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Nintendo has won more than 11 mln in circumvention and copyright infringement case

In 2012, Parliament amended the Copyright Act, RSC 1985, c C-42 to add prohibitions against circumventing technological protection measures (TPMs) and trafficking in circumvention devices. In doing so, Parliament explicitly recognized the importance of TPMs for protecting copyrighted works, particularly in the video game industry.

The applicant, Nintendo of America Inc, is a video game company. It sells and distributes popular and well-known video games and video game consoles in Canada. The Respondent, Go Cyber Shopping (2005) Ltd., is a registered Ontario corporation. It operates a retail location in Waterloo, Ontario and several commercial websites. At issue in the application were the handheld video game consoles known as the Nintendo DS and 3DS, and the Wii home video game console. The applicant does not and has never authorized downloading of its games onto devices that mimic its game cards or discs and which circumvent its TPMs.

There were two types of copyrighted works at issue in Application: computer code and data used by the applicant as part of its TPMs (“Header Data”) and the video games developed for the Applicant’s video game consoles (“Nintendo Games”). The Respondent did not challenge the subsistence or ownership by the Applicant of the asserted copyrights. Since at least 2013, the respondent has advertised and offered for sale, either through its websites or at its retail store, certain devices which the Applicant contended were designed to circumvent TPMs employed on the applicant’s Nintendo DS, 3DS, and Wii gaming consoles.

The applicant contended that the respondent infringed its copyright in the three Header Data works contrary to s. 27(2), in that: (1) unauthorized copies of the works are either contained on Game Copiers when they are sold or are obtained by following the instructions provided by the Respondent; (2) the Respondent knew, ought to have known, or was wilfully blind to the fact that the Game Copiers contained such works; and (3) the Respondent sold, distributed, offered for sale, and possessed the Game Copiers for the purpose of those activities. The applicant submitted that the respondent’s Game Copiers circumvent each of the three TPMs used to control access to its Nintendo DS and 3DS games, and that by distributing, offering, and selling the Game Copiers, the Respondent has contravened s. 41.1(1)(c) of the Act.

The Respondent did not dispute that it has distributed, offered for sale, and sold Game Copier devices. The Respondent also admitted that its Game Copiers were “not commercially significant other than to circumvent the TPMs through the descrambling of encrypted communications from the DS Systems”. The Respondent knew that its Game Copiers were used by its customers to play pirated Nintendo Games. This is sufficient to satisfy s. 41.1(1)(c)(ii).

The Applicant has elected to recover statutory damages for both copyright infringement and TPM circumvention. The Applicant contended that statutory damages for TPM circumvention ought to be calculated on a per-work basis, i.e. each copyrighted work that the circumvention grants unauthorized access to attracts a separate award of statutory damages. Using the per-work approach, the Applicant sought a range of statutory damages between $294,000 to $11,700,000 for TPM circumvention of 585 different Nintendo Games, based on a statutorily mandated range between $500 and $20,000 per work. The Applicant’s approach has been adopted.

The “market” for circumvention devices and services is driven by the value of the works to which access is illicitly gained. A robber breaks a lock because of the value behind the lock, not because of the value of the lock(s). If the Applicant had not invested millions of dollars to create a library of valuable video games, the Respondent would have no market for its circumvention devices. The court decided that the Applicant is entitled to a statutory damage award for each of the 585 Nintendo Games to which the Respondent’s circumvention devices provided unauthorized access and is also entitled to statutory damages for each of the 3 Header Data works in which copyright infringement has been established.

The court decided that in view of the foregoing factors, an award of $20,000 per work is reasonable and justified. Therefore, according to court the Applicant is entitled to statutory damages of $11,700,000 for TPM circumvention in respect of its 585 Nintendo Games, and of $60,000 for copyright infringement in respect of the three Header Data works.  The court also decided that the Respondent’s conduct justifies an award of punitive damages – $1,000,000.