Case comment, Case note

Case C-435/12 ACI Adam v Stichting de Thuiskopie

Justin Koo, PhD Candidate, The Dickson Poon School of Law, King’s College London

The claimants in this case were importers of data media storage devices such as CDs. By virtue of Article 16c(2) of the Auteurswet (Dutch copyright law), the claimants were responsible for the payment of remuneration to authors. This payment has the effect of offsetting the costs of the private copy exception under Article 16b given that the imported media storage devices facilitate acts of private copying. However, the claimants contended that the remuneration payable to the defendants incorrectly takes into account copying from unlawful sources. In other words, the importers were being forced to pay compensation for illegal acts that should not fall within the private copy exception under Article 16b.

On appeal to the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), the case was stayed and three questions referred to the Court of Justice of the European Union (CJEU).[1] In short, the first question asked whether private copying from unlawful sources fell within the scope of the private copy exception under Article 5(2)(b) of the Information Society Directive. In terms of the second question, the Dutch Supreme Court essentially asked what the role of the three-step test under Article 5(5) of the Information Society Directive is. The CJEU in addressing both questions together, posed the question whether reading Article 5(2)(b) and Article 5(5) of the Information Society Directive together would preclude national legislation that does not distinguish between the sources (lawful or unlawful) from which a private reproduction is made. With this in mind, the significance of the case was not about the determination of the levy to be paid but rather, the scope and application of the private copy exception.

In simple form, Article 5(2)(b) does not expressly address whether the source of the reproduction must be lawful in order to come within the exception. As such it was unclear whether copying from unlawful sources could also be included in the scope of the private copy exception. From a preliminary perspective, the exceptions and limitations provided by Article 5 of the Information Society Directive must be interpreted strictly following the decision in Infopaq.[2] Furthermore, their implementation into domestic law must be in accordance with the three-step test, as provided under Article 5(5) and emphasised under Recital 44 of the Information Society Directive. Following this established reasoning, the interpretation of Article 5(2)(b) must be understood to preclude the making of private copies from unlawful sources.

In respect to the strict interpretation of the exceptions and limitations, this can be aligned to the aim of establishing a smooth functioning internal market. Therefore, adopting a broad interpretation of the private copy exception as in the case of Article 16c of the Dutch copyright law could be detrimental to the proper functioning of the internal market.  This is because it could allow Member States to have varying forms of copyright protection not envisaged by the Information Society Directive. Furthermore, tolerating private copies made from unlawful sources would run counter to the Information Society Directive’s aim to establish a high level of protection and foster creation and investment in copyright works. Moreover, it would likely influence further acts of piracy and counterfeiting. This is because the toleration of copies made from unlawful sources could be indirectly seen as toleration of the unlawful sources.

In terms of the application of the three-step test, making private copies from unlawful sources would fail that test in at least two regards. Firstly, allowing private copies to be made from unlawful sources would conflict with the normal exploitation of the work because persons would be inclined to make a personal copy from a cheaper illegitimate copy rather than from a legal copy. This could negatively impact on the demand for legitimate versions of authors’ works. Secondly, tolerating private copying from unlawful sources may prejudice the legitimate economic interests of the author because he would be effectively unable to rely on his exclusive right of reproduction in cases of private copying. In other words, authors would be forced to tolerate the reproduction infringements that accompany private copying even where the source is an unlawful one. Thus allowing, private copying from unlawful sources would undermine the effectiveness of the exclusive right of reproduction.

With this in mind, Articles 16b and 16c of the Dutch copyright law have to distinguish between the lawful and unlawful sources of private copying in order to be compliant with Article 5(2) (b) of the Information Society Directive. The implication of this is that the inclusion of compensation for copying from unlawful sources would not be fair on the grounds that copying from unlawful sources does not fall within the scope of the private copy exception.[3] As such the claimants were right in contending that the private copy levy they were being charged was unfair and excessive.

