Hacker testifies News Corp unit hired him

SANTA ANA, California (Reuters) - A computer hacker testified on Wednesday that a News Corp (NWSa.N) unit hired him to develop pirating software, but denied using it to penetrate the security system of a rival satellite television service.

Christopher Tarnovsky -- who said his first payment was $20,000 in cash hidden in electronic devices mailed from Canada -- testified in a corporate-spying lawsuit brought against News Corp's NDS Group (NNDS.O) by DISH Network Corp (DISH.O).

The trial could result in hundreds of millions of dollars in damage awards.

NDS, which provides security technology to a global satellite network that includes satellite TV service DirecTV, denies the claims, saying it was only engaged in reverse engineering -- looking at a technology product to determine how it works, a standard in the electronics industry.

After an introduction by plaintiff's attorney Chad Hagan as one of the "two best hackers in the world," Tarnovsky told the court that he was paid on a regular basis by Harper Collins, a publishing arm of News Corp, for 10 years.

Tarnovsky said one of his first projects was to develop a pirating program to make DirectTV more secure.

But lawyers for DISH Network claim Tarnovsky's mission was to hack into DISH's satellite network, steal the security code, then flood the market with pirated smart cards costing DISH $900 million in lost revenue and system-repair costs.

Smart cards enable satellite TV converter boxes to bring in premium channels.

The suit was brought by EchoStar Communications, which later split into two companies, DISH and EchoStar Corp, with DISH being the primary plaintiff.

"I never got money for reprogramming Echostar cards," Tarnovsky said. "Someone is trying to set me up."

DISH attorney Chad Hagan asked, "This is all a big conspiracy?"

"Yes," Tarnovsky answered. He conceded that he constructed a device called "the stinger" that could communicate with any smart card in the world.

Another hacker, Tony Dionisi, testified on Tuesday that Tarnovsky bragged about creating "the stinger" and that he knew of another hacker and NDS employee who reprogrammed 50 EchoStar smart cards with the device.

The trial is expected to last another two to three weeks. It is being heard in southern California because both Tarnovsky and NDS are located there.