Canada: Game On: First Interpretation Of The TPM Provisions By The Federal Court

Last Updated: March 28 2017
Article by Fogler, Rubinoff LLP

The powerful combination provided by broadly worded legal prohibitions plus the potential for the award of large statutory damages, a helpful factual profile and a sympathetic judge recently worked to the considerable advantage of the applicant Nintendo in the ground-breaking Canadian copyright case of Nintendo of America Inc. v. King et al1.

When Canada's copyright laws were updated in November 2012 there was considerable controversy surrounding the enshrinement of severe prohibitions against the circumvention of "technological protection measures" or "TPMs", particularly the prohibitions against the circumvention of access control measures which, as the name suggests, restrict access to a work. Examples of access control TPMs are passwords, paywalls, time limits and encryption. Concerns were expressed at the time that since digital content creators routinely deployed such measures, the carefully constructed balance between owners' and users' rights which had been established under the Copyright Act2 (the "Act") in the aftermath of the seminal decision of the Supreme Court in the CCH Canadian Ltd. v. Law Society of Upper Canada3 case would be upset by the over-protection of "digital locks" (although there are several specific exceptions to the prohibition against circumventing TPMs, there is no general exception modeled on the fair dealing user right covering circumventions undertaken to facilitate private or personal use) and that Canadian copyright law would thereby be forced to veer away from its traditional focus upon the question of whether any of the exclusive rights granted by statute to the copyright owner had been infringed by the defendant's actions.

Those concerns are evidenced in the outcome in Nintendo, which represents a substantial advance for the interests of copyright owners in Canada that was strategically obtained via litigation funded by a deep pocketed global enterprise against a much smaller corporate respondent that operated a retail location in Waterloo, Ontario and several commercial websites (the individual respondent King - the sole director and officer of the corporate respondent- entered into a separate settlement agreement on all issues with the applicant) that was expressly viewed by Mr. Justice Campbell as being dedicated to carrying out circumvention activities and as being an effective promoter of illegitimate infringing activities.

The TPMs in question were deployed on video game consoles (Nintendo DS, 3DS, and Wii) in order to control access to Nintendo's copyrighted games. The respondent, sold and installed various devices that substituted for Nintendo 3DS and DS game cards as well as "mod chips" designed to circumvent Wii consoles. The use of these devices enabled users to play illegally downloaded video games, thereby reducing Nintendo's ability to sell genuine copies.

There were several key issues in the proceeding; however, the most noteworthy was whether there was TPM circumvention under s. 41.1(1) of the Act. In that context, three interesting points of law were raised and the Court favoured Nintendo's position on all of them, finding that: (i) the TPM definition is to be construed broadly as including physical configuration, which operated to protect the physical shape and configuration of Nintendo's game cards and the corresponding slots on its DS and 3DS consoles; (ii) the definition of "circumvent" is also to be broadly construed as including replication of a TPM, which operated to protect the physical shape and the encryption circuits of a Nintendo game card; and (iii) the respondent's interoperability defence (one of the specific exceptions to the prohibition against circumventing a TPM) was to be narrowly construed and so was not established by the mere existence of usable third-party owned software, given that the respondent did not prove that any user had used the impugned devices to run such "homebrew" software. In fact on the last point Mr. Justice Campbell expressed the problematic view that recourse to the foregoing exception should not be made if other means for achieving software interoperability are available. If that view was to become embedded in the jurisprudence it would have the effect of further narrowing the operation of what is already a narrowly drafted exception.

As a result, the respondent was found liable for trafficking in and the installation of TPM circumvention devices. Accordingly, the Court awarded the maximum statutory damages of $20,000 for each of the affected 585 video games which amounted to $11,700,000. The Court also awarded $20,000 for each of three header data works found to have been infringed by the respondent's actions. Finally, the Court awarded punitive damages in the amount of $1,000,000, granted an injunction, and ordered delivery up of the relevant circumvention devices - giving rise to a notable total monetary award of $12,760,000.

Footnotes

1. 2017 FC 246

2. RSC 1985, c C-42

3. 2004 SCC 13

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.

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