Game Over for Mod Chips?

November 1, 2004

It seems that everyone wants to play their Playstation. But certain game players don’t want to pay to do so. Controversially, a number of manufacturers have produced Mod-chips to make this possible – bypassing the protective devices of the console. Sony has embarked on a campaign to bring actions against these Mod-chip manufacturers. Sony has had mixed success. An action in Belgium met with success, yet rather surprisingly Mod-chips were held to be lawful in cases brought in Spain and Italy. This case concerned the first test of the UK‘s copyright laws regarding the circumvention of copy protection. It is viewed by many in the gaming industry as having considerable importance because it is indicative of the stance the English courts would adopt regarding the Copyright, Designs and Patents Act 1988 both before and after the implementation of the Copyright Directive (2001/29EC).

Like many console and DVD-drive makers, Sony uses regional encoding that prevents European hardware, based on the PAL standard, from playing software from the US or the Far East (which do not contain codes as Sony embeds that code in the consoles and games). Sony brought its case against David Ball, a UK citizen, who was accused of selling some 1,500 Mod-chips. Users could install the Mod-chips in their PS2 to play imported games and pirated copies. The electronic chip, called Messiah 2, which can be fitted to PS2 operates on the consoles so as to “trick” the console into playing unauthorised copies of games. Without the chip, unauthorised copies cannot be played because the embedded codes cannot be copied. Sony applied for summary judgment against Mr Ball on the grounds that he had breached their rights, both under s 296 of the CDPA prior to 31 October 2003, and ss 296, 296ZA, ZD and ZF of the CDPA as amended on 31 October 2003 by being involved in the design, manufacture, sale and installation of the Messiah 2 chip. On their application for summary judgment, Sony argued that Mr Ball had no real or substantial defence to any of the claims.

Dealing in a circumvention device

Section 296, in its original form, provided that there is infringement, in relation to a copyright work published in electronic form which is copy-protected, where a person who, knowing or having reason to believe that it will be used to make infringing copies, makes, imports, sells or lets for hire, offers or exposes for sale or hire, or advertises for sale or hire, any device or means specifically designed or adapted to circumvent the form of copy-protection employed (s 296(2)(a)). Publishing information intended to enable or assist circumvention is also an infringement (s 296(2)(b).

There was prima facie infringement by Mr Ball. Indeed it was not disputed that the PS2 security system was a copy-protection means and that Messiah 2 was a device specifically designed or adapted to circumvent it or that Mr Ball dealt with the chip and knew what it was intended to do. Indeed Mr Ball had even assisted with the installation of a number of Messiah 2 chips.

Infringing copy

It was argued that Mr Ball had an arguable defence on several grounds. Mr Ball argued that he could not be said to have the requisite knowledge for the purposes of s 296 (that the device would be used to make “infringing copies”) on two grounds. The first of these was that the infringing copy created by use of the Messiah 2 had to be an “article” as defined by s 27 of the CDPA. Mr Ball argued that there was no article in this case because the copy created when the game was copied into the RAM chip in the console only existed for a fraction of a second. Further that Messiah 2 was not used for making unauthorised copies of the disc on which the game was supplied. If there was an infringing copy, it had to be created by the unlocked use of either the unlicensed copy of a disc or the imported foreign game.

Sony’s argument was that use of either of these, enabled by Messiah 2, resulted in infringement. According to Sony there was an act of reproduction when the program and other creative works were read from the unauthorised disc and copied into the RAM of the console. Mr Ball said that the copy in RAM was too transient to be an infringing copy as it existed only for a fraction of a second. That, he argued, could not be “an article”, as opposed to material loaded into a Read Only Memory (ROM) where it would be retained.

Laddie J favoured Sony’s view. The silicon RAM chip was an article. When it contained the copy data, it was also an article. The fact that it did not contain the copy before and would not contain the copy later did not alter its physical characteristics while it did contain a copy. It was only an infringing article for a short time, but it was still an article. Laddie J explained that, retention as a copy was included within the definition of s 27. This was supported by s 17 of the CDPA, which provides in s 17(2) that copying in relation to a literary, dramatic, musical or artistic work means reproducing the work in any “material form”. Further s 17(6) provides that copying in relation to any description of work includes the making of works “which are transient or are incidental” to some other use of the work.

