The High Court has given summary judgment in a case concerning copyright infringement by the sale of devices for playing pirated copies of computer games. The case provides some clarification of the complex provisions of sections 296ZD and 296 of the Copyright, Designs and Patents Act 1988 ("the CDPA").
- The CDPA can be used to tackle the suppliers of devices for playing pirate games, as well as individual pirates. A parallel can be drawn with the recent criminal action of Gilham v R discussed in our newsflash dated 12 November 2009.
- Section 296ZD of the CDPA may be used to prevent export sales of devices for playing pirate games.
- A sole director and shareholder of a company importing devices for playing pirate games may be liable as a joint tortfeasor.
This case concerned the importation and sale of devices enabling Nintendo DS users to play unlawful copies of Nintendo DS games downloaded from the internet. Playables, the defendants in the proceedings, imported the devices into the UK in very large quantities and each device was able to store and play many copies of Nintendo DS games, with the resulting economic impact upon Nintendo being substantial.
The devices were designed to fit into the slots on Nintendo's games consoles, circumventing Nintendo's technical security measures which were supposed to prevent the loading and playing of unlawful copies of games. The technical security measures related to three features in particular: (i) the shape of the slot on the consoles, which corresponded to the shape of the game cards; (ii) the boot-up software which was permanently stored on the console; and (iii) the use of shared key encryption technology and scrambling.
In this case, the parties had reached a partial settlement of the claim, with Playables giving Nintendo contractual undertakings in relation to dealing with the devices. Nonetheless, Playables did not consent to Nintendo's summary judgment application.
Section 296ZD CDPA
Nintendo founded their claim on sections 296ZD and 296 of the CDPA, as well as on a more straight forward claim for copyright infringement.
With regard to section 296ZD, the Court accepted that, as well as establishing standing to bring the claim, a claimant relying upon section 296ZD needs to show:
- that there are "technological measures" that have been "applied" to a copyright work or works (other than a computer program), and that these applied technology measures are "effective". Such measures are referred to in the judgment as "ETMs".
- that the defendant has manufactured, imported, distributed, sold etc, a "device, product or component" or provided services which are promoted, advertised or marketed for the purpose of the circumvention of the effective technology measures, or have only a limited commercially significant purpose or use other than to circumvent the ETM, or are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of the ETM.
Floyd J. held, referring to Directive 2001/29/EC (the Copyright in the Information Society Directive) that, whilst the physical shape and electrical characteristics of the connector used by the Nintendo DS system was unlikely to amount to an ETM, the boot-up software, the NLDF and the encryption and scrambling clearly amounted to "effective technology" within the meaning of the section.
Furthermore, whilst the information stored on the card includes a computer program, the games also include graphics and other works. These graphics and other works were copyright works "other than computer programs", as required by the section.
Finally, Floyd J. held that neither knowledge, nor a reason to believe that the device would be used to make infringing copies, were necessary ingredients of a successful claim under s.296ZD. The section sets out a tort of strict liability. Even if the device could be used for a non-infringing purpose, there was liability, so long as one of the conditions in the section was satisfied.
In conclusion, Nintendo's claim of section 296ZD infringement succeeded.
Section 296 CDPA
The court noted in assessing infringement of section 296 that the analysis of this section was less straightforward. This is because section 296 required Nintendo to show that the sole intended purpose of the devices was to facilitate the unauthorised removal or circumvention of the technical device.
On the facts, Floyd J. found that the fact that a device might be used for a purpose which did not involve infringement did not mean that the sole intended purpose was not the unauthorised circumvention of a technical device. In this case it was clear that (i) "technical devices" had been applied to the copyright computer programs in the console and its game cards, and (ii) that the devices had the sole intended purpose of circumventing Nintendo's technical measures. Infringement of section 296 was therefore established.
Some of Playables' sales were export sales, with the exported devices only being put to use in the country to which they were exported. The court was asked to decide whether section 296 and section 296ZD were infringed by such sales.
In respect of section 296, Floyd J., following the reasoning of Laddie J. in Sony v Ball concluded that summary judgment must be refused in respect of the export sales because s.296 infringement required that the person dealing in the device knows or has reason to believe that the device will be used to make infringing copies. This in turn must involve infringement in the UK.
In respect of section 296ZD however, Floyd J. held that there is no such knowledge requirement and that Laddie J's conclusions on this point in Sony v Ball were incorrect. Accordingly, Nintendo were granted summary judgment on export sales under section 296ZD. This decision will give some hope to claimants seeking to prevent copyright infringement by exported products, however with two High Court judges now reaching opposite conclusions, a decision of the Court of Appeal on the correct interpretation of the legislation will probably be required, before the position is fully resolved.
Director and shareholder liability
Finally, Nintendo argued that Mr Chan, the sole director and shareholder of Playables, should be jointly liable for copyright infringement. Floyd J. considered the position of Mr Chan within the defendant company, together with the fact that the scale of Playables activities was such that the activities must have been corporate policy set by Mr Chan, and that many of the devices were delivered to Playables marked for his personal attention. The court was satisfied that Mr Chan should be liable as a joint tortfeasor.