The New York Times The New York Times Technology January 3, 2003  

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Student Charged in DirecTV Theft

By JENNIFER 8. LEE

WASHINGTON, Jan. 2 — A 19-year-old University of Chicago student was arrested in Los Angeles today and charged with stealing trade secrets from DirecTV, the nation's leading satellite television provider.

Federal prosecutors said that Igor Serebryany of Los Angeles would be charged under the rarely used 1996 Economic Espionage Act with stealing the documents — which described the latest technology to control access to DirecTV — and releasing them on the Internet. He faces a maximum sentence of 10 years in prison and a $250,000 fine.

Prosecutors said Mr. Serebryany, a sophomore at the University of Chicago, stole confidential papers about DirecTV's latest generation of satellite television smart cards from the law firm of Jones, Day, Reavis & Pogue. Mr. Serebryany, who worked for an outside document preparation company, was imaging papers for a civil lawsuit over DirecTV's card technology.

Jones Day represents DirecTV in a lawsuit against NDS, the company that designs encrypted satellite cards for DirecTV. According to prosecutors, Mr. Serebryany sent hundreds of digital documents to three satellite pirate Web sites in September and October.

The confidential documents contained technical specifications for DirecTV's Period 4 generation of satellite smart cards, as well as correspondence between NDS and DirecTV discussing the card's architecture and design, according to DirectTV. The technical details about the card are valuable because the three previous generations of DirecTV access cards have already been hacked by pirates.

Satellite television smart cards, which slide into set-top boxes, contain computer chips that decrypt signals from DirecTV's satellites. Hacked satellite television cards override the encryption technology, allowing a viewer to receive the satellite signals free.

While prosecutors say Mr. Serebryany did not profit personally by releasing the documents, the Economic Espionage Act prohibits the release of information to benefit others. "This is a very serious crime which we will prosecute aggressively," said James W. Spertus, an assistant United States attorney.

Satellite piracy is a huge underground industry estimated in the tens of millions of dollars. Many of the pirate vendors are based in Canada where, until this year, the legal status of pirating American satellite television was ambiguous. Dozens of Web sites are devoted to satellite piracy. Many of them serve as public forums for discussions on how to reverse-engineer the Period 4 technology.

DirecTV said that the documents, though confidential, did not provide a roadmap for reverse-engineering the new chip. "The card is designed so that even if you know everything about it, you still can't hack it," said Marc Zwillinger, the lead lawyer for DirecTV's anti-piracy efforts.

DirecTV has been plagued by piracy. The company has 11 million paying subscribers, but industry analysts estimate that an additional million or more households illicitly receive DirecTV signals. To combat the piracy, DirecTV spent $25 million on research and development of Period 4, which it introduced last year. The company is also spending tens of millions of dollars to mail the cards to subscribers.






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