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Mod Chippers Ordered to Pay $9 Million in Fines 94

Posted by Zonk
from the sell-more-product-to-make-up-the-difference dept.
GameDaily is reporting that that ESA is announcing a major victory against game software piracy in California. A judge has handed down over $9 Million in fines to Divineo Inc., some employees, and international subsidiaries. From the article: "The defendants had apparently violated the DMCA by trafficking mod chips and the HDLoader software application that enables users to copy whole video games to a console's hard drive ... Mod chips then can be used to allow a console to play illegally obtained/pirated games. Both the mod chips and HDLoader application therefore circumvent the copyright protection technology built into video game consoles and video game software and are in direct violation of the DMCA."
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Mod Chippers Ordered to Pay $9 Million in Fines

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  • Reasonable doubt? (Score:5, Insightful)

    by Temuar Skylari (1008449) on Friday October 06, 2006 @04:59PM (#16341727)
    From TFA: "Once the entire video game file is on the console's hard drive it probably isn't too difficult for a hacker to transfer it to his PC and then illegally distribute it on the web." PROBABLY? I'm no cracker, so I have no idea how easy or difficult this is, but COME ON. I seriously hope nobody got fined for theoretical damages caused by distributing a game online when the only evidence was that they had copied it to their console's HD.
    • So the defendants declare bankruptcy and the plaintiffs get what then? As for the DMCA, could this be a case of, "Thought Crime?", as in "We Think That This Might Just Happen, So We Can Now Get Rich For Nothing?" FTFA, there appears to have been no statement that there WAS 9M in damages; Maybe the penalty was a bit excessive? Maybe this could be a test case for the law at a higher level of jurist prudence?
      • Re: (Score:3, Informative)

        So the defendants declare bankruptcy and the plaintiffs get what then?

        If the company is liquidated they 1) get the company out out of business and 2) some part of the companies' assets. If the company stays in business they get paid off at some percentage depending on the restructuring.

        To be honest 9 mil isn't that much to a large company. The main thing is getting these mods off the market.

        • by tuck3r (987067)
          getting them off the market will never happen because they are largely sold outside the US
    • It would be easier to make an ISO by putting the PlayStation 2 DVD in your computer. HDLoader, I believe, makes a new partition on the HDD for each game and stores the files there. The quoted statement is more true for the Gamecube, and now I believe the Xbox360, where you need the console to play middleman and read the disc for you.
    • Re:Reasonable doubt? (Score:4, Informative)

      by westlake (615356) on Friday October 06, 2006 @09:21PM (#16344181)
      Reasonable doubt?

      The Geek never quite seems to grasp the basic distinctions between civil and criminal law.

      Civil actions are all about the balance of probabilites, what is more likely than not. There is no burden of proof beyond a reasonable doubt.

      Damages under the DMCA are assessed according to a statutory formula:

      "At any time before final judgment is entered, a complaining party may elect to recover an award of statutory damages for each violation of [17 U.S.C. 1201] in the sum of not less than $200 or more than $2,500 per act of circumvention, device, product, component, offer, or performance of service, as the court considers just." Hefty award to Sony in action against seller of PlayStation 2 "mod chips" [internetcases.com]

      "The amount of damages was calculated by awarding $800 per mod chip sold before June 12, 2004, and the full amount of $2,500 per mod chip sold after June 12, 2004. On that date, Filipiak had signed a stipulated injunction in which he agreed to discontinue sales of the chips and related software. The court concluded that the sales made after Filipiak signed the agreement constituted a willful violation of the DMCA, thus justifying a higher amount of statutory damages."

      • by bit01 (644603)

        The Geek never quite seems to grasp the basic distinctions between civil and criminal law.

        And The Lawyer never quite seems to grasp that slashdot is a large community with varying knowledge, experience, ages and opinions.

        Most here are quite familiar with the distinction between civil and criminal law. And sometimes have more knowledge of law in non-US jurisdictions than you do.

        Broad generalisations are usually wrong.

