Game Copiers and Mod Chips – AG Sharpston issues Opinion in Case C-355/12 Nintendo v PC Box

Rather than reading the Opinion of the AG,
Walter preferred to spend the day
knitting his Super Mario hat ...

As was announced earlier today on The 1709 Blog, this morning Advocate General Eleanor Sharpston released her Opinion in Case C-355/12 Nintendo v PC Box.

The IPKat is delighted to host a summary and explanation of the issues at stake before the Court of Justice of the European Union (CJEU) prepared by Katfriend Tom Ohta, copyright specialist at Bristows.

Here's what Tom writes:

Since it began dabbling in the video games market in the 1970s, Nintendo’s iconic offerings have been embraced globally – and some readers may have fond memories of days hours happily guiding Mario through Mushroom Kingdom to rescue Princess Toadstool from Bowser’s evil clutches.

Nintendo’s handheld ‘Nintendo DS’ and its hugely successful ‘Wii’ console were the subject of Advocate-General Sharpston’s Opinion regarding technological protection mechanisms (TPMs) aimed at preventing unauthorised copying of video games and use of ‘pirate’ copies.

The TPM mechanisms contained within Nintendo’s video game cartridges / DVDs and on the DS / Wii consoles co-operate together like a lock and key to prevent unauthorised use of pirate games and copying of genuine ones. This type of copyright protection mechanism is well established in the video games industry.

Despite the efforts of the gaming industry to prevent copyright infringement by employing such TPM mechanisms, techniques to circumvent TPMs have also been developed, for example, with ‘game copiers’ for the Nintendo DS and ‘mod chips’ for the Wii:

• Game copiers fit into the Nintendo DS slot and contain either built-in memory or a memory card slot on which to store pirate games. The game copiers contain circuitry, software and data which enable them to pass the verification tests performed by the Nintendo DS to authenticate that the inserted game card is genuine.
• Mod chips (modification computer chips), once correctly installed on the Wii, enable pirate games stored on DVDs to be played by circumventing the authentication process built into the Wii console, which would otherwise only allow games containing a certain code to be loaded.

Major players such as Nintendo and Sony have been active in suing developers and distributors of game copiers and mod chips in a number of EU jurisdictions (see for example here, here and here). The legislative framework protecting against the circumvention of TPMs (for works other than computer programs) stems from Article 6 of the InfoSoc Directive. A slightly less generous level of protection for computer programs against circumvention techniques (due to the exceptions under Articles 5 and 6) is provided for separately under Article 7 of the Software Directive.

It was in this context that the Italian Court (the Tribunale di Milano) in Case C-355/12 Nintendo v PC Box referred two, arguably, indecipherable questions to the CJEU, which Advocate-General Sharpston rather diplomatically observed were “perhaps not quite as clearly [posed] as might have been desired”.

The AG understood Question 1 as comprising of two parts:

a)    Does ‘technological measures’ within the meaning of Article 6 of InfoSoc include measures which are physically linked to devices which facilitate the use or enjoyment of copyright material (i.e. by incorporation in the Nintendo Wii or DS consoles on which the games are played), as well as those which are physically linked to the copyright material itself (i.e. by incorporation in the cartridges or DVDs on which the Nintendo games are recorded)?

(to which AG Sharpston’s answer was a resounding “Yes”)

b)   Do such TPM measures qualify for protection pursuant to Article 6 if its effect is also to prevent any use of Nintendo games on other devices (i.e. on another third party device) or conversely, non-Nintendo products on a Nintendo device?

... And so did Charles, choosing Luigi's hat
so to match his eyes ...

The AG recognised that part b) above raised the question of whether Nintendo could have protected its own (or licensed) games without preventing or restricting the use of its consoles for other legitimate uses, such as to play ‘homebrew’ games. In other words, was Nintendo’s TPM system proportionate to achieve the aim of protection against unauthorised acts (and thus qualify for protection under Article 6) or did they go beyond what was necessary for that purpose, such that it fell out of the scope of Article 6?

Ultimately, the AG recognised that these were primarily questions of fact which were for the national court to determine.

In making that determination however the AG considered that “a national court must verify whether the application of the [TPMs] complies with the principle of proportionality”.

This required the national court, in particular, to consider whether the TPM’s objective can be achieved without preventing or impeding the ability to carry out what would otherwise be non-infringing acts (such as the playing of homebrew games).

... But Serge found reading
the Opinion extremely engaging

However, in determining whether a TPM qualified for protection, the AG did not advocate an absolute requirement that the TPM did not prevent or impede otherwise legitimate acts in order to fall within the scope of protection under Article 6. Instead, it was suggested that it would still qualify for protection under Article 6 if the TPM achieved its protective objective with the effect that it prevented or restricted otherwise legitimate acts “to a lesser extent”. This is an important qualification by the AG providing guidance to the national court on the scope of its balancing exercise when considering proportionality.

Question 2 boiled down to the following: what types of criteria – quantitative and/or qualitative – should be relied upon when assessing whether the mod chips or game copiers “have only a limited commercially significant purpose or use other than to circumvent” the technological measures put in place by Nintendo?

The correct approach, in the AG’s view, was to consider the ultimate purposes or uses of the mod chips/game copiers. This required the referring court to adopt a quantitative approach and consider the extent to which mod chips and game copiers can in fact be used for purposes other than allowing infringement of exclusive rights.

If the primary use of the mod chips/game copiers was for infringing purposes, this would be a strong indication that the TPM is proportionate, and thus allowable under Article 6.

If, on the other hand, the mod chips or game copiers were primarily used for legitimate, non-infringing purposes, this would point towards a disproportionate TPM which would fall foul of Article 6(1).

In relation to qualitative assessment criteria, the AG indicated that this may be relevant, for example, to consider the relative importance of allowing Nintendo’s consoles to be used for purposes which did not infringe any exclusive rights (e.g. running homebrew games) and whether this might outweigh the importance of preventing or restricting unauthorised acts via the use of TPMs.

... At least for a while 

Whilst the AG recognised that there may be cases where TPMs should not interfere with users’ rights to carry out acts requiring no authorisation, to the extent that these are not fundamental rights, the referring court should give due recognition to the importance of protecting copyright and related rights.

Given that circumvention devices appear to be primarily used for infringing purposes, with arguably only de minimis legitimate use, the AG’s Opinion is likely to be positively received by many in the creative video games sector. It will be interesting to see whether the CJEU will follow the AG’s approach in due course.

Finally, an important point briefly touched upon in the AG’s Opinion was whether or not the Software Directive or the Information Society Directive applies to video games. This is a question pending before the ECJ in Case C-458/13 Grund and Nintendo which was only recently referred on 19 August, and so it will be some time yet before we hear further on this point.

Thanks Tom for this helpful and thorough analysis!