LOS ANGELES (California): NDS has countersued DirecTV Enterprises and two of its subsidiaries, along with a chip manufacturer and its North American sales affiliate.

The countersuit alleges that DirecTV and the chip manufacturer misappropriated NDS' trade secrets and proprietary information, conspired to infringe NDS' patents, colluded to create unfair competition and breached agreements and licenses restricting the use of NDS' intellectual property.

NDS claims that DirecTV has been secretly working with the chip manufacturer to develop a knock-off of NDS' latest generation smart card for DirecTV that infringes NDS' patents and misappropriates its technology for the last two years.

DirecTV, the biggest satellite television firm in the US had initiated legal action against NDS, the Middlesex supplier of smart cards that prevent pirating, in September. The lawsuit comes six months after Canal Plus Technologies (CPT) of France began a $3 billion legal action against NDS alleging it helped fund hackers who published secrets on the Internet about its pay-TV technology, say reports. The DirecTV suit, filed under seal in a US district court in Los Angeles, made a series of allegations against NDS including breach of contract, fraud, breach of warranty and misappropriation of trade secrets.

DirecTV on its part sought damages, the delivery of software which it claims is required by contract and an injunction to prevent any further breaches.

NDS, meanwhile, in its countersuit filed yesterday, has claimed that DirecTV induced the chip manufacturer to breach its agreements with NDS and that DirecTV has been leaking confidential information related to NDS' smart card to pirate websites to give DirecTV an excuse to break its agreements and unveil its competing knockoff smart card. NDS has also sued DirecTV for negligence and breach of contract, claiming that DirecTV's faulty distribution policies and gross mismanagement of satellite television piracy jeopardize NDS' technology and resulted in widespread piracy of DirecTV's service.

NDS has sought compensatory and punitive damages and an injunction prohibiting DirecTV and the chip manufacturer from producing the new smart card, infringing NDS' patents and misappropriating its technology. It has also sought an injunction against DirecTV preventing it from soliciting NDS' employees and from assuming control of its conditional access technology.