The first defence failed and Laddie J considered it unnecessary to consider Sony’s alternative argument. This argument stated that reproduction of the unlicensed or parallel-imported copy of the game, or the copyright artistic works within it, onto the screen of the television to which the console was connected also created an infringing copy.

The export argument

Mr Ball’s second argument was based on the claim that 90% of Messiah 2 chips were exported to foreign customers. He argued that infringement under s27 was limited to the UK copyright or “the article” imported into the UK. As the Messiah 2 was for export, its sale could not result in the creation of infringing copies. Mr Ball argued that a trader in the UK who deals with chips which will or might end up abroad cannot have the knowledge or belief that a chip “will be used to make infringing copies” as required by s 296(2).

Laddie J felt Mr Ball’s argument had greater strength. Sony’s claim under the original s 296 would succeed only insofar as Mr Ball had sold Messiah 2 chips in the UK, knowing or having reason to believe that they would be used to make infringing copies. Mr Ball’s liability would therefore depend on the particular facts of each type of commercial activity in respect of which Sony complained. It was not a matter for summary judgment as it would require a detailed examination of Mr Ball’s commercial operations.

Publication

Mr Ball had no defence to Sony’s other claim under the old s 296 that his publication of information relating to the installation of Messiah 2 on Web sites infringed s 296(2)(b). Mr Ball had published information intended to enable or assist persons to circumvent their copy-protection system. Laddie J accepted this was a clear breach of the CDPA and it was irrelevant that the same publication also went to non-British users.

Post-implementation

Following the implementation of the Copyright Directive, the anti-copy-protection provisions are now split into two groups. The new s 296 is restricted to anti-copy-protection devices that allow copyright computer programs to be copied. Section 296A onwards contain similar, but not identical, provisions to counter anti-copy-protection devices designed to facilitate the copying of other types of copyright work such as the artwork on computer games. Sony alleged a breach of both.

The computer program

The old and new provisions are similar and the same conclusions were reached regarding “infringing copy” and the export argument under the new s 296. However, Mr Ball had two further arguments. The first related to the requirement in the new section that the “sole intended purpose” of the offending means must be to facilitate unauthorised removal or circumvention of the copy-protection device. It followed that the Messiah 2 was not infringing because it could also be used to allow back-ups of original games to be played and to allow games bought legitimately in the UK to be used on non-European consoles imported into the UK. This argument failed because neither of these classes of activities were authorised by Sony. Nor was Mr Ball absolved by s 50A of the CDPA (which allows the lawful user of a copy of a computer program to make any back-up copy if necessary for lawful use). In this case there was no necessity to make back-ups.

Mr Ball’s additional argument was considered “hopeless” by the judge. This argument was that because PS2 games intended for the UK market were marked “for home use only” the user was licensed to run games purchased in the UK on consoles imported from outside the European territory. As such use was authorised by Sony, it was submitted that Messiah 2 merely allowed owners of such consoles to operate under this licence. Regardless of whether a court would be prepared to accept that the Messiah 2 was designed for that purpose, the argument faltered on the fact that on all authentic European PS2 games it was expressly stated that the software was compatible only with consoles bearing the appropriate European logo.

The artwork

Two issues arose in relation to the new provisions and the artwork of the games. Section 296ZD protects against the dealing and promotion of devices designed to circumvent “effective technological measures” that have been applied to a copyright work other than a computer program. Technological measures are defined in s 296ZF as “any technology, device or component which is designed, in the normal course of its operation, to protect a copyright work other than a computer program”.

As this is a tort of strict liability, Mr Ball could not escape liability by showing that he did not know or have reason to believe that the Messiah 2 would be used to make infringing copies of Sony copyright works. However, Laddie J accepted that under the new provisions the main purpose of Sony’s copy-protection system must be to protect copyright works so as to prevent infringements of copyright. It was therefore necessary to determine whether the Sony system was designed to prevent unauthorised use of Sony’s copyright work in a way which would amount to an infringement of copyright.

