said the company had evidence NDS sent the smartcards to a lab in Israel where engineers spent up to a year deciphering the security code. The code was then handed over to a DR7.com representative in California. It is now reportedly still available on up to 27 different websites. Carayol said Canal Plus is confident the attack was the work of NDS, and not a hack by a rogue individual within the company. "These things do not happen by chance, they require sophisticated and expensive technology and well trained engineers, available only to major corporations with large resources. We have solid evidence it was a corporate decision and we will prove this in court," he said during a conference call earlier today. A spokeswoman for NDS said the company is currently reviewing the claims and will issue a response shortly. Canal Plus became aware of the theft in 1998. However it allowed customers to continue using the fake smartcards for several years while it conducted its investigation. It is only now rolling out a new generation of digital smartcards for customers in Europe and Malaysia, a process that will take until the end of this year to complete. Carayol defended the delay, claiming the company did not want to release a new security code until it discovered how the original one had been deciphered. The court case is due to begin in California within the next few weeks.