16th December 2015
Goodbye Modchips? Italian Court Holds Nintendo’s ‘protective measures’ are legal
In a recent Italian case, Nintendo has won an important victory against importers of modchips and technological protection measures (“TPMs”).
The judgment, from Milan’s specialist intellectual property Tribunal, given on 16thNovember, marks the first time a Member State of the EC has applied the guidance of Europe’s highest court, the Court of Justice of the European Union.
The case is part of a long running legal battle between Nintendo and PC Box s.r.l. Nintendo installs a security code recognition system on its console and handheld devices (a form of TPM) which prevents the hardware being used for pirate games without the correct security code. PC Box, an Italian company, manufactures modchips which, if inserted in the game device, disables Nintendo’s TPM. Nintendo has been fighting PC Box in the Italian courts, claiming the devices PC Box manufacture are intended to enable copyright infringement and are therefore illegal. PC Box on the other hand claim Nintendo’s TPMs are too stringent, preventing not only the playing of pirated games but also the use of devices for legitimate purposes such as playing music or homebrew games.
The legal right to use TPMs to protect copyright holders against infringers of their rights derives from an EU copyright directive (the “Directive”). The Italian Courts referred two questions to the European Court of Justice (“CJEU”), namely:
- do systems on video game devices fall within the scope of copyright protected works; and
- if such systems are subject to the protection, how should the court determine whether the measures were justified and proportionate?
The CJEU held the system used by Nintendo was a legitimate form of TPM which protected a genuine work of authorship and therefore potentially protected. However, this did not mean Nintendo’s TPM was automatically appropriate or necessarily mean PC Box’s modchips would be illegal.
In determining whether Nintendo’s TPMs are appropriate, the CJEU held it would be appropriate for the national court to consider:
- the cost of such TPMs;
- how effective the measures were in preventing copyright infringement; and
- whether there were alternative measures which would prevent infringement which imposed fewer limits on legitimate use of a device.
In determining whether modchips and other components or measures intended to disable or avoid TPMs, the CJEU held it was ‘particularly relevant’ to analyse how often these components were used to enable use of pirate games, as opposed to other legitimate use of devices.
Following the CJEU decision, the case was referred back to the Milan Tribunal for a formal decision. The Tribunal held, on the facts, Nintendo’s TPMs were appropriate and proportionate to protect the copyright in games from infringement. By contrast, PC Box’s modchips were held to have a primary purpose of enabling users to play pirated games and therefore to be illegal under the Directive and Italian copyright law. The Tribunal confirmed this was in line with recent decisions made the by Italian criminal courts regarding copyright infringement.
This is the latest chapter in a series of cases brought by Nintendo to ‘fight back’ against modchip manufacturers. In 2010, it brought a successful claim in the English courts against ‘Playables Ltd’ under the equivalent English law provision. The court in that case held any decision was specific to acts which could facilitate copyright infringement in the jurisdiction, re-enforcing the need to bring cases on a ‘state by state’ basis.
Nintendo is understandably very pleased with the outcome of the case, which it claims is in line with decisions in other European jurisdictions.
Does this mean the end of modchips? Not necessarily. The CJEU deliberately held back from stating these components are automatically illegal, even if the TPMs they seek to circumnavigate are held to be appropriate. Any case brought in a national court will have to be analysed on its facts to determine whether the component is primarily used to facilitate the use of pirate games which infringe copyright law or simply to enable use of devices for other legitimate purposes.
That said, this is certainly a positive outcome which will reassure console manufacturers their standard practice of using TPMs is unlikely to breach EU law, By contrast, modchip manufacturers are at the mercy of their customers’ ‘good behaviour’; if the main use of modchips is in fact to allow gamers to play pirate games, courts are likely to hold the components themselves are illegal.
This article was first published in the games magazine MCV.