SONY COMPUTER ENTERTAINMENT v PAUL OWEN & ORS (2002)

[John R T Brazier]

Dear All,

Is it me, but there seems to be a couple of oddities here?

(a)	I've bought CDs/DVDs (of several types, ie music, software, games) in
the States, and they certainly don't have 'USA only' stickers on them (ref:
"The games are sold, as appears to be common ground, abroad with, for
example, ‘For Japan only’.") Therefore this would seem to be a quite limited
argument for territorial licensing (ie if the sticker is missing you're ok).

(b)	Ref: "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.". Most PC software clauses are about the fact that you are
buying a license to use - not the media itself (most companies will replace
the media for a licensed person at a, ahem, 'nominal' price). Music CDs are
different: when I last bought one you didn't have to agree to a contract! Is
this the same for Playstations?

Best Regards,

John B



-----Original Message-----
From: ukcrypto-admin@chiark.greenend.org.uk
[mailto:ukcrypto-admin@chiark.greenend.org.uk]On Behalf Of Donald
ramsbottom
Sent: 15 May 2002 15:24
To: ukcrypto@chiark.greenend.org.uk
Subject: Re: SONY COMPUTER ENTERTAINMENT v PAUL OWEN & ORS (2002)


Full Transcript from Law reporters, less the final part on damages.



Case No. HC 01C0 5235
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
CITATION: [2002] EWHC 45(CH)
Royal Courts of Justice
Strand
London. WC2A 2LL
23 January, 2002
Before:
MR. JUSTICE JACOB
----------
B E T W E E N:
SONY COMPUTER ENTERTAINMENT
(Claimants)
- and -PAUL
OWEN and Others
(Defendant)
----------
(Tape Transcription by Marten Walsh Cherer Ltd.
Midway House, 27/29 Cursitor St., London. EC4A 1LT
Telephone: 020 7405 5010. Fax: 020 7405 5026
----------
MR. SPECK (instructed by Messrs. Bristows, London) appeared on
behalf of the Claimants.
MR. DEAN (instructed by Messrs. Harding Evans) appeared on
behalf of the Defendant.
----------
JUDGMENT NO. 1
(As Approved)
----------


23 January, 2002
JUDGMENT NO. 1
(As Approved)

MR. JUSTICE JACOB: 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.

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.

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.
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”.

What the Defendants do is to import -I amtold 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 4
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 -----”.

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”.

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”.

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.
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.

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.
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.
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.

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.

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.

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.”

Reliance is placed upon the private and domestic use
exception. 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”.

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.
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.

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”.

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.

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”.

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.
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.

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)
----------

1
Case No. HC 01C0 5235
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
CITATION: [2002] EWHC 45(CH)
Royal Courts of Justice
Strand
London. WC2A 2LL
23 January, 2002
Before:
MR. JUSTICE JACOB
----------
B E T W E E N:
SONY COMPUTER ENTERTAINMENT
(Claimants)
- and -PAUL
OWEN and Others
(Defendant)
----------
(Tape Transcription by Marten Walsh Cherer Ltd.
Midway House, 27/29 Cursitor St., London. EC4A 1LT
Telephone: 020 7405 5010. Fax: 020 7405 5026
----------
MR. SPECK (instructed by Messrs. Bristows, London) appeared on
behalf of the Claimants.
MR. DEAN (instructed by Messrs. Harding Evans) appeared on
behalf of the Defendant.
----------
JUDGMENT NO. 2
(As Approved)
----------

2
23 January, 2002
JUDGMENT NO. 2
(As Approved)
MR. JUSTICE JACOB: 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.”

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 3
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.

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)
----------


Donald Ramsbottom BA LLb (Hons) PGdip
Ramsbottom & Co Solicitors
Internet and Global Encryption Law Specialists & General UK  Law Matters
5 Seagrove Avenue Hayling Island Hampshire UK
Tel (44) 023 9246 5931 Fax (44) 023 9246 8349
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