Chipping at the mod-chip case

COMMENTARY: Mod-chips facilitate piracy by allowing gamers to sidestep anti-piracy measures that would otherwise prevent the playing of illegal, unlicensed games on Sony PlayStations, Microsoft Xboxes and other popular gaming consoles.

In the process, mod-chips eat away at the revenue of thousands of programmers, distributors, retailers and other channel members in the marketplace for legitimate games. Many of you probably know that already.

And you can bet your bottom dollar that the High Court of Australia knew it when it delivered its unanimous decision in favour of mod-chips in Stevens v. Sony (see the "Resellers sound off " story in CRN 183, 17 October, page 6).

What you may not know, however, is that the decision does not spell out whether mod-chips are currently legal or illegal in Australia. This should come as a great relief to those resellers who were under the impression that modchips are now legal! Read on for more information.

Several important issues are relevant to the decision:

1. The decision was based on the nature of the access codes and Boot ROMs used by the Sony PlayStations that the modchips were installed on in 2001. New consoles such as the Sony PlayStation 3 and the Microsoft Xbox 360 may rely on different technologies.

2. The decision in Stevens v. Sony was based on an interpretation of a version of Australia’s copyright laws that were in place prior to the implementation of the Australia-United States Free Trade Agreement (AUSFTA). The AUSFTA came into effect on 1 January 2005 and has changed Australia’s copyright laws.

The AUSFTA also requires that Australia implement new laws on mod-chips that will likely be much more in favour of banning mod-chips. Those laws are currently the subject of a Parliamentary inquiry.

3. The decision handed down in Stevens v. Sony ultimately hinged on a mere technicality. The High Court had to decide whether the access codes and Boot ROM mechanisms contained in Sony PlayStations prevented the copying of games. The court found that although these mechanisms deterred people from copying games, and that they prevented people from playing illegally copied games, the access codes and Boot ROMs did not actually prevent people from physically copying games. Other issues were also discussed.

4. Stevens v. Sony is the latest instalment in a series of judgments regarding digital piracy that have been handed down by the courts this year. In the Grokster and Kazaa cases, the courts held that the peer-to-peer (P2P) software providers were liable for breach of copyright laws; in the Mp3s4free.net case, the court found that the website owner and the ISP that hosted the website that hyperlinked to illegal MP3 files were also in breach. These cases demonstrate a pattern of the courts cracking down on piracy. Stevens v. Sony does not change this pattern.

What this demonstrates is that the courts are yet to pronounce on the legality of mod-chips under current Australian law. As a result, mod-chippers have not been given free rein to supply and install modchips in Australia.

It will be interesting to see the architectures used by the new consoles that are due to arrive in Australia later this year and the outcome of the Parliamentary inquiry on the new laws.

This column is for general informational purposes only. It is not a substitute for legal advice. Readers should seek legal advice on their particular circumstances.

Alan Arnott is a technology lawyer with qualifications in computer science and is an associate of Arnotts Lawyers in Sydney. He can be contacted on (02) 9419 6355 or via email at alan@arnotts.net.au.