Kabushiki Kaisha Sony Computer Entertainment v. Stevens

Citation: Kabushiki Kaisha Sony Computer Entertainment v. Stevens, [2005] HCA 58, (2005) 221 ALR 448; (2005) 79 ALJR 1850 (Oct. 6, 2005).

Factual Background
Eddy Stevens sold computer chips that enabled his customers to play imported videogames on PlayStation consoles they had purchased in Australia. The imported games &mdash; which Stevens also sold &mdash; all were authentic games. No one suggested that Stevens sold counterfeits. But the imported games were designed by Sony to be used only on consoles sold elsewhere in the world, not on Australian consoles.

The design feature that distinguishes games intended for sale in Australia from those intended for sale elsewhere is an “access code.” PlayStation games contain access codes that differ from country to country. As designed by Sony, PlayStation consoles play only those games that have the proper access code for the country where the console was sold. However, the chips sold and installed by Stevens permitted Australian consoles to play games imported from elsewhere &mdash; games that did not have Australian access codes, and so would not have played on his customers’ consoles, if Stevens had not installed those chips.

One purpose of Sony’s regional access codes is to ensure that its consoles can only play PlayStation games lawfully acquired in Australia (or Europe). The codes are, in other words, a technique for implementing Sony’s world-wide marketing strategy. The codes have the effect of preventing Australians from importing games from other countries where they are less expensive than in Australia. Access codes also help to prevent piracy, because games that are copied without authorization usually do not have access codes at all, and thus they can’t be played on consoles either.

Trial Court Decision
Sony sued Stevens in Federal Court in Australia, and won. The trial court ruled that Stevens had infringed Sony’s trademarks by selling imported games.

But the trial court rejected Sony’s argument on an important copyright issue, and so Sony appealed. That issue was whether Stevens’ chips were devices used to circumvent technological protection measures (TPM). If they were, then in addition to infringing Sony’s trademark, Stevens also violated the anti-circumvention provisions of the Australian Copyright Act.

The Act prohibited the selling of “circumvention devices,” which were defined as devices that could be used to circumvent or facilitate the circumvention of a TPM. The Act defined a technological protection measure as a “device or product, or a component incorporated into process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means. . . .”

The trial court decided that Sony’s access code]s were not “technological protection measures,” because they didn’t prevent games from being copied. They simply made them unplayable. The court held that playing games &mdash; even copied games &mdash; does not infringe Australian copyright.

Full Court Decision
That ruling was reversed by the Australian appellate court. In a lengthy opinion, Judges Robert Shenton French, Kevin Edmund Lindgren, and Raymond Antony Finkelstein unanimously held that Sony’s access codes are TPMs and thus Stevens’ chips are prohibited circumvention devices.

The opinion is unusually lengthy for three reasons. First, the question of whether access codes are TPMs required a detailed exploration of the legislative history of Australia’s anti-circumvention provision, as well as an almost philosophical analysis of the techniques of statutory interpretation.

Second, Sony also argued that the copyrights to its games were infringed when they were played on consoles modified by Stevens, because the games were copied into the consoles’ random access memory (RAM) while they were being played. The trial court rejected this argument, and Judges French and Lindgren affirmed that ruling. Judge Finkelstein sided with Sony on this issue.

Finally, since the judges did not agree with one another on the second question, each wrote his own decision about the entire case. The court entered a declaration in Sony’s favor, an injunction against Stevens, and remanded the case to the trial court for further proceedings on damages.

High Court Decision
The Australian High Court overturned the appellate court’s decision and reinstated the decision of the trial judge. The Court accepted the trial judge’s finding that a TPM must be something which “prevents or inhibits the person from undertaking acts which, if carried out, would or might infringe copyright in the work” (¶38). The Court held that the use of the “mod chip” was not for the purpose of copying the copyright protected game, but merely for the purpose of accessing it.

In interpreting the legislation, the Court noted that the Act provided for, inter alia, a penalty of up to five years imprisonment for making or selling a circumvention device, and stated that this militated in favor of a more restrictive interpretation. Further, the Court stated: “[t]he true construction of TPM must be one which catches devices which prevent infringement. The Sony device does not prevent infringement. . . . The Sony device and devices like it prevent access only after any infringement has taken place.” (¶46). Finally, the Court noted that “in construing a definition which focuses on a device designed to prevent or inhibit the infringement of copyright, it is important to avoid an overbroad construction which would extend the copyright monopoly rather than match it.” (¶47) The Court declined to accept an interpretation that would prohibit conduct which did not infringe copyright, and which was otherwise lawful.

Sony argued that by allowing the game to be played on the machine, illicit reproduction occurred in the RAM of the PlayStation. The Court considered the interpretation of “reproduction in any material form.” The Court found that a work might be reproduced in material form in RAM in some circumstances. However, for this to be the case, the Court reasoned, it would have to be possible to extract the work from RAM and reproduce it. Since this could not be done in the case of the PlayStation games, the RAM storage did not amount to reproduction in any material form.

In a separate concurring opinion, Justice McHugh noted that the TPM provisions were a result of a legislative compromise “that is the product of intensive lobbying, directly or indirectly, of Ministers and parliamentarians by groups in the industry seeking to achieve the maximum protection or advancement of their respective interests. The only purpose of the legislation or its particular provisions is to give effect to the compromise. To attempt to construe the meaning of particular provisions of such legislation not solely by reference to its text but by reference to some supposed purpose of the legislation invites error.” (¶126)