Laddie J decided that it was, and that it could be protected under the new provisions. Therefore, if the Messiah 2 was “primarily” designed to enable or facilitate the circumvention of the Sony system, within the jurisdiction, there was a breach of Sony’s right. However, as the judge saw no reason for the provisions to be read as covering circumvention outside the jurisdiction, the unresolved issue was whether the circumvention took place within the jurisdiction. Again, in relation to the Messiah 2, this was not something that could be dealt with on summary application. Nevertheless, insofar as Mr Ball distributed, offered, exposed or advertised for sale or had in his possession for commercial purposes Messiah 2 chips and promoted and advertised them for customers in the UK, there was a breach of s 296ZD.

Software or hardware?

Mr Ball’s final argument related to the relevant provisions both before and after implementation of the Directive. He argued that the mischief at which they were directed was the circumvention of copy-protection systems which were “applied to a computer program or other copyright material”. He suggested that because Sony’s copy-protection system was applied to the hardware, it was not to benefit such a system.

Laddie J disagreed. There was nothing in the original s 296 that restricted the protection in this way. Although the new s 296 referred to a “technical device” which had been “applied to a computer program”, technical device was defined as referring to “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”. In the judge’s view, there was nothing which limited where the device should be. Similarly, under s 296ZD, “technological measure” was defined as any technology, device or component designed to protect a copyright work other than a computer program.

A hole in Sony’s rights?

Counsel for Sony referred to what he regarded as a hole in Sony’s rights left by the lack of protection for issuers of copy-protected works against the export of devices like the Messiah 2. Traders in such devices will be able to sit in one country and conduct an exclusively export trade forcing companies like Sony to sue customers in the country of importation.

Laddie J felt that this lacuna was not as significant as counsel suggested. Although this problem does not appear to be resolved by the new provisions, the judge was of the view that the hole has largely been addressed by the amendments to the Act. He also referred to the harmonising effect of the Copyright Directive throughout the EU and the possibility of traders who carry on business in the UK and export to other Member States being sued in the UK not only for breaches of the CDPA but also for breaches of similar legislation in other Member States via the Brussels Convention.

Result

In relation to both the software and artwork on PS2 games, Mr Ball was found liable under both the old and new law. His dealings in the Messiah 2, insofar as these led to circumvention of Sony’s copy-protection system inside the UK, was a clear breach without defence. However, the extent of that liability would have to be determined at trial. Mr Ball was also liable for publishing information on how to use Messiah 2, and had no defence against a claim under s 296ZA in relation to his own use of the console on which the chip had been installed. What counted was that there is copy protection, not where it was contained.

Twist

In an unusual twist in this action, Sony successfully claimed that Mr Ball had produced false statements in his statements of case in breach of CPR, r 32.14. Under this provision, proceedings for contempt of court may be brought if a person makes a false statement in a document verified by a statement of truth without an honest belief in its truth. Sony obtained permission to commence such proceedings and the judge hearing the application for committal, Blackburne J, held Mr Ball to be in contempt of court by making false statements which were likely to interfere with the course of justice. He was fined £2,000 and ordered to make another interim costs payment. This underlines the importance that must be placed upon drafting accurate statements of truth.

Conclusion

Although this judgment does not create any “new law”, it confirms the strength of UK copyright law. It is also interesting that ss 296ZA to 296ZE create a strict liability tort, for which lack of knowledge of infringing will provide no defence. Further it confirms that an article need only transiently contain a copy to be an infringing copy. However the position is less clear-cut in other Member States. So while the UK position on ‘Mod-chips’ is now clear, the EU-wide ‘uniformity’ promised by the Copyright Directive remains a long way off.

Matthew Pryke is a solicitor based in the London office of Hammonds Commercial and IP department. Matthew deals with all issues relating to IP and commercial matters and has particular experience of working with the IT industry. Matthew.pryke@hammonds.com