Modifying Canadian Law

A blog reader has passed along a legal demand letter they recently received from Smart & Biggar, a leading Canadian IP law firm, representing the Entertainment Software Association.  The letter focuses on the sale of modification devices – frequently referred to as "mod chips" that can be used to modify or alter store-bought video games or play infringing copies of those games.  Mod chips have been rendered illegal in the U.S. and U.K., while Australia's High Court upheld their legality in 2005 (the law was changed under pressure from the U.S. last year).

The letter argues that the ESA has both trademark and copyright rights in the video games.  In addition to pointing to Section 27 of the Copyright Act as governing the sale or distribution of unauthorized software, the applicability of criminal offences under Section 42 of the Copyright Act, and the fraud provisions of the Criminal Code, it claims:

"any use, offer for sale or sale of modification devices, or 'mod chips' to permit circumvention of our clients' consoles security systems to play pirated or counterfeit software, is also an offence and constitutes direct or indirect infringement of our clients' intellectual property rights by inducing and procuring infringement by others of our client's aforesaid rights."

Given that the letter makes no reference to patent rights, the intellectual property referred to in this sentence is presumably copyright.  This raises at least two issues. 
First, while the ESA makes no secret about the fact that it would like Canada to follow the U.S. model, this letter suggests that it isn't bothering to wait for the law to change.  It is trying to apply U.S. law in Canada today since the doctrine of inducing infringement does not exist here (if it sounds familiar, it is because the U.S. Supreme Court raised inducement in the Grokster case).  Moreover, I believe that it is simply wrong to argue that the use of a mod chip alone constitutes an infringing act in Canada.  These attempts to import U.S. law into Canada is precisely why the Copyright Act should be reformed to include a copyright misuse provision that would penalize copyright holders from overclaiming.

Second, the letter appears to completely undermine the ESA's argument that Canadian copyright law is in need of reform.  While the ESAmaintains that Canadian law does not adequately address mod chips, its own Canadian lawyers are actively using a range of Canadian legal provisions to address the issue (and it regularly trumpets police action).  It seems to me that you can't have it both ways – either Canadian law does not address mod chips (in which case this letter arguably constitutes an abuse of process) or it does (in which case the ESA's claims for copyright reform are subject to challenge). Mod chips raise a host of legal issues in Canada and selling unauthorized software in Canada is clearly an act of infringement. That said, the ESA's claims raise serious concerns about copyright misuse and call into question the organization's claims about the need for reform.


  1. What about linux says:

    What about linux
    There are many uses for mod-chips that do not ‘induce’ copyright infringement. Running linux on an xbox for example — the chip is required to bypass a restriction device that dictates how the purchased hardware may be used. To the best of my knowledge, Canada has no DMCA like anti-circumvention law that would restrict doing this.

    That said, most of these chips use a modified set of the original machines code, and ship it. This is probably infringing; however, it would seem to be somewhat arguable that because the device goes into a product that must already have a valid license for that software (on the original chips), that the infringement isn’t to provide the software in violation of copyright, but instead to enhance it — thus since it doesn’t even potentially reduce the number of copies of the software sold, it would be pretty hard to claim any copyright damages, no?

  2. Precisely
    If I buy hardware/software, I should be able to do whatever the heck I want to do with it in my own home. In the specific example of the XBox, I should be able to run Linux on it, try to swap in and out hardware, or take it out back and destroy it with a baseball bat. In fact, I should even be allowed to take XBox games, modify them, and run them.

    Where I don\’t have a problem with Microsoft suing is if someone turned around and tried to sell copies of the above modifications. For example, selling modified copies of XBox software or beatup computer cases with XBox logo\’s on the side.

  3. Darryl Moore says:

    of unauthorized sales and help
    I did a little research on this. One very odd thing I just found was regarding a different case “eProsecutions counsel, Sush Gupta, working with FPS (Ottawa-Gatineau) Crown counsel Pierre Lapointe, secured a guilty plea on a precedent-setting case that garnered international attention dealing with copyright infringement and the sale of unauthorized computer equipment.”

    This was on the Department of Justice website [ link ] SALE OF UNAUTHORIZED COMPUTER EQUIPMENT????? Since when did we need anybodies approval to sell computer equipment? This isn’t Russia, Cuba, or even the USA.

    There is absolutely nothing in the copyright act dealing with this, however there was an Ottawa case (maybe the same) where “Robert Garby, 38, pleaded guilty to two counts of copyright infringement and four counts of selling unauthorized computer equipment.” [ link ] Again with the unauthorised sale. Can someone please tell me where this mysterious law is that he pleaded guilty to. Or is it one of those secret 9/11 laws?

