The Federal Court’s recent decision in Nintendo of America v. King is among the first decisions applying the Copyright Act’s new provisions relating to technological protection measures (“TPMs”). TPMs are mechanisms that rights owners use to restrict unauthorized access to their works, for example encryption and password protection. This decision answers several questions about Canada’s TPM regime, and will serve as a useful precedent for copyright owners. The decision also raises several interesting new questions.
Go Cyber Shopping had advertised and offered for sale devices, referred to in the judgment as “game copiers” and “mod chips”, which enabled customers to play illegally downloaded copies of Nintendo games on various Nintendo game systems. Go Cyber Shopping also offered mod chip installation services. The Federal Court found that these activities constituted both copyright infringement and TPM circumvention, and awarded Nintendo $11.7 million in statutory damages, and $1 million in punitive damages.
Can retailers of game copiers and mod chips be found liable for circumventing TPMs?
Yes. The Court noted the breadth of the legislative definition of “TPM”, which covers “any effective technology, device or component that, in the ordinary course of its operation, (a) controls access to a work…”. This broad definition allowed the Court to find that the physical shape and configuration of Nintendo’s game cards, which the game copiers emulated, was in itself a TPM under the broad legislative definition. Because the physical shape of the game card and the arrangement of the electrical pins operated like a lock and key, the Court found that the configuration was effective in controlling access to Nintendo’s games, and thus constituted a TPM.
Also of interest is the Court’s finding that the replication of a TPM can qualify as circumvention. Go Cyber Shopping had argued that simply copying a TPM does not constitute circumventing it. The Court disagreed, finding that “[a] burglar who uses an illicitly copied key to avoid or bypass a lock to access a house is no less of a burglar than one who uses a lock pick.”
Finally, Go Cyber Shopping had argued that its services and products fall under the exception to TPM circumvention for computer program interoperability. Go Cyber Shopping argued that its activities enabled customers to use “homebrew” games on their Nintendo game systems, and that in doing, so it was entitled to take advantage of the interoperability exception. This argument was rejected for five reasons: the primary purpose of Go Cyber Shopping’s activities was to enable users to play illegal copies of Nintendo games; the scale of theoretical homebrew activity was dwarfed by the market for infringing activity; Go Cyber Shopping did not actually offer any homebrew games; Nintendo offers legitimate paths for developers to develop software without infringing TPMs; and there was no evidence that any of Go Cyber Shopping’s customers actually used its products to play homebrew games.. Thus, the interoperability exception was interpreted quite narrowly.
How should statutory damages for TPM circumvention be calculated: per work or per TPM?
The Copyright Act is unclear on how statutory damages for TPM circumvention should be calculated; by multiplying the statutory amount (between $500 and $20,000) by the number of TPMs circumvented, or the number of works potentially accessible as a result of the circumvention? Considering all the circumstances, the Court decided to calculate statutory damages by multiplying the maximum amount by the total number of Nintendo games that could have been unlawfully accessed: 585.
Therefore, the potential consequences of offering circumvention services are greater depending on, for example, how many games, books, or albums are protected by the same TPM. The bigger the plaintiff’s copyright holdings, the greater the damages.
Can a party write its own judgment?
In what is, to many lawyers, the most interesting aspect of the decision, the Federal Court used an unusual process in drafting the judgment. After evidence was filed, the individual defendant, Jeramie King, settled with Nintendo. The judge, recognizing the potential precedential value of the decision, asked Nintendo to file a written argument worded as if it were the final judgment. Although the corporate defendant, Go Cyber Shopping, had the option to respond, it chose not to. The judge agreed with Nintendo’s written argument and adopted it as his reasons.
What is the meaning of “technology” in the TPM provisions? Has this decision expanded Canadian copyright law into the physical realm?
This decision holds that the particular physical shape and configuration of the game copiers is a TPM because it is similar to a lock and key. This raises the issue of how sophisticated an access prevention device must be to be legally considered a TPM. There are even simpler access control devices that can be used to protect copyrighted works in a manner analogous to a lock and key and it will be interesting to see where the line will be drawn.
Will this precedent be useful outside of Canada?
Many jurisdictions have recently adopted similar prohibitions on TPM circumvention, and it is likely that copyright owners will at least argue that this decision is worth reviewing in those other jurisdictions.
Is this the first of several judgments to come that is actually written by one of the parties?
It is easy to see how the process used in this case could become a trend that catches on, especially in cases about new technologies.