England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London. WC2A 2LL
		23 January 2002

MR. JUSTICE JACOB:

1. This is an application for judgment pursuant to Part 24 of the CPR. The Claimants are Sony. Originally there were three Defendants. The First and Second Defendants have settled. The Third Defendant, Mr. Edmunds, who trades as Channel Technology disputes liability.
2. The basic facts are largely not in dispute. Sony make and sell a device for playing computer games called the PlayStation 2. To play a game on this device you put in a CD or a DVD which carries the game as a computer program. The games themselves are created by Sony, or licensees of Sony, or independent people who co-operate with Sony in order that the particular disks they make and sell can be run on the PlayStation 2.
3. Each game has a code embedded into the CD or DVD. The console looks for those codes whenever it is loaded with a disk. Sony have so arranged matters that these codes do not form part of the data which would be read by an ordinary computer accessing the CD or the DVD. Thus if you take a PlayStation game on a disk and copy it using a CD burner, the copy will not run on a PlayStation console. If you try and run it, you get nothing. So, it is fair to say that the copy which you make is impaired. These specially embedded codes are intended, amongst other things, to prevent copying of Sony games - which copyright works - on the CD Roms. The special codes of course also stop anything else being run on the console.
4. Sony have divided the world up into three parts: broadly, these are Japan, the United States and what are called the PAL countries. They sell slightly different consoles in each of these three areas: each of these types of console requires a different code. Thus it follows that if you buy a CD game in one area, it will not run on the consoles sold to another area. This is called, in the evidence, "regional control".
5. What the Defendants do is to import - I am told from Russia - a chip, which it calls Messiah. This you can insert into a Sony PlayStation 2. If you do that, the codes on any disk are by-passed. Mr. Midgley, the Defendant's expert, puts it this way:

"Operation of the Messiah Device. The Messiah device comprises a card which circumvents the copy-protection and region-control technologies in order to allow the types of work identified in paragraph 9 to be loaded (played) and run. It does so by intercepting calls to those parts of the PS2's BIOS and DVD Controller which implement the copy-protection and region-control, and returning data which authorises any CD or DVD for playback, regardless of the region-control and copy-protection codes. In so doing, the Messiah device does not itself make any copy of data obtained from the disk; the Messiah device merely by-passes the authorisation process ....".

6. The Defendant wishes to sell these chips in this country for customers to insert into consoles in this country. Sony say that such activities infringe their rights under Section 296 of the Copyright, Designs and Patents Act 1988. This provides as follows,

"(1) This section applies where copies of a copyright work are issued to the public by or with the licence of the copyright owner in an electronic form which is copy protected".

7. There is no dispute that the market is almost awash with copyright works issued by Sony or its licensees for use on the PlayStation 2. So sub-section (1) applies if there is copy-protection.

"(2) The person issuing the copies to the public has the same rights against the person who, knowing or having reason to believe that it will be used to make infringing copies (a) makes, imports, sells, or lets for hire, offers or exposes for sale or hire, or advertises for sale or hire any device or means specifically designed or adapted to circumvent the form of copy-protection employed; or (b) publishes information intended to enable or assist persons to circumvent that form of copy-protection as a copyright owner has in respect of an infringement of copyright.

(4) References in this section to copy-protection include any device or means intended to prevent or restrict copying of the work or to impair the quality of copies made".

