Canada: TPMs Are Alive And Well: Canada's Federal Court Awards Nintendo $12.7-Million In Damages

Five years ago, Canada enacted legal protection for technological protection measures (TPMs) as part of the Copyright Modernization Act. The Federal Court has now rendered the first decision interpreting these important rights. In short, the court made it clear that legal protection for TPMs were meant to foster innovation in the creative industries and that businesses blatantly engaging in industrial scale TPM circumvention activities will be dealt with harshly by the courts.

In Nintendo of America Inc. v. King & Go Cyber Shopping (2005) Ltd., 2017 FC 246 (docket here; decision available soon on the Federal Court website and CanLII), Mr. Justice Campbell of the Federal Court rendered a decision awarding Nintendo $12.7-million in statutory and punitive damages plus costs and interest against the second respondent, Go Cyber Shopping (2005) Ltd.

Nintendo had protected its game software by employing multiple TPMs on its DS, 3DS and Wii consoles. These included physical configuration TPMs, boot-up security checks, encryption and scrambling technologies, unique data formats, and copy protection codes.

Since 2013, Go Cyber had offered for sale at least 10 devices designed to circumvent one or more of these TPMs which enabled users to play infringing copies of Nintendo's copyrighted games. Each of the devices permitted users to download pirated versions of the games from the Internet, save them onto memory cards, and insert the memory cards into the devices, which could then be inserted into Nintendo's various consoles. Go Cyber also offered "mod chips" and "mod chip kits" enabling users to modify firmware on Wii consoles or disable security routines. It also offered a service to modify consoles to be able to use the pirated content. To drive business, Go Cyber heavily advertised the functionality of the devices on social media, warned customers they may be banned from Nintendo's network for using circumvention devices, and advised customers how to use the devices with certain pirated video games and how to avoid detection.

Based on this uncontroverted evidence, and adopting written submissions of Nintendo as his own reasons, Mr. Justice Campbell found that Go Cyber infringed Nintendo's rights in three ways. The first was through the "secondary infringement" causes of action found in s. 27(2) of the Copyright Act (the "Act"). Nintendo's TPMs contain copyrighted code that cause the Nintendo consoles to boot. This code was copied on the devices sold by Go Cyber to the Canadian public, and Go Cyber was aware of this. Accordingly, Go Cyber's sales of devices containing copyrighted works it knew to be infringing violated this provision.

Second, Go Cyber's website directed users to instructions on how to obtain the file containing another essential piece of Nintendo code to enable one of the devices to work. The Federal Court found this to be an infringement by authorization.

The last and most notable infringements were violations of Nintendo's rights to legal protections for its TPMs. The court started its reasons on this issue by quoting from the preamble to the Copyright Modernization Act and from a government backgrounder that highlighted Parliament's intention to foster innovation and promote investments in the cultural industries by providing effective legal protection for TPMs. It also quoted from the government's fact sheet which stated the following:

Innovative companies, such as video game developers, will have the legal tools to protect the investments they have made in order to reinvest in future innovation and jobs.

Protecting digital locks gives copyright industries the certainty they need to roll out new products and services, such as online subscription services, software and video games, if they choose to use this technology. Not only will this promote investment and growth in Canada's digital economy, it will also encourage the introduction of innovative online services that offer access to content. Such services are increasingly available in other countries.

The Bill recognizes that certain protections, such as restricted content on news websites or locked video games, are important tools for copyright owners to protect their digital works and are often an important part of online and digital business models.

Introducing legal protections for digital locks brings Canada in line with international partners, as it is one of the requirements of the World Intellectual Property Organization Internet treaties.

While the music industry has moved away from digital locks on CDs, they continue to be used in many online music services. Software producers, the video game industry and movie distributors also continue to use digital locks to protect their investments. Canadian jobs depend on their ability to make a return on their investment. Businesses that choose to use digital locks as part of their business models will have the protection of the law.

