The Game Rules of Content Potection

A judgment of the EU Court of Justice retains gaming industry´s position as gatekeepers for their software and leaves independent software as rarities.

A recent judgment of the Court of Justice of the European Union (C-355/12) assesses the legal protection of technical content protection measures. The court provides well-reasoned and balanced verdict, without weakening the possibilities for protection of the right owners. It simultaneously takes into account that too much protection leads to negative externalities, which are to be avoided.

Digital content protection measures, also known as digital rights management (DRM), has a history which all parties would likely prefer to forget. With examples of inefficient protection and cumbersome user experiences, not many attempts can be considered as successful break-throughs.

While technical content protection measures are nowadays mostly replaced by open access to content and streaming services, gaming consoles are an area where technological content protection measures are as strong as ever and a natural part of the experience.

Copying Made Impossible

The gaming industry grew with the fact that console games were not accessible with competing devices. In addition games were run from their own cartridges with virtually no means accessible to consumers to make copies of them even before actual copy protection measures were introduced.

By comparison, in the music industry listeners learned early on the benefits of mixing tapes and did not accept their music devices to restrict this or to play music from only one source. This proved to be incompatible with introduced copy protection measures.

The end to end control in the console architecture made it possible to develop efficient protection measures without users experiencing negative side effects allowing enough time to develop the measures to be truly effective.

While not entirely unbreakable, current content protection systems in consoles are very secure. In the negative side – as it was also argued in the above mentioned CJEU case – current systems have also its share of negative externalities. These measures usually prevent other software than authorized by the producer of console from being run on the console, essentially closing the machine from independent software.

Facts of the Case

The Court of Justice of the European Union (CJEU) ruled in its judgment C-355/12, with Nintendo companies and PC Box as parties, on to what extend does anti-circumvention clauses in article 6 of the InfoSoc Directive (Directive 2001/29/EC) protect the providers of gaming hardware in their efforts to protect their system when the product capable of circumvention has also other legitimate uses, as the PC Box devices had.

Nintendo is a company well known for its gaming consoles. The Italian Company PC Box kept in sale devices that can be installed in Nintendo consoles allowing installation of additional software not authorized by Nintendo. An unmodified Nintendo console runs only software authorized by Nintendo, and software lacking an authorization code cannot be run on the console.

These measures have the effect of preventing the use of illegal copies of videogames. The device sold by PC Box deactivates this technological protection measure on the console and thus allows installation of additional applications from independent manufacturers. These additional applications, so called “homebrews”, can provide additional features not commercially available to the console, like allowing playback of media files to play music and movies.

By deactivating the requirement for authorization in the console, the device by PC Box also allows use of infringing copies of games, thus PC Box was sued by Nintendo.

The Italian court examining the case asked the CJEU for preliminary ruling on questions, which the Advocate General interpreted as whether Nintendo’s technological measures qualify for protection under EU law because they are designed to prevent acts not authorized by the right holder, even if they also restrict interoperability; then, if so, whether that protection must be provided against the supply of PC Box’s devices because they allow the performance of such unauthorized acts. With this background, the court provided its judgment.

The Scope of Legal Protection

First the CJEU assessed that videogames, which the content protection system in Nintendo consoles protects, are protected under the InfoSoc Directive 2001/29 instead of the Software Directive 2009/24, and that the system in place in Nintendo consoles is eligible for protection under the former.

Then the court assessed the scope of legal protection against circumventing technological protection measures. It considered that legal protection against acts not authorized by the right holder must respect the principle of proportionality.

The directive should not prohibit devices or activities which have a commercially significant purpose other than to circumvent the technical protection. Also, it must be assessed if the effective level of content protection can be achieved with means having less interference with the activities of third parties outside the scope of copyright.

More specifically the directive requires the member states to provide adequate legal protection against devices which have only a limited commercially significant purpose other than the purpose of circumventing technological content protection measures. In other words, the court concluded that devices that do have other significant uses than circumventing are not prohibited by the directive even when the devices are capable of circumvention.

To assess this the CJEU advised the national court to examine how often those devices are in fact used in disregard of copyright and how often they are used for purposes which do not infringe copyright.

The Outcome of the Judgment

The result of the judgment is that at least in theory operators like PC Box may continue to provide devices that disables the authorization system in gaming consoles in order to install independent software if the bulk of the software run on these modified consoles actually are independent and non-infringing instead of infringing copies of games.

Nevertheless, the practicalities of how modern consoles operate creates a self-fulfilling prophecy that the device allowing circumvention often leads to usage of illegal copying of games.

Nintendo, as well as other manufacturers of dedicated gaming consoles, provides regular updates on the consoles’ firmware that in addition to other features, may disable circumvention measures the manufacturer has become aware of. Thus, users of modified consoles are discouraged from updating their firmware, which leads to incompatibilities with legitimate games.

As a result, the only sustainable method to play games with modified console is to play illegal copies. This creates evidence on the view Nintendo expressed during court proceedings that such devices’ main usage is to allow illegal copying of games.

The Advocate General considered that the dispute between the parties to the main proceedings concerned not only copyright law, but whether the measures put in place by Nintendo are in conformity with competition law. This, however, has not been considered more in the judgment, as it was not asked by the Italian court. Thus, the door is open for the possibility to assess content protection measures once more in the CJEU. If this happens, the above mentioned effect of manufacturer’s conduct may come under scrutiny as well.

The judgment sets important principles and boundaries on the protection of copy protection measures, but it is doubtful the judgment has any implications on the business of Nintendo. It still retains the position of gatekeeper for the software that can be run on its devices, leaving independent software as rarities, playthings for the curious and the rebels.

Joni Hatanmaa
Hedman Partners Attorneys, Helsinki