SONY CONSIDER APPEAL IN AUSTRALIAN ‘MOD CHIP’ CASE

Sackville said in ruling that Sony had failed to prove PlayStation consoles had copyright protection measures installed, so he couldn’t rule mod chip provided and installed by Stevens broke copyright law: “In view of the failure of the applicants to establish that the copyright work was protected by a technological protection measure, it is not necessary for me to determine whether the devices installed by Mr. Stevens in the PlayStation consoles were circumvention devices.” Sackville also said he was swayed against SCE’s position because company itself during proceedings “accepted that the installation of the [mod] chip enabled the owner of the console also to play a backup copy of the PlayStation game which lacked the access code.” Therefore, mod chip appeared to serve additional purpose other than just defeating console’s access code to play pirated software, judge said.

SCE Australia said it was “disappointed with the court’s finding” because case “was part of global efforts to stop piracy and followed a similar proceeding brought by Sony Computer Entertainment Europe in the United Kingdom in December last year. In that case, Justice Jacob of the U.K. High Court found in favor of Sony Computer Entertainment Europe under the corresponding provisions of the U.K. Copyright Act.” SCE Australia said case decided last week “calls into question the value of the new provisions of the Copyright Act which were passed by Federal Parliament after a long period of consultation to deal precisely with this issue.”

Before decision last week, Sony had been successful elsewhere in its battle against mod chips and software pirates. For example, Sony Computer Entertainment America (SCEA) joined Interactive Digital Software Assn. (IDSA) in applauding Canadian DoJ and Royal Canadian Mounted Police for what SCEA called “precedent-setting conviction for the illegal sale and distribution of circumvention devices” in Canada (CED July 24 p9). Recent Canadian action followed early successes by game industry and govt. in U.S. SCEA said that since U.S. Congress passed Digital Millennium Copyright Act (DMCA) in Oct. 1998, company successfully argued that mod chips were illegal circumvention devices under DMCA in U.S. “and the recent Canadian conviction recognizes that such devices violate copyright laws in other areas of the world.”

Australian Competition & Consumer Commission (ACCC), which testified in case on behalf of defendant as friend-of-the-court, praised Fri. ruling. Consumer watchdog group -- independent statutory authority created by Australian govt. to oversee trade practices and pricing -- also is likely to use Sackville’s decision as further artillery in its efforts to do away with regional coding for DVD software in Australia. As we reported earlier this year, ACCC started investigation into possibly illegal collusion by movie studios in establishing DVD regional coding. ACCC said regional coding created artificial trade barriers and said it wasn’t illegal in Australia to play imported disc or those copied for backup purposes, although it was illegal to import software for resale.

ACCC Chmn. Allan Fels had accused Sony of “moving in [Stevens] case to prevent Australian consumers from reaping the benefits of globalization.” Commenting on Fri. ruling, he said: “Australian consumers can now enjoy games legitimately bought overseas, as well as authorized backup copies, by legally having their games consoles chipped.” But SCE Australia Managing Dir. Michael Ephraim told Reuters: “There is no such thing as an authorized backup copy. The Copyright Act makes it clear that making backup copies of games is illegal.” He also criticized ACCC for what he said were “misleading” and “distorted” comments to Australian consumers about regional coding and competition. Ephraim told Reuters PlayStation 2 (PS2) games were being sold in Australia at same price as in U.S. and at up to 20% less than in U.K. and court case was strictly about piracy, which he called “major problem.” Report said pirated PlayStation games sold on black market for as little as 5 Australian dollars compared with retail price of 49 Australian dollars, while pirated PS2 games could be bought for about 30 Australian dollars instead of typical 100 Australian dollars for legally distributed title. Regional coding, Ephraim told Reuters, was created because of different TV formats in Australian and U.S. -- not for commercial motives as ACCC charged.

However, SCE Australia said “it was pleased the Federal Court had found that… Eddy Stevens had infringed SCE’s trademarks by selling and offering to sell ‘an extended range’ of pirated copies of PlayStation computer games.” SCE spokesman in Europe told us company still was studying ruling before deciding definitely whether to file appeal on rest of decision. However, based on SCE’s success arguing similar cases in other areas of world, as well as its refusal to back down in various other types of suits, at least some observers believed SCE almost certainly would file appeal.