        ---

        It's wrong that an intellectual property creator should not be rewarded for

  • I have a dream... (Score:5, Insightful)

    by dolson (634094) on Friday October 06, 2006 @05:01PM (#16341769) Homepage Journal
    I dream of a day when I won't have to get off my couch to put the legally-purchased games I own into my game console, stream video, pictures, and music from my Linux PC, check the weather, etc. all without the use of these law-breaking modchips. I guess the Wii has a lot of that covered, and probably the PS3 and 360, I don't know. But for me, I really am THAT lazy, that I don't wanna switch the discs. :) That's a benefit of using a modchip even to those who don't pirate software.
    • by Some_Llama (763766) on Friday October 06, 2006 @05:09PM (#16341843) Homepage Journal
      "That's a benefit of using a modchip even to those who don't pirate software."

      Or have kids who regularly play on a console swapping out discs 3 or 4 times a day and manage to sratch them to the point of unreadability in a matter of weeks.
      • Re: (Score:3, Interesting)

        Yep. Don't forget that you get MUCH faster load times too!
      • How is this not legal ?? if you own a copy of the disc is that not just shifting the media format, somthing that is specifically allowed under fair use ?? I have 8-tracks with music on them that I cannot listen to but I AM KEEPING as my legal basis for having the MP3's on my hard drive. IANAL but IMHO that meets the RIAA's license vs purchase argument. Buy the media ONCE in a legal format then keep current with a digital image of the same. Either you buy the song and can do what you want with it, or you buy
        • by KDR_11k (778916)
          You can format shift all you like, you just can't circumvent ANY copy protection in the process.
    • That's a benefit of using a modchip even to those who don't pirate software.

      You know, there's something else that just occurred to me too. What about import games and the chips that let you play those? Again, I'm fairly uninformed, but IIRC that use of a modchip isn't illegal. Are people going to be getting fines for bringing Lunar: The Silver Star Story over so they could hear the Japanese lyrics? How about my friend's brother, who lived in Japan for a year or so, bought all these great semi-old RPGs fo
      • by KDR_11k (778916)
        AFAIK import-only modifications are legal and in some jurisdictions (Australia, for example) even encouraged. Though when I went looking for a way to import-enable my PS2 I couldn't find any import-only chips.
    • by MarkAD88 (971843)
      I would have to agree with you. I think it's ridiculous that I can't simply image a game on to my console and pick it from a menu. They could accomplish this and still maintain their paranoid DRM measures simply by encrypting the image using a hash unique to the machine or something similar.

      I can't even begin to count how many games I've had to rebuy over the years for my XBox simply because the DVD has gotten damaged from continuous use... a situation that would not have happened if I could simply stor
      • by gknoy (899301)

        I can't even begin to count how many games I've had to rebuy over the years for my XBox simply because the DVD has gotten damaged from continuous use...

        Someday, maybe, someone at Microsoft or Sony or Nintendo or whatever company will make this a viable option on a console and when they do I'll have my wallet in hand on the day of the release.

        Since most people aren't smart enough to buy frmo newsgroups/user groups/etc, I don't think the console companies will be motivated for THAT reason. Now, the laziness

      • by shamer (897211)
        I can't even begin to count how many games I've had to rebuy over the years for my XBox simply because the DVD has gotten damaged from continuous use...
        The more you damage, the more you buy... The more you buy, the more they proffit. I think that would be why they wouldn't allow games to be saved to HD's in the first place, let alone moding / pirating
        • The more you damage, the more you buy... The more you buy, the more they proffit.

          They don't profit if you buy used.
          • by JohnFluxx (413620)
            Yes they do. Buying used pushes up demand and prices of used games. This means that the cost of buying then selling is decreased leading to an incentive for people to buy more.
            • So, hypothetically, I buy a new copy of Crab Slaughter for the PS3. I beat it/get bored, sell it to Gamestop. Someone buys that used copy. They sell it back. Repeat. ...Doesn't Sony only get paid once during that whole thing?