Based on the legislative history, statutory wording, and the intentions of Parliament, the court made some key findings including the following:

  • The TPM provisions are crucial to the functioning of the copyright system in the digital world. The Federal Court noted that each of Nintendo's video games can take years and millions of dollars to develop, and that Nintendo was "a target of intellectual property 'pirates' who benefit from the Applicant's investments by making unauthorized copies of its video games or by creating means to enable users to play such unauthorized copies of its video games on its consoles".
  • The doctrine of technological neutrality means that physical barriers can serve as TPMs. The Federal Court agreed that the TPM provisions were to be given a technologically neutral interpretation, saying:

    having regard to Parliament's express intent to give copyright owners the power to control access to works, the principle of technological neutrality, the scheme of the Act, and the plain meaning of the definitions for TPM and "circumvent", it is clear that access control TPMs do not need to employ any barrier to copying in order to be "effective".

    In its written representations, Go Cyber relied on obiter dicta in a UK decision in which the High Court expressed doubts that a physical configuration could serve as an "effective" TPM. The court, applying the broader language of the Act, ruled that the words "any effective technology, device or component" could enable the configuration of a device to be a TPM. The Federal Court also rejected the argument that an "access control" TPM, to be legally protected, had to be designed to prevent copying of the work it protected. This followed from, among other things, that the Act protects both access control and control TPMs.
  • The term "circumvent" must be read to accomplish the goals of the Act. Go Cyber argued that the specific words "avoid, bypass, remove, deactivate or impair" used in s. 41.1(1)(c) of the Act, should be read narrowly, and that the devices it sold did not therefore "circumvent" the Nintendo TPMs. This argument too was rejected. The Federal Court agreed with Nintendo that this list of activities is exemplary but not comprehensive, meaning that other forms of circumvention may also give rise to rights under s. 41.1(1)(c) of the Act.
  • "Access" must be viewed holistically. Go Cyber contended that, at worst, the scrambling and encryption devices merely provided access to the Nintendo operating system and did not therefore circumvent the TPMs implemented on specific games created by Nintendo. This suggestion was rejected. The functionality of the devices was to permit users to play infringing copies of video games that would otherwise be unplayable without these devices. While they did provide access to the operating system, they also provided access to the games. That is all that is required to make out the cause of action.
  • The "Interoperability" defence and "Homebrew" defences are not credible in context. Go Cyber suggested that it could avail itself of the defence provided under s. 41.12 of the Act, which allow circumvention for the purpose of making computer programs interoperable. It suggested that the devices could allow for "homebrew" programs to be played on Nintendo consoles, those being non-Nintendo-created or licensed games designed for the Nintendo consoles. Noting that Go Cyber had the burden of proof in respect of this defence, the Federal Court agreed with Nintendo's argument that:

    "although homebrew software may be available on the internet and users of the Respondent's devices could theoretically be using them for homebrew, the scale of such activities is dwarfed by the market for illicit and infringing activities... Indeed, most of the websites purporting to make homebrew software available also offer (in far greater quantities) unauthorized copies of the Applicant's copyrighted games... [Indeed], the Respondent's own website belies its submission. The only mention of 'homebrew' on the Respondent's website states 'no homebrew at the moment'. Having effectively advised its customers that homebrew is unavailable, the Respondent is in no position to show that its products and services were for this purpose."
  • Statutory damages are not based on the number of TPMs circumvented. Go Cyber attempted to limit its damages by contending that the up-to-$20,000 statutory damages award available under the Act should be computed by assessing the number of TPMs circumvented, rather than the number of works to which access was provided. The Federal Court rejected this argument based on the specific language of s. 41.1(4), which allows damages not only where a TPM has been circumvented, but where it "could be circumvented" as a result of the defendant's acts.
  • Heightened statutory damages and punitive damages were warranted given Go Cyber's knowledge and "industrial scale operation". As part of its affidavit evidence, Nintendo was able to convince the Federal Court of Go Cyber's clear awareness of the illegality of its activities and its systematic "industrial scale" subversion of the market for authorized copies of video games. In this context, Go Cyber's late attempt to "admit[] its wrongdoing" did not spare it from the brunt of a massive damages award. The Federal Court also drew on the stated objectives of Parliament to "protect investments made by the creative industry, including specifically the video game industry".

The gist of the Federal Court's message is clear. The TPM provisions in the Act were intended to provide legal protection for businesses that invest in 21st-century businesses models. Business built on undermining these models by trafficking in circumventing technologies or services will not be able to operate with impunity in Canada.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions