Nintendo mod chip seller infringed copyright, rules High Court

Out-Law News | 30 Jul 2010 | 3:15 pm | 4 min. read

An importer of 'mod chips' that allowed people to play pirated Nintendo DS video games infringed copyright and broke laws forbidding the circumvention of copy-protection technology, the High Court has said.

Wai Dat Chan and his company Playables imported and sold devices which are widely used to help people to play unlicensed versions of games for the Nintendo DS games console.

Her Majesty's Revenue and Customs (HMRC) and Trading Standards seized 165,000 devices that were on their way to Playables, the Court said. The devices included so-called R4 cards, a form of mod chip that slots into a Nintendo DS as though it is a game card. These cards
have a slot of their own which accommodates a micro-SD flash card, a commercially available memory card. Copies of games can be stored on this memory.

The R4 cards contain circuitry, software and data which enable them to pass the tests performed by the Nintendo DS to verify that the game card inserted is genuine. Unlicensed copies of Nintendo games can then be downloaded from the internet, saved to a micro-SD flash card and played on the DS.

The High Court was asked to issue a summary judgment in Nintendo's favour, and it said that Chan and Playables were liable for authorising the copyright infringement that occurred when the devices made copies of files related to Nintendo's copy-prevention software.

Nintendo also said that Chan and Playables broke sections of the Copyright, Designs and Patents Act of 1988 that outlaw the making, sale or distribution of devices that break the copy protection technology which other companies use to protect their copyrighted material.

Playables argued that it did not know that the devices would be used for this purpose and that the devices can be used for legal purposes, but Mr Justice Floyd rejected those arguments.

"In my judgement, none of these defences has a realistic prospect of success," he said. "It is not a requirement in proceedings brought under section 296ZD [of the 1988 Act] to show knowledge or reason to believe that the accused devices would be used to make infringing copies. The section creates a tort of strict liability."

While Playables claimed that the devices should be legal because they allowed for the playing of home-made games, the Court said that this use does not provide legal cover for liability for the other uses.

"One such suggested lawful use is for home-made games. However, such use will still circumvent the ETM [effective technological measures, or anti-copying technology], or otherwise the game will not play," the ruling said. "The mere fact that the device can be used for a non-infringing purpose is not a defence."

The Court found that Nintendo's ETM did meet the required standard demanded by the law to win its protection, and that Nintendo should be awarded summary judgment.

That judgment was based on one section of the law which applied to computer programs and one section which applied to copyright works other than computer programs. The judge said that these other works could include elements within the game, which is a program.

"The game includes graphic and other works the copying and use of which is controlled by the ETM," he said.

The law in relation to circumvention of technical devices applied to computer programs is slightly different. Section 296 of the 1988 Act says that an offence is only committed if the person behind the sale of "any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of the technical device" knows or has reason to believe that it will be used to make infringing copies of the program. Publishing instructions on how to remove or circumvent the technical device is also an offence, if there is reason to believe that the information will be used to make infringing copies.

The High Court said that Chan and Playables did have the knowledge for a breach of that section.

"In relation to the knowledge requirement, Nintendo relies on the evidence of Mr Yarnton, the General Manager of Nintendo's UK subsidiary. His evidence demonstrates, to put it at its lowest, that a very well known use of devices such as the R4 card is for video game piracy," said the ruling. "This fact has had wide publicity in a number of articles which he produces."

"In addition Nintendo relies on the evidence of Mr Boyd of [Nintendo's European distributor] who refers to the very large volumes of devices in which the defendants were dealing. Given the relatively minor proportion of the market represented by lawful use he concludes that it is inconceivable that the defendants did not appreciate that the major use to which the devices would be put would involve infringement of copyright," said the ruling.

"In the light of that evidence, I do not think that the defendants have a realistic prospect of asserting that they did not know of the unlawful uses to which the devices would be put," said Mr Justice Floyd.

The judge said that while he agreed with Mr Justice Laddie's ruling in a previous case involving Sony that in relation to computer programs UK courts should not include damages for exported devices where infringement occurs outside of the UK, he disagreed with the other judge in relation to the non-computer program part of the law.

Because that part of the law did not contain the condition that someone is liable only if they know about the likely infringement, export sales should be accounted for in damages calculations by UK courts, he said.

"The relevant requirements concerning circumvention under this section are all concerned with the capabilities of the device, or the purpose for which the device is sold," he said. "If  one takes the requirement of section 296ZD(1)(b)(ii) [of the 1988 Act] that the device has only a limited commercial purpose other than to circumvent, that is a requirement which one can assess at the moment the device is distributed."

"There is no requirement that circumvention should actually occur. If that is right, then there is equally no requirement that the circumvention should take place in the United Kingdom," he said. "The section is concerned with dealings in the United Kingdom in devices capable of circumvention, wherever they may ultimately end up. It follows that I consider that Nintendo is entitled to summary judgment on export sales under this section."