    Failing to find any such law or regulation I’d venture to say that the statement above contravenes the BC code of conduct 4.6 which states:

    “A lawyer must not engage in any activity that the lawyer knows or ought to know assists in or encourages any dishonesty, crime or fraud, including a fraudulent conveyance, preference or settlement.” [ link ]

    Anybody else want to venture an opinion. I’d really hate to see this fellow give in to these tactics. As long as there really aren’t any copyright infringements going on. I’d like to see a grass roots movement to rise up and squash these lying corporate SOBs. How can we help???

  4. As another commenter mentioned, it’s perfectly possible to use a mod chip legitimately… and yet at the same time such legitimate use would still be entirely impossible without the mod chip. It really just comes down to playing with the hardware enough to make it do things that the designers never intended it to do.

    So here’s a wild thought… if they don’t want people making mod chips for their hardware, (which itself is really just a consequence of the designers never having considered it important that anything a user might legitimately want to do with the hardware, they ought to be able to do), maybe they should try making their hardware more open in design so that it wouldn’t _REQUIRE_ a mod chip to do such things in the first place!

  5. Modchips should not (are not) illegal, E

    That said, most of these chips use a modified set of the original machines code, and ship it. This is probably infringing; however, it would seem to be somewhat arguable that because the device goes into a product that must already have a valid license for that software (on the original chips), that the infringement isn’t to provide the software in violation of copyright, but instead to enhance it — thus since it doesn’t even potentially reduce the number of copies of the software sold, it would be pretty hard to claim any copyright damages, no?

    True, but in the case of the Xbox they wrote an entirely new BIOS called Cromwell that was free of Microsoft code. As well they made their own programming API that is available on sourceforge.

    It’s pretty frightening to see how far hte DMCA goes in the US already (see libdvdcss, attacks against printer cartridge refills), exactly why should any Canadian want to import it up here? Shame on the ESA.

  6. ESA part deux
    forget to mention backups as well. It’s troubling that they believe they have some kind of license on hardware. I know that some people accept that in some software these days (you don’t own it, you license it by our terms, yada yadda EULAs) but taking it to hardware is something else.

    Just imagine the state of the PC industry if the ESA had been around in the 80s and early 90s.

  7. He was selling pirated games
    Excerpts from Darryl’s links above:
    “An Ottawa man was fined $17,000 and put on one year’s probation for selling pirated Sony PlayStation games and modifying the game units to play them.”

    “Robert Garby, 38, pleaded guilty to two counts of copyright infringement and four counts of selling unauthorized computer equipment.”

    I would guess the reference to selling pirated games = copyright infringement and isn’t very controversial. However in regards to selling unauthorized computer equipment… your guess is as good as mine as to what this refers to and what he pleaded guilty to. Could someone in Ottawa follow this up and contact Mr Garby? If nothing else to find out more information about it? The CBC article is dated July 23, 2002.

  8. Matthew Skala says:

    Could be pure copyright infringement
    If I had to guess, I’d guess that these were mod chips of the type that contain a modified copy of the original firmware. Those could be called infringing (“unauthorized”) copies of a copyrighted work (the firmware), and their sale prosecuted as commercial copyright infringement. Because of that risk, more recent mod chips are designed in such a way as to NOT contain copies of the original firmware.

    However, that’s only a guess. It’s of some concern that the CBC drew a distinction between “copyright infringement” and “selling unathorized computer equipment” as if those were two separate offences.

    I wasn’t aware of this case – which would mean either it wasn’t important enough to be noted in the sources I usually read, or else I’m reading the wrong sources.

  9. Darryl Moore says:

    unauthorized use of a computer
    I found it!! Two things actually

    First in the ESA submission to the heritage committee in 2004 they said [ link ]

    “Under current Canadian copyright law, neither acts of circumvention of TPMs, nor the possession or distribution of circumvention devices or video game copying devices, is prohibited. Where an action has been brought, it has been under the section 342.1(1) of the Criminal Code prohibitions against unauthorized use of a computer. The language of section 342.1(1), however, does not specifically prohibit devices whose primary purpose is to bypass technological protection measures used by video game publishers to prohibit unauthorized access or copying of entertainment software products (or for that matter, any material or content protected by copyright).”

    and looking into section 342.1(1) of the criminal code yields this:

    Unauthorized use of computer

    342.1 (1) Every one who, fraudulently and without colour of right,

    (a) obtains, directly or indirectly, any computer service,

    (b) by means of an electro-magnetic, acoustic, mechanical or other device, intercepts or causes to be intercepted, directly or indirectly, any function of a computer system,

