The CJEU has ruled on the extent to which Article 6 of the Information Society Directive (2001/29/EC) protects technological protection measures ("TPMs") applied to video games and consoles, where these measures prevent both the playing of infringing copies of games and legitimate third party games.

Under Article 6(1) of the Directive, EU member states must provide adequate protection for rights holders against the circumvention of any “effective technological measures” which they use to prevent infringement of their copyright. These include mechanisms whereby access to the copyright-protected work is controlled by the right holder by means such as encryption or scrambling.

Nintendo had adopted certain TPMs in relation to their DS and Wii consoles featuring a recognition system installed in the games consoles and encrypted code incorporated in the physical housing system of video games, so that games and software without the code could not be launched on the DS or Wii consoles. The effect was that non-Nintendo games and software could not be used on Nintendo consoles.

Nintendo brought proceedings in Italy against PC Box Srl, which sold mod chips and game copiers designed to circumvent Nintendo's TPMs and allow users to play non-Nintendo games on Nintendo consoles ("circumvention devices"). PC Box's circumvention devices worked by "tricking" the Nintendo console into mistakenly recognizing third party games as Nintendo games. Nintendo sought an injunction preventing the sale of such devices.

PC Box argued as part of its defence that Nintendo’s TPMs went too far to be protected by Article 6(3) of the Directive, as their actual purpose was to prevent legitimate use of independent software which did not constitute an illegal copy of video games, but which was intended to enable MP3 files, movies and videos to be read on consoles, in order to fully use those consoles.

Questions referred to CJEU

The Italian court referred two questions to the ECJ for a preliminary ruling:

  1. Do “technological measures” for purposes of Article 6 of the Directive include not only those which are physically linked to the copyright material itself (i.e. the games in this context) but also those which are physically linked to devices required in order to use or enjoy that material (i.e. the consoles)? Furthermore, do such technological measures still qualify for protection under Article 6 if the effect is also to prevent any use of Nintendo games on non-Nintendo devices or any use of non-Nintendo games on Nintendo devices?
  2. What criteria should be considered when assessing whether circumvention devices have only a "limited commercially significant purpose or use other than to circumvent" Nintendo’s TMs for the purposes of Recital 48 of the Directive?

Advocate-General Sharpston gave her opinion on these questions in September 2013. Our previous alert on this can be found here.

CJEU ruling

The CJEU broadly followed the approach suggested by the Advocate-General and made the following points in its ruling.

  • “Effective technological measure” for the purposes of Article 6(3) of the Directive includes TPMs which are partly incorporated in the physical housing of video games and partly in consoles, and which require interaction between them.
  • Article 6 is intended only to protect the copyright holder against acts which would, without permission, constitute an infringement. Therefore, rights holders can only claim protection for TPMs to the extent necessary to prevent infringing acts (such as unauthorised reproduction of their own works), and should not use TPMs in such a way as to unduly prevent or restrict legitimate use of third party games or software.
  • Use of TPMs must be proportionate if they are to be protected by Article 6. The proportionality requirement is not expressly set out in Article 6, but derives from Recital 48 of the Directive. In determining whether use of TPMs is proportionate, a court must consider whether other effective protection measures could be employed which would cause less interference with the activities of third parties, or limit them to a lesser extent. Factors relevant in determining this include:
    • Costs of different types of TPMs.
    • Technological and practical aspects of their implementation.
    • Relative effectiveness of TPMs in protecting rights.
    • The actual use being made of the circumvention measures, and whether they are being used for lawful or unlawful purposes.
  • The CJEU emphasised the purpose for which circumvention devices are used as being a particularly important consideration in assessing whether TPMs inappropriately prevent or restrict legitimate activities. In determining the purpose of circumvention devices, the court emphasised the need to look at evidence of actual use by the third party of the circumvention measures (as opposed to the use claimed by the copyright holder), i.e. are the circumvention measures being used to infringe copyright or for a legitimate use?

Implications

This is an important decision, suggesting that circumvention devices may now be considered lawful in some circumstances. In particular, under the existing CDPA regime, parties wishing to circumvent TPMs for certain legitimate purposes expressly listed within the CDPA would have to apply to the Secretary of State in order to do so, but the Nintendo ruling calls into question whether there will be any need to do this now, and would appear to take a broader approach to the legitimacy of circumvention measures than the UK has to date.

Although it remains to be seen how this development will play out in practice, it is likely to become more difficult for right holders to claim protection for TPMs, particularly if they are unable to adduce actual evidence that circumvention devices are being used for unlawful purposes. The ruling may also have consequences for software manufacturers who wish to use TPMs to "lock" their products after a set period of time to avoid a second-hand market; it may now be arguable that devices circumventing such "time-locking" TPMs could be lawful in certain cases.

Additionally, the case provides some clarification on the applicability of the Information Society Directive and the Software Directive (2009/24/EC) to video games. The CJEU took the view, following the approach taken by the referring court, that video games are not simply mere computer programs, but have a “unique creative value” and are intellectual creations capable of being protected by copyright. This seems to bring video games firmly within the remit of the Information Society Directive and narrow down the scope of applicability of the Software Directive (since the special nature of the Software Directive means that, although its provisions take precedence over those of the Information Society Directive, this is only the case where the relevant material falls wholly within the scope of the Software Directive). However, the debate regarding the applicability of the two Directives to video games is still ongoing, given the pending CJEU reference from Germany in Grund v Nintendo (Case C-458/13).

The CJEU's judgment can be seen here.