              Isn't that why used games are cheaper? I mean, outside of the not so fresh feeling, that there's no kickback to the studio? I'm not an economist, but it seems logical.
              • by KDR_11k (778916)
                Yes but what if you (or a subsequent owner) scratched it so badly Gamestop won't buy it?
              • by JohnFluxx (413620)
                You're not seeing the bigger pictures (tm) ;-)

                Consider a game. Imagine that there are 100 people that would pay $30 for the game and a further 20 people that would pay $20 for the game.

                Now the 20 people that would pay $20 for the game might consider buying it for $30 if they knew they could resell it for $10 - thus paying $20 in total. i.e. there are people who might pay full price for the goods because they expect to get some money back from resell.

                Follow?
              • by pyrote (151588)
                Yes but now they have 4 total people that Love the game and now reccomend it to their friends... only one copy floating around so everyone else has to buy their own.
    • Re:I have a dream... (Score:5, Interesting)

      by dgatwood (11270) on Friday October 06, 2006 @05:17PM (#16341947) Journal

      It also makes it easier to run Linux. But the biggest reason that these companies are so strongly against modchips is because it allows software developers to write games for their hardware without paying a royalty to the console manufacturer. Nothing to do with piracy at all, really....

      Next stop, 9th circuit, where I suspect this will be overturned swiftly as anti-consumer.

      • Do you have a source for this? I'm sorry, I just find it pretty hard to believe that MS et al would rather curb homebrew than piracy.
        • by dgatwood (11270) on Friday October 06, 2006 @06:38PM (#16342909) Journal

          There must be a million sources. The primary purpose for requiring special encryption and stuff on games has always been to force companies to pay a licensing fee to the console manufacturer. It's well documented. Heck, just read Wikipedia [wikipedia.org] or read about any of the many reverse engineering lawsuits related to Nintendo and other companies over the years.

          Technology to crack DVDs is explicitly forbidden under the DMCA, but publishing unencrypted DVDs is quite possible (and done regularly). As seen in the Australian courts (and I think it will hold up in U.S. court if it ever gets high enough), the technologies used in video games are the exact opposite. Instead of protecting the content, they protect the devices against using unprotected content. This is a fundamentally different action by console makers, and one that cannot be justifiably protected by law. Clearly, modding games to not check to see if the game is a legit copy is a DMCA violation. Modding hardware to make it allow you to use unprotected content (which may or may not be pirated) is completely different.

          • Until we pressure our government into requiring justices presiding over an issue to have at least a bachelor's degree in the theory behind the issue we will not see this kind of nuance considered at all.

            At this point even the lawyers involved can't fully grasp what's going on enough to understand the subtle but important difference you've just outlined (unless theyre from the EFF, then they just don't know how to play the legal game correctly).

            The fact that we have such important issues to consumer rights a
      • by Have Blue (616)
        One reason gamers should be against modchips is that they enable cheating in online games (which wasn't an issue until this generation).
        • by dgatwood (11270)

          Not if the online game is written correctly. The game has a certain probability of something occurring. If the probability goes more than about a standard deviation outside those bounds, the server can reasonably conclude that something is probably wrong.

          For that matter, the more decisions are made on the server, the less relevant the client is. Ideally, for multiplayer games, the client should be a rendering engine and little more. If you do it that way, no amount of client hacking can have a signifi

      • But the biggest reason that these companies are so strongly against modchips is because it allows software developers to write games for their hardware without paying a royalty to the console manufacturer.

        Bullshit. The biggest reason these companies are against modchips is because they allow users to steal commercial games instead of having to spend money on them.

        Unlicensed software written for game consoles is almost entirely poor quality. Look at the "games" published by Color Dreams/Learning Tree for t
        • by dgatwood (11270)

          Unlicensed software written for game consoles is almost entirely poor quality.

          You're not asking the right question. The question is how many of the licensed games would be licensed if it were not difficult to publish unprotected games? Probably a lot more than are published now.... With console sold often at a loss, it's not hard to see why this is an issue....