What Now

From this case it is made clear that the private copy exception only applies to copies made from lawful sources. Therefore, making copies from unlawful sources amounts to an infringement of the exclusive right of reproduction provided by Article 2 of the Information Society. However, the more pertinent lessons to be learned from this case relate more generally to the implementation of the exceptions and limitations found under Article 5 of the Information Society Directive. It would appear that Member States do not have much leeway in transposing and interpreting the twenty-one exceptions and limitations provided. Member States do not have the freedom to expand the scope of the exceptions provided. Rather, they only have the freedom to restrict the scope of the exceptions especially in regards to new technologies.[4] Furthermore, there must be coherent and consistent application of the exceptions across Member States. As a result, it can be inferred that the wording of the exceptions provided under Article 5 are not just prototypes but perhaps ready-made provisions to be implemented verbatim.

On the one hand this strict interpretation may be good in terms of legal certainty. However, from a different perspective this development of narrow exceptions may be cause for concern given the broad and far reaching interpretations given to the exclusive rights.

 


[1] Only the first two questions are looked at in this article.

[2] Case C-5/08 Infopaq International A/S v Danske Dagblades Forening [2009]

[3] This position was suggested in the earlier Advocate General Opinion of Trstenjak on Case C-467/08 Sociedad General de Autores y Editores (SGAE) v Padawan SL [2010] para 78

[4] See Recital 44 of the Information Society Directive

Article

Should We Be Able To Modify Nintendos? A Note On Nintendo v PC Box

Justin Koo LLB, LLM

PhD student, Dickson Poon School of Law, King’s College London

 

For the avid gamers out there, you would no doubt be aware that playing video games can be quite an expensive hobby. On average one video game costs about £30-£45,[1] whereas, the cost of buying a mod chip to ‘modify’ your console is about £70-£100.[2] Therefore, one can see the obvious allure in purchasing a mod chip as it provides a cheap albeit illegal alternative to buying new games. However, the legality of mod chips for video game consoles has always been in question because its usage normally implies the playing of unauthorised or illegitimate copies of video games.[3]

Without a mod chip these illegitimate copies of games will not work given that video game hardware and software are both encoded with technological protection measures (TPM) in order to prevent such acts. Regardless of this major purpose, there are other ways in which mod chips can be used. Mod chips also allow the use of ‘homebrew’ software, which in lay-man terms, allows users to run applications and processes that ordinarily are not available on a non-modified console. For example, homebrew software would allow: emulator programs to run – these enable the playing of video games from other platforms (normally older discontinued consoles),[4] playing licensed video games from other regions and playing other non-video game media such as DVDs and MP3s (where previously unavailable).[5]

These very mod chips are the subject of dispute in the Nintendo v PC Box[6] case that has been referred by the Tribunale di Milano to the Court of Justice of the European Union (CJEU). In short, Nintendo argued that PC Box’s mod chips circumvent the TPMs designed to prevent the playing of unauthorised video games on their Wii and DS consoles. However, PC Box argues that the true purpose of Nintendo’s TPMs is to prevent the use of independent software and to geographically segment markets by restricting the use of games according to region. Therefore, the Italian district court referred two questions to the CJEU concerning the circumvention of Nintendo’s TPMs on their Wii and DS video game consoles by PC Box’s mod chips:

1)    The first question concerns the application of Article 6(1) of the Information Society Directive 2001[7] to the TPMs contained in Nintendo’s hardware and software. Basically, the first part of the question asks whether Article 6(1) is applicable to Nintendo’s consoles (hardware) that have TPMs although they are not copyright works but merely facilitate the use of them. Secondly, it asks whether Article 6(1) still applies even though the purpose of Nintendo’s TPMs is not only to restrict the infringement of their copyright works (namely reproduction of their video games) but also to preclude interoperability.

2)    The second question focuses on the application of Article 6(2) to the supply of PC Box’s mod chips. The district court asks the question of how the purpose of a device (mod chip) is to be decided in determining whether there are any other commercially significant uses.

In a more general sense there are two major issues that can be inferred from the above questions. In the first place, the validity of video game mod chips is in the spotlight as it is being questioned whether they have any other commercially legitimate purposes that do not involve the infringement of copyright works. And secondly, to what extent will Article 6(1) protect TPMs that go further than merely preventing the infringement of copyright works especially in instances that involve the prevention of acts that do not require the authorisation of the copyright owner.