8. There really can be no doubt that the special codes put in by Sony fall within sub-section 4. They are a device or means intended to prevent or restrict copying of a work. The copying that is prevented is, of course, the loading of the game into the computer. There can be really no doubt that Sony intended that to be the case.
9. The Defendant's case is essentially that the device extends beyond mere protection of copying of copyright works. If you put a Messiah into a Sony PlayStation, the PlayStation will be able to run with independent software devised by people who have no connection with Sony or with copies said to be backup copies which some people might wish to make of any Sony game they have got in case the disk they have got becomes corrupted or destroyed. They will also be able to play games imported from outside Europe, whether made with Sony's licence or not. In particular, they would be able to play what are known as Hong Kong Silvers. I am told that Hong Kong Silvers form two classes - some pirate games (that is to say, unauthorised copies of games of Sony or its licensees); some are pornographic. The Messiah-fitted console will be able to play what teenagers would probably call 'swaps' -"swapping" is the name that one teenager makes a copy of a game he has for his friend, and his friend makes a similar copy of another game in return.
10. Sony say that it does not matter one way or the other whether or not there are, or are potentially, uses of such a console which do not involve any infringement of copyright. The plain fact is, they say, that there are uses which would involve infringement of copyright and the Defendant knows that. In practice, Sony add, pretty well all the use of consoles fitted with Messiahs would be for infringing uses. They say the principal uses will be swaps and use on games imported from outside the PAL area and that either form of use would amount to infringement.
11. So, there are two disputes: (1) does it matter whether or not there may be some lawful uses, given that there are some which are not? (2) What, if any, is the extent of any lawful use. The second point is irrelevant if Sony are right on the first point. The first point depends solely on the language of Section 296.
12. Mr. Dean, on behalf of the Defendant, in his extremely well-constructed argument, says that the proper construction of sub-section (2) confines the right to devices or codes, or the like, which are specially designed simply for the purpose of circumventing the form of copy-protection in this sense - that they can only be used for reading copyright-protected works which ought not to be read. In other words, the only use can be so as to assist copyright infringement. He looks at the words 'any device or means specifically designed or adapted'. He says the Messiah has other purposes because it can be used, for example, to allow a disk to be read which contained nothing of Sony's or its licensees' copyright works.
13. I reject the argument. The language of the section is, "any device or means specifically designed or adapted to circumvent the form of copy-protection". That is just what the Messiah does. It does not matter that once circumvented, the machine may read non-infringing material. Once it is conceded - as I think it must be -that the special codes which Sony put in are a device intended to prevent or restrict copying of a work within the meaning of sub-section (4), it follows that the Messiah is a device designed to circumvent that. It follows that Sony's first argument is right.
14. The second argument relates to the scale to which the device may, or may not, be used to read pirate works. On any view it is likely to be used on a considerable scale for so doing. One would have to shut one's eyes to reality to imagine that the scale of swapping by teenagers would be trivial if this device were widely available on the market. Games for the PlayStation cost between £25 and £45. It would be well worth getting a Messiah so that games could all be shared. Much the same thing happened with blank tapes for music. Indeed, blank tapes for music in some countries carry levies because everybody knows it is going to happen.
15. In a sense, therefore, the points argued about the extent to which the various types of use would, or would not, infringe copyright is completely academic. Since they were argued, I will give my views on them. Firstly, imports of a private nature from non-PAL areas. The argument here is that the mere importation by an individual of a CD or DVD sold lawfully in, say, Japan would not infringe copyright. Reliance was placed upon Section 22.

"The copyright in a work is infringed by a person who without the licence of the copyright owner imports into the United Kingdom otherwise than for his private and domestic use an article which is, and which he knows or has reason to believe is, an infringing copy of the work."

16. Reliance is placed upon the private and domestic use exception.
17. Then it is said, assume such a person has imported. They would be protected by Section 50 C which provides,

"It is not an infringement of the copyright for a lawful user of a copy of a computer program to copy or adapt it provided that the copying or adapting is necessary for his lawful use and (b) is not prohibited under any term or condition of an agreement regulating the circumstances in which his use is lawful".

18. To my mind, those two sections do not answer the question completely. The real question is whether an importer of a non-PAL Sony game may lawfully, in the country from which it is imported, would have any right to play the game in this country. That depends upon the existence of a licence to use the copyright work in this country.
19. The games are sold, as appears to be common ground, abroad with, for example, 'For Japan only'. I see no reason from that to suppose that there is a licence for use outside Japan. In the end, it is for a licensee to prove his licence and I do not think any such licence is proved. Copyright is inherently territorial. You need a licence in every territory in which you wish to use a copyright work in such a way as would otherwise infringe. In the case of computer programs, you use the computer program when you load it into the machine - you reproduce the work.
20. Next there is the backup argument. I have to confess I found this rather fanciful. Thus far, millions of Sony games have been sold around the world without anybody making backups. They could not make backups which would work until a circumvention device arrived. Reliance is placed upon Section 50 A which provides,

"It is not an infringement of copyright for a lawful user of a copy of a computer program to make any backup copy of it which it is necessary for him to have for the purposes of his normal use".

