Nintendo of America Inc. v. King, 2017 FC 246

Nintendo has been awarded an injunction, $11,760,000 in statutory damages and $1,000,000 in punitive damages for the trafficking of infringing devices that were alleged to allow the use of pirated games in Nintendo DS, 3DS and Wii video game consoles. These devices included mod chips and game copiers designed for use with downloaded ROMs.

The following was ordered against the Respondent Go Cyber Shopping (2005) Ltd. The individual respondent had reached a settlement agreement on all issues, including liability and quantum of damages, before the end of the hearing.

The Court found copyright in the Header Data for each of the three game systems, as well as the video games themselves. The Defendant was said to provide the directions on how to copy or download the Header Data if it was not already provided with the device. This was found to be either primary or secondary infringement of the copyright held by Nintendo.

The Court considered what is meant by the definition of a Technological Protection Measure in the Copyright Act, and held that access control TPMs do not need to employ any barrier to copying in order to be effective. Therefore, the physical configuration of Nintendo's game cartridges, including the shape of the card and the arrangement of the electrical pins, was held to be a TPM. The boot up security checks, encryption/scrambling, format and Wii Copy Protection Codes were also held to be TPMs.

The Court disregarded arguments seeking to narrow the meaning of "circumvent" when applied to TPMs, and held that the game copiers circumvent the physical configuration TPM. The game copiers were also found to circumvent the boot up security check TPM and the encryption/scrambling TPM. The Wii TPM was found to be circumvented by the use of mod chips.

The Respondent raised a "homebrew" affirmative defence, arguing for the interoperability of computer programs and the potential availability of homebrew software. The Court held that the primary purpose of the Respondent's devices is to play pirated copies of Nintendo games, and that the Respondent did not meet its burden of establishing the exemption.

The Court awarded the maximum of $20,000 in statutory damages per work, which was found to be 585 Nintendo games and the three header data works. In doing so, the Court noted that actual infringement of copyright is not necessary for an award of statutory damages for TPM circumvention. It was also held that the damages would not be assessed per TPM circumvented, but rather per work infringed.

Punitive damages were also awarded, to reflect the objectives of retribution, deterrence, and denunciation. The Court held that the Respondent knowingly and deliberately sold circumvention devices, promoted such activities to its customers, had done so for years and operated under a misleading unregistered business name. The evidence also suggested plans to expand to Nintendo's next generation of game consoles.