 

The Opinion

Advocate General Sharpston in her opinion suggested that the CJEU should answer the first part of the first question in the affirmative. Article 6(1) should be applicable to Nintendo’s hardware on the grounds that Article 6(3) details a wide range of access controls or protection processes including copy control mechanisms. If TPMs not contained in the copyright material itself were exempted from protection, then a broad range of TPMs would be excluded contrary to the objective of the provision. However, the TPM used must be proportional. It will be a matter for the domestic court to determine whether the acts requiring authorisation can be restricted without also restricting acts that do not require authorisation based on the current state of technology. What this means is that TPMs that are disproportionate to the purpose of preventing copyright infringement will not be protected under Article 6(1) as it will not be an ‘effective technological measure’.

Regarding the second question, AG Sharpston suggested that the relevant criteria for determining whether Nintendo should gain protection against the supply of PC Box’s mod chips was Article 6(2)(b). In other words, if the mod chips have no other commercially significant purpose than infringing copyright in video games then its supply will be subject to legal repercussions. However, in reaching this conclusion she did note that if the mod chip can be used for legitimate purposes, then it should influence the decision regarding whether Nintendo’s TPMs are proportional. As such if the mod chips can be used for commercially significant legitimate means, then there is the possibility that Nintendo’s TPMs are overly (and unnecessarily) broad and as such may not qualify as ‘effective’.[8] The consequence of this is that Nintendo’s TPMs may fall outside the scope of protection provided by Article 6(1).

Considering all the evidence at hand and the opinion of AG Sharpston it would seem that the decision of the case turns on the finding of any other commercially significant purposes for the mod chip. However, it is this writer’s opinion that even in the instance of other legitimate uses being found, the primary purpose of the mod chip to facilitate the playing of unauthorised or illegitimate video games outweighs any other use. Therefore, Nintendo should receive protection for its TPMs as well as protection against the supply of PC Box’s mod chips.

 

Interesting Issues

Although the Nintendo v PC Box case is interesting in its own right, it does raise some further issues and questions which are as interesting as the case itself. One of the first issues discussed in the case at the domestic level concerned what the applicable law should be, that is the Computer Programs Directive 2009[9] or the Information Society Directive 2001. The decision to choose the Information Society Directive as the applicable law is a significant one because it meant categorising video games as more than software. In fact, the court held that video games cannot simply be regarded as computer programs but instead are “complex multimedia works.”[10] The implication of this is that video games are afforded a broader range of protection than it would be entitled to if were categorised as a mere computer program.

A second interesting point to note is the manner in which the referring court addressed the second question in Nintendo v PC Box. In applying Article 6(2) the court was only concerned with subsection (b), ignoring subsections (a) and (c). It would be desirable to apply Article 6(2) in a cumulative manner for the purpose of determining whether the supply of a device should be protected against opposed to singling out an individual criterion.[11] The consequence of this is that the Italian district court could have avoided the hard question of determining whether PC Box’s mod chips had any other commercially significant purposes by merely looking at the reason the device was designed and its marketing. The rationale behind this criticism is that the marketing and design of PC Box’s mod chips would give insight into the primary purpose of the mod chips as well as any other commercially significant purposes. Thus, answering the question posed by the district court anyway.

But more generally, this case raises the issue of whether TPMs belong in copyright law. Although there is virtue in protecting TPMs given that they serve the purpose of preventing copyright infringements, the reality is that there is nothing inherently copyright-esque about TPMs or anti-circumvention protection. It can be argued that Article 6(1) is a black sheep in the copyright flock.

 

 

 


[1] Price range as found on www.game.co.uk.

[2] This price range is based on my own research of websites selling such devices.

[3] The illegitimate copies of video games are normally downloaded from torrent sites and then copied to DVDs or mass storage devices such as external hard drives.

[4] Note this would most likely also involve copyright infringement – reproduction of video games

[5] See http://www.consoleunlock.com/?hop=mattmartin for the ways in which a mod chip can be used on a Nintendo Wii.

[6] Case C-355/12

[7] Directive 2001/29

[8] Of course the opposite applies, in that, if the mod chip has no other commercially legitimate purpose(s) then the TPM used by Nintendo will likely be proportional and subject to protection under Article 6(1).

[9] Directive 2009/24

[10] Case C-355/12 para 25

[11] Article 6(1) (a), (b) and (c) should be considered together.