    • by cplusplus (782679) on Friday October 06, 2006 @05:32PM (#16342101) Journal
      That, and ultra fast load times. A 7200 RPM hard drive is a LOT faster than a DVD drive. So, by modding, you end up with a console that requires no disk switching (and thus no risk of scratched media) and loads game data about 10x as fast. It was a win-win-win for my XBox :)
      • by goldcd (587052)
        I'm with you. The DVD load speed on the 360 is very annoying and PS3 Blu-ray transfer speed is pretty much the same (so will be just as annoying).
        Putting mod chips to the side for a moment, I just wish XB/360/PS3 games would allow you to run a HD cache for them. I don't even mind putting the disk in the drive (if a better protection mechanism can't be found). I very rarely seriously play more than one game at a time, so if I could just shove it on the HD it would make everything so much nicer.
        Ho-hum.
    • But for me, I really am THAT lazy, that I don't wanna switch the discs.

      But for me, I have kids. The first time a kid uses one of my $40-$60 game CD's for a carpet protector under the chair due to carelessness is the last time I buy a game I can't run from a working copy or off the hard drive with the original locked in a cabinet.

      Needless to say, I haven't bought many retail games lately. We stick to games on the PC which run with a No-CD crack or install and run on the hard drive. If there is no crack, t
  • Next up: PC (Score:1, Interesting)

    by AP2k (991160)
    You just know someone is crazy enough to use this precedence to piss on people installing games on their computers.

    Only in America.
  • by rolfwind (528248) on Friday October 06, 2006 @05:11PM (#16341859)
    These firms are being punished in the same way a lockpicking tool company is being punished in that the tools they sell can be used for evil.

    However, modding has not started with computers, people have always modded. They modded cars, their houses, their radios, their tools, and anything else they have bought. And all of these mods have potentially illegal uses.

    Imagine if Honda struck back against Aftermarket makers, using the DMCA, and telling people that only "Honda certified" parts are allowed in the vehicles honda bought.

    I can't help but think that electronics companies are getting a free ride from the government here.
    • These firms are being punished in the same way a lockpicking tool company is being punished in that the tools they sell can be used for evil.

      I really like that analogy, but has that ever happened? Anyone have a lawsuit link or somesuch?
    • by Sancho (17056)
      In both of your cases, the tool is restricted, but is the use therein? Can you not mod your console on your own? My suspicion is that you can (it would be a fair use) but you aren't allowed to distribute such a tool.
      • by gamlidek (459505)
        Do you mean, is it possible for one to mod an xbox? Or are you asking is it fair use for a person to mod their own xbox? If the former: yes, absolutely. I have modded my own, and know a few peeps that have, as well. If the latter, I don't know why not. I can mod my car, my laptop, my Dell PC, my house, etc.

        I guess, I'm with you on the latter aspect: what's so special about an xbox that precludes me from the right to modify it with a "mod chip"?

        /gam/
        • by Sancho (17056)
          Nothing, except that it may be illegal for someone to hand you a mod chip. If you want to make the chip yourself, I think it would be hard for you to be convicted.
        • by Damvan (824570)
          "I don't know why not. I can mod my car, my laptop, my Dell PC, my house, etc."

          Well, like an xbox, some of those things you can't modify, in certain ways, legally. You cannot mod your car anyway you like and still be able to drive it on public roads legally. You cannot modify your house anyway you like, without a permit, and be able to sell it latter. Not to mention your homeowner's insurance cancelling you. So, sure you CAN modify those things, just like a xbox, but is it legal? Not necesarily.
          • by rolfwind (528248)
            And note that is state law and local law, Federal Law does not get into this area.

            And yes, you can modify your car as you like as long as you don't drive on public roads which the state controls and therefore can restrict use of (notice how bicycles are not allowed on highways in all/most/some areas). Modifying your house is based on local law, so one generalization is not good for the whole country.