    (c) uses or causes to be used, directly or indirectly, a computer system with intent to commit an offence under paragraph (a) or (b) or an offence under section 430 in relation to data or a computer system, or

    (d) uses, possesses, traffics in or permits another person to have access to a computer password that would enable a person to commit an offence under paragraph (a), (b) or (c)

    is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years, or is guilty of an offence punishable on summary conviction.


    which does look frighteningly like a DMCA provision, except that in this case the computer belongs to the person trying to break into it, so presumably it would be authorized. Therefore I don’t see how a charge under this section could ever be successful in the case of mod chips.

  10. Sounds like he was sent up the river
    Sounds like he or his lawyer (maybe a public defender?) got scared of 342.1 and decided to just plead guilty and hope it all went away. Slap on the wrist vs 10 years jail time. Pity they did not understand that you have color of right to use your own equipment that you paid for. I’d still like it if someone who is better qualified to speak with Robert Garby would do so.

    I’d love to see the prosecutor (Sush Gupta) lock his keys in his car and then get 10 years jail time because he jimmied the lock to get inside. (Most cars have computer chips now, and many have computer locks.) And if his notebook computer was on the seat…

    What happened in this case is just as absurd. But it’s far to dangerous to ignore. Sony, Federal Prosecution Service (apparently the org responsible to prosecute this stuff) and “Justice Canada” all think this is a precedent setting case. Scary!

    Why do judges/lawyers completely forget about basic property law as soon the words “copyright” or “computer” are mentioned?
    (BTW: Good job at tracking this info down Darryl.)

  11. Darryl Moore says:

    in a Leaky boat
    Oh no, I think Mr. Garby peaded guilty because of the pirated games he was selling as well. I don’t think there is any question about that. In the current case where there presumably is no copyright infringement happening, the question is how applicable is section 342.1(1) of the criminal code? By the ESA’s own admission in their statement to the Heritage committee, it is not. With that fact now documented, I am more of the conviction that the lawyer who wrote the letter from which Michael quotes is in violation of the BC law society code of conduct. Additionally I would say the chap who received the letter has a good case against the ESA for harassment. But alas I am not a lawyer so I’m really just guessing here, but it sure sounds good.

  12. What Mr. Geist said, essentially: “it is simply wrong to argue that the use of a mod chip alone constitutes an infringing act in Canada”. That’s it, bottom line. If I buy it, *I* own it and I can do WTF I want with it. *NO LAW* will ever stop me from tinkering in my basement.

  13. Importing Chips
    I need some views on this…just happened today. I imported 50 modchips intended for the Nintendo Wii. The customs officer upon checking my invoice asked what these chips are for and I said they are modchips and I intended to resell them. He then said he would be seizing my chips because the end use of them is illegal and that customs goes after shipments from middlemen like myself and not the end user. He refered to the references on the Justice’s website and said he would be putting my file under investigation and possibly passing the info along to the RCMP. My question is, should I be concerned and make a complaint to get my chips or should I just let it go? Thanks.

  14. import response
    next time say they are flashable circuit boards for computer hardware. cause thats what a gaming console really is. computer hardware. that should pose no problem next time.

  15. Illegal Or Not
    Ok I bought a Wii and it had a wiikey installed in it already. I was hoping to run some homebrew stuff on it but I dont have the time to play with it so I decided to sell it (on ebay). I got an email from ebay stating this “The rights owner, ESA – Entertainment Software Association, notified eBay that this listing violates intellectual property rights. When eBay receives a report of this type of violation, we remove the listing to comply with the law”. I was not selling anything copied or pirated, all games were originals. Is selling a console with a modchip in it illegal? Wish I knew before I placed the add.

  16. John Zhang says:

    Illegal in Canada?
    I just want to clearify several things. So given the current UNCLEAR criminal prohibitions and WEAK copyright piracy
    enforcement in CANADA not USA. There would be no criminal offences/ it is not illegal, to sell Nintendo DS flash cartridges/modchips and not pirated CD/DVD in CANADA right? And that the copyright law in Canada is not similar to the DMCA regulation, such that you cannot sell a device that may interfere with copyright material even though it can be used for other purposes right?

    Is there a new bill like bill c-60 that is being drafted, or updates on the progress of bill c-60. Because I read somewhere that Bill C-60, a DMCA-like piece of legislation, did receive first reading in the Canadian House of Commons on June 20, 2005, but was tabled with the fall of the Liberal minority government several months later.
    [ link ]