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How Europe's courts must assess TPMs

Companies that modify computer game consoles face scrutiny from the courts over the purpose of their modifications and how gamers actually use them

That was the conclusion of a ruling from the Court of Justice of the EU today in a dispute between Nintendo, which makes DS and Wii consoles, and PC Box, which sells equipment that allows consoles to read movies, videos and MP3 files, but which circumvents their technological protection measures.

Nintendo uses an encrypted code on the physical housing system of its videogames and a recognition system in the consoles. These technological protection measures (TPMs) prevent the use of illegal copies of its videogames. They also stop users from using games without a code and from using multimedia content other than Nintendo's on the consoles.

The Japanese company had argued that the software and equipment sold by PC Box was designed to allow users to play pirated games on its consoles. PC Box claimed that Nintendo was trying is to prevent use of independent software that allows users to watch movies and play MP3 files on the consoles, even though the software does not constitute an illegal copy of Nintendo's videogames.

The Milan District Court asked the Court of Justice to clarify how far Nintendo could go to combat the circumvention of its TPMs.

Today the Court ruled that the Copyright Directive only offers protections for TPMs that are intended to prevent people from infringing copyright. The legal protection it offers must respect the principle of proportionality, however, and not prevent the use of devices that have a commercially significant purpose other than simply circumventing TPMs for unlawful purposes.

The Court added that when assessing the scope of legal protection of TPMs, national courts must consider the purpose of the TPM-circumventing devices, and how they are actually used by consumers, rather than by reference to the way that copyright owners envisage that the consoles will be used.

Ultimately, the Court said, it is for national courts to decide whether the copyright owner could use other measures to protect his rights that would interfere les with the activities of users. In making this assessment, courts should consider issues such as the cost of different TPMs and their effectiveness in preventing copyright infringement.

In an emailed statement, Nintendo said it was pleased that the ruling is generally consistent with the opinion issued by Advocate General Sharpston in September. It also claimed that it only ever utilises TPMs that are both necessary and proportionate to prevent piracy of its IP and that the circumvention devices marketed by PC Box are mainly designed to enable piracy of legitimate video games. Therefore, it said, the sale of the devices should be held to be unlawful.

That is now a matter for the Milan Tribunal to decide.

Nintendo added that it will pursue anyone involved in the commercial distribution of circumvention devices on the grounds that the devices infringe IP laws.

The gaming industry association Interactive Software Federation of Europe, whose members include Disney Interactive, Nintendo and Sega, said that it was essential that countries enforce effective provisions against the manufacture, distribution and use of circumvention devices and software to help limit the download and sale of pirated games.

"Without the ability to deploy TPMs, console piracy would thrive and competition and innovation in the market would be undermined or destroyed," it said.

But posters on the user forum of gaming enthusiast website were less supportive of TPMs.

"After removing all the legal jargon, this [ruling] says that digital rights management is allowed in particular to prevent piracy. However, if you do implement it you better be sure it doesn't screw with the user's experience," wrote one.

Nintendo was represented at the Court of Justice by a team including Ray Black of King & Wood Mallesons SJ Berwin, barrister Martin Howe, and Giorgio Mondini and Giacomo Bonelli of Mondini Rusconi. PC Box was represented by Italian lawyers S Guerra, C Benelli and S Fattorini.

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