            Oftentimes, a building permit to add on to your house is just as much, if not more so, about collecting more
          • by gamlidek (459505)
            Exactly. I CAN mod whatever I own however I want without fear of the act of just modding it being illegal. _USE_ of said mods may or may not be legal, but that's not what I'm saying. I'm saying that I can't see a reason why it would be illegal just to MOD something. If I mod my xbox so I can install a larger hard drive to store all of my ITMS files purchased from itunes, for instance, vs. modding it for the larger hard drive so I can rent video games and copy the content to my drive and return the game.
    • by couchslug (175151)
      "Imagine if Honda struck back against Aftermarket makers, using the DMCA, and telling people that only "Honda certified" parts are allowed in the vehicles honda bought."

      If Honda did this, the only customers they would have left would be the ignorant and the fanbois.
      Car buyers expect choice and become angry when they don't get it.
    • rolfwind opined:
      I can't help but think that electronics companies are getting a free ride from the government here.
      Those companies paid good cash money [wikipedia.org] for all the Senators and Congress Critters they bought.

      Free ride indeed!

  • Take a Hint (Score:2, Insightful)

    by Anonymous Coward
    Although I can see their point of not wanting piracy, don't they notice what people are actually doing? Aren't they making their consoles do what they want them too? I have to admit, if I saw my console, one I manufactured, being modded with face plates that read off disk space and allow games to be moved to the drive, etc, wouldn't it be smarter to build these in myself and charge more for the device? Obviously you should put in safeguards, but learn from what is going on around you and adapt your produ
    • by ianejames (999353)
      wouldn't it be smarter to build these in myself and charge more for the device?

      Their business model requires selling the device below market value, then recouping that loss by increasing the cost of games (indirectly through licensing).
    • by Alchemar (720449)
      They lose money on the consoles, wouldn't that mean that the game manufactures are their customers, not the "consumer"?
  • by gtmaneki (992991) on Friday October 06, 2006 @05:24PM (#16342035) Journal
    If they'd get rid of region codes on games, a lot of incentive to modify consoles would go away. I modded my PlayStation so I could play some fun games that never made it here, like Persona 2: Innocent Sin, Macross VFX 2, and Gunnm: Martian Memory.

    Nintendo has it right. The GBA and DS are region-free.
    • by zoftie (195518)
      well they are portable, imagine kid from hong kong comes down to airport in say frankfurt, wants a new game, and his gameboy tells him to take a hike. I'd toss that console pretty fast. Stationary entertainment systems don't travel as much, so their market share won't be dented as much by the "annoyed" customers. Or so I'd think from their prespective. I mean even if you get copy of windows, you don't own it you get licenced to use a copy that can be , logistically speaking revoked. Thinking in twisted corp
    • by westlake (615356)
      If they'd get rid of region codes on games, a lot of incentive to modify consoles would go away

      The reality is that exporting culture -- in a book, a game, or a video -- is hard. The stateside market for the region-free console is microscopic.

    • Nintendo has it right. The GBA and DS are region-free.

      Nintendo has it wrong. The Wii is region-locked, X360 leaves it up to the publishers, and PS3 is region free.
  • I'm surprised... (Score:5, Informative)

    by Gadzinka (256729) <rrw@hell.pl> on Friday October 06, 2006 @05:29PM (#16342063) Journal
    I'm surprised that no one picked up the fact that it is Japanese company suing French company in US court.

    They won. SFW? How are they going to enforce this ruling in France? From the coverage of this ruling on Ars Technica I know, that the company is still offering those modchips on their web page. And they will. The only thing they can't do now is to visit US. And maybe Iraq or Afghanistan. All of the international treaties about enforcig court rulings abroad have one basic assumption written into them: no party to such treaty shall enforce a court ruling for something that's perfectly legal in the country of residence of defendant party.

    Nothing to see here, move along.

    Robert
  • Default Judgment? (Score:3, Informative)

    by calbanese (169547) on Friday October 06, 2006 @05:32PM (#16342099) Homepage
    ...damages against corporate defendant Divineo, Inc., and Canadian resident Frederic Legault.
    ...damages against corporate defendants Divineo U.K. and Divineo SARL, and French resident Max Louarn.


    It sounds like the suit wasn