21. This pre-supposes somebody having a licence - for example, to use a word processing program - and the physical hardware - for example, a floppy disk, or more likely these days, a CD rom - which enables them to operate their licence (particularly so in the case of floppy disks because they were rather fragile). So, if you got your licence and your floppy disk would not work, you would still have a license, but you could not operate your license. That is not the same thing to my mind as a man whose only licence is to use the particular disk concerned. That is all you get when you buy a computer game.
22. Copinger considered the question of what is meant by 'necessary' in the latest edition of Copinger & Skone James. It points out that Section 50 A is consequential upon Art. 5 of the Computer Software Directive, as Council Directive 91/250/EEC is generally called. It goes on to say,

"While the making of a backup copy is no doubt highly desirable, it seems arguable that it is not usually necessary. It would seem particularly difficult to argue that an additional copy was necessary if, as is normally the case, the program was supplied on a CD rom or floppy disk with the intention it should be copied on to the hard drive. Where a program is supplied on floppy disk it is widely seen as good practice always to copy the original disks and to use the copies to install the program on to the hard drive, and user manuals frequently provide instructions to this effect. Even in the absence of such a specific instruction, it might be possible to imply a licence to make such copies by virtue of custom in the trade. It therefore seems that unless a wide construction is given to this provision so that the ordinary and prudent making of a backup copy is protected, this section would be of virtually no application but the purchaser will often have the benefit of an express or implied license".

23. To my mind, Copinger has not quite addressed the point, which is that there are cases where there is a separate licence other than the obviously implied licence to use the article itself as embodied on a floppy or the like. That is the kind of situation which Section 50 A of the directive is aimed at. The fact is that if you spoil your CD, which has a recording of music on it, you have to go and buy another. The same is true of a CD carrying a game. Backups are not necessary at all.
24. Therefore, if it were necessary, I would hold that the preponderance of the uses by far of the Messiah chip would result in copyright infringement. Mr. Speck asserted that all the uses would be so, but I think he cannot be right about that. The one example, which in theory exists, is the development of a wholly independent game to be read by the PlayStation 2 console. Mr. Speck's answer to that is that there is no evidence that there are any such games, but there was a little evidence that some people may wish to make some games of a rather amateur nature for the console.
25. It follows that Sony have established liability. I understand there is a dispute as to the extent and form of the relief that should be granted.
(Proceedings continued)

, 2002

JUDGMENT NO. 2 (As Approved)

MR. JUSTICE JACOB:

1. Amongst the relief sought is some assessment of additional damages pursuant to Section 97(2) of the Copyright Designs and Patents Act 1988. This provides that "the Court may, in an action for infringement of copyright, having regard to all the circumstances, and in particular to (a) the flagrancy of the infringement, and (b) any benefit accruing to the Defendant by reason of the infringement award such additional damages as the justice of the case may require."

2. In this case there was a Court order restraining the Defendant by injunction from selling the chips concerned. He did so. Sony submits that the fact that chips were sold in breach of a Court order - and the breach stands admitted - can be taken into account in an award of additional damages, and should be the ground of such an award. It is submitted on behalf of the Defendant that that is not right; that the only consequence of contempt of court is that there may be proceedings for contempt of court, and that one cannot obtain damages for contempt of court. Reliance is placed upon the decision of Mr. Justice Eady in WB -v- H Bower (Publishing) Ltd., 14 June, 2001. That was a case in which a name was published in breach of confidence, and in contempt of court, Mr. Justice Eady held that no damages could be awarded by reason of the contempt of court.

3. That seems to me to be a very different case because there is no provision authorising damages for contempt itself and no provision in the general law for additional damages for the wrongs alleged. Here there is. Section 97 requires the Court to have regard to all the circumstances. Those circumstances, to my mind, plainly can include the circumstance that the sales were done in breach of a court order. They make the act flagrant. They make the act fairly describable as 'scandalous'. In this regard, copyright is different from many other rights precisely because there is the statutory right to additional damages if the Court, in all the circumstances, thinks it right to grant them. I do, in this case, in principle, although I am told that the evidence will establish mitigating circumstances.

(Proceedings continued)