High Court upholds Nintendo claim in "modchips" case

Practical Law UK Legal Update 4-502-9176 (Approx. 5 pages)

High Court upholds Nintendo claim in "modchips" case

by PLC IPIT & Communications

Background

Copyright subsists in original literary and artistic works under section 1(1) of the Copyright, Designs and Patents Act 1988 (CDPA).

The copyright in a work is infringed by a person who, among other things, copies the whole or a substantial part of the work, either directly or indirectly, without the consent of the copyright owner (sections 16(1) and (2), CDPA).

Section 17(6) of the CDPA provides that it is an infringement of copyright to make transient copies of a copyright work.

Circumvention of technical measures

The protection available for works supplied in copy-protected form was enhanced by the implementation of the Copyright Directive (2001/29/EC) by means of the Copyright and Related Rights Regulations 2003 (SI 2003/2498). Regulation 24 introduced a new regime relating to the circumvention of protection measures by incorporating into the CDPA provisions dealing with the circumvention of technical devices and effective technological measures (ETMs) designed to control the use of a copyright work.

Section 296 of the CDPA applies where a technical device has been "applied" to a computer program. In this context, a technical device is defined as "any device intended to prevent or restrict acts that are not authorised by the copyright owner of that computer program and are restricted by copyright" (section 296(6), CDPA).

Section 296(1) provides that the person who issues or communicates to the public copies of a computer program to which a technical device has been applied (or the copyright owner, if he is not either of these persons), has the same rights as a copyright owner or his exclusive licensee have in respect of a copyright infringement against any person who, knowing or having reason to believe that it will be used to make infringing copies, either:

Manufactures for sale or hire, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire, or has in his possession for commercial purposes, any means the sole purpose of which is to facilitate the unauthorised removal or circumvention of the technical device.
Publishes information intended to enable or assist persons to remove or circumvent the technical device.

Similar provisions apply where ETMs have been applied to a copyright work other than a computer program. In particular, section 296ZD of the CPDA applies where a person (C) manufactures, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire or has in his possession for commercial purposes any device, product or component, or provides services which:

Are promoted, advertised or marketed for the purpose of the circumvention of;
Have only a limited commercially significant purpose or use other than to circumvent; or
Are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of,

ETMs.

Section 296ZD(2) provides that various persons have the same rights against C as a copyright owner has in respect of an infringement of copyright, including a person issuing or communicating copies of the work to which ETMs have been applied to the public (or the copyright owner, if he is not either of these persons).

Facts

The first claimant was the designer, manufacturer and distributor of the Nintendo DS games console and the games that went with it. The second claimant was the European distributor of the games.

The case concerned a number of different devices imported and dealt with by the defendants (the accused devices) which enabled Nintendo DS users to play unlawful copies of Nintendo DS games which they had downloaded from the internet. Nintendo asserted claims under the circumvention of copy-protection provisions, namely section 296ZD and section 296 of the CDPA. In addition they asserted "normal" copyright infringement in respect of some copyright works transiently copied into the random access memory (RAM) in the course of use of the defendants' devices.

Nintendo had implemented a range of security measures designed to prevent the loading and playing of unlawful copies of its games. It relied principally on the following measures:

The shape of the connector arrangement of the slot on the Nintendo DS and the corresponding shape of the game cards designed to fit into it.
The boot-up software permanently stored on the Nintendo DS which checks for the presence on an inserted card of the Nintendo Logo Data File (NLDF) and prevents execution of programs present on the inserted card if the NLDF is not detected.
The use of shared key encryption technology and scrambling to enable the Nintendo DS to detect whether game cards are authentic.

All the accused devices fitted into one of the slots on the Nintendo DS. They each contained either built-in memory or a further slot of their own which accommodated a commercially available memory card. Copies of games could be stored on this memory either by connecting the device itself to a computer using an adapter or by extracting the memory card used with it and connecting that to a computer, again using an adapter.

The accused devices also contained circuitry, software and data (including a copy of the NLDF) which enabled them to pass the tests performed by the Nintendo DS to verify that the game card inserted was genuine. In this way, the accused devices enabled unlawful copies of Nintendo games to be played successfully on the Nintendo DS, as well as other material. The evidence established that when a game was played, substantial parts of the game code were loaded into the RAM of the Nintendo DS console.

Decision

Floyd J granted Nintendo's application for summary judgment on the reasoning summarised below.

Claim under section 296ZD, CDPA

The first question for the judge was whether the Nintendo DS had ETM. Floyd J doubted whether the physical shape and electrical characteristics of the connector amounted to ETM. While in order to copy a work on to the console, one needed to make a device capable of being connected, Floyd J considered that it was at least arguable that section 296ZD had in mind something which acted as a barrier to copying once such a connection had been made. On the other hand, it was clear that the boot-up software, the NLDF and the encryption and scrambling clearly amounted to ETMs.

It was equally clear that Nintendo had "applied" ETMs to its games. Such ETMs had been applied to copyright works "other than computer programs" as the game included graphic and other works the copying and use of which was controlled by the ETMs.

In the judge's opinion, it was clear that the accused devices had been imported and offered by the defendants and that they allowed the Nintendo DS to boot up and play unlawful games by successfully circumventing the ETMs. Floyd J rejected the defendants' argument that the chips allowed gamers to play home-made games, ruling that the mere fact that the device could be used for a non-infringing purpose was not a defence. Accordingly, Nintendo was entitled to summary judgment on this claim.

Claim under section 296, CDPA

Floyd J said that while the expression "technical device" was used in section 296 instead of ETMs, the definition was a wide one. The focus on section 296 was on circumvention. The fact that a device could be used for a purpose which did not involve infringement of copyright did not mean that the sole intended purpose was not the unauthorised circumvention of a technical device.

The additional requirement of knowledge, "knowing or having reason to believe that it will be used to make infringing copies", was general. It was not necessary to show that the defendant knew any particular program was to be copied or that the means would only be used for making infringing copies.

Floyd J held that it was clear that "technical devices" had been applied to the copyright computer programs in the Nintendo DS and its game cards. It was also clear that the relevant elements of the defendants' products had the sole purpose of circumventing those technical devices.

The judge went on to find, on the evidence, that the defendants had no realistic prospect of asserting that they did not know of the unlawful uses to which the devices would be put.

Comment

This decision will be welcomed by game and console manufacturers. Earlier in 2010, Nintendo blamed a 50% fall in Nintendo DS software sales on piracy. However, the sale of similar storage devices is widespread on the internet, and not just for the Nintendo DS: there are chips available for most current consoles, which all perform a similar function.

Case: Nintendo Company Ltd and another v Playables Ltd and another [2010] EWHC 1932 (CH), 28 July 2010 (Floyd J; Martin Howe QC and Jonathan Hill (instructed by SJ Berwin LLP) for the claimants; the defendants did not appear and were not represented).

High Court upholds Nintendo claim in "modchips" case | Practical Law