Modchips now legal in the EU (as long as they’re not naughty)

We now have some authoritative clarification about the legal status of modchips in the EU for the first time.  As longstanding readers of this blog will know, I’ve been writing about modchips for some time.  Here’s a quick recap of the latest position.

What are modchips?

Essentially, a modchip is a technology which permits you to circumvent restrictions which a device manufacturer builds into a device to limit your potential usage of the device.  These limitations are enforced by technology commonly called ‘technological protection measures’.  For example, a modchip might permit you to install software or to play games on a device which otherwise you wouldn’t be able to due to the technological protection measures installed by the device manufacturer on the device.Essentially, the use of TPMs and the attempted neutralisation of TPMs using modchips is a battle for control for devices: who gets to decide what you can do with a console or handheld device or phone: the manufacturer or the user?

The legal battle

This question of control has been fought back and forth for a while now: someone manufactures modchip or other TPM circumvention technology, occasionally they get sued and the device manufacturer tries to show how this is an open and shut case involving IP infringement and so forth.  Usually that results in a fairly quick legal victory because the TPM manufacturer or user backs down.  But not always.

Nintendo v PC Box

PC Box was an Italian company which created modchips for the Nintendo Wii console and Nintendo DS handheld device.  Nintendo brought proceedings against PC Box which ultimately ended up going before the Court of Justice of the European Union – the EU’s highest court.  You can read the CJEU’s decision here.

I wrote back in September 2013 about the preliminary ruling made by the CJEU’s Advocate General.  Now we have the decision of the full CJEU.

My friend Angus MacCulloch has written a great breakdown of the legal analysis of the case and its practical implications, which I recommend reading.  For me, I’m glad to say that my informal legal summary for developers which I made back in September 2013 is still accurate following the decision.  Here is it again:

A TL;DR summary of the law on modchips in the EU following Nintendo v PC Box:

• Console manufacturers can use “technological protection measures” (which are physically linked to either the console or the game itself) to restrict acts which they do not want users to be able to carry out.
• However, modchips intended to circumvent those TPMs are not illegal per se: you have to look at what the modchip is doing and whether its usage is proportionate to the actual harm done.
• If the primary use of the modchip technology is for infringing purposes (e.g. to pay pirated games), this suggests the modchip would NOT be being used legitimately and proportionately.
• However, if the mod chip is used primarily used for legitimate, non-infringing purposes (e.g. home brew games), this suggests the use of the modchip may be used legitimately and proportionately.
• The evidential burden is on the console manufacturer to show on the facts that an attempt to circumvent their TPMs is unlawful.
• So: modchips are not ALWAYS illegal – it all depends on whether a user is using them in the right and proportionate way.

In practice, will this really change much?  On one view, maybe only a little: the pendulum has swung away from the device manufacturers in the EU (who were, as Angus put it excellently, at one stage trying to use the law to create an exclusive ‘console manufacturers’ right’) and towards modchip makers and users.  However, all the CJEU has really done is put a balancing test in place between these opposing sides: there still needs to be litigation in order for the balancing test to be applied in any particular situation.  IF litigation does kick off, the modchip maker or user will find stronger legal defences for their activity than they found previously.  But in practice how many will have the necessary financial resources and resolve to face down a console manufacturer in order to bring those legal defences into play?

On the other hand, these things are seldom as straightforward as they seem, particularly given the ability of legal changes to shape business behaviour over time.  What if, for example, a group of users decide to petition (or even sue) a console manufacturer to build modchip type abilities into a device right from the outset?  What if a console manufacturer itself decides that this kind of case shows that there is both user and legal support for modchip type abilities and decides voluntarily as a business to introduce new functionality themselves? (Actually that’s happened before, when Sony introduced “OtherOS” functionality to the Playstation 3, before later removing it).

We’ll have to see whether this case spurs either further litigation or business/tech changes from the manufacturer (or both). Either way, I can’t imagine this is the last we’ve heard about this issue (look for example at EU interactive entertainment industry association ISFE’s press release, arguing stridently that “without the ability to deploy TPMs, console piracy would thrive and competition and innovation in the market would be undermined or destroyed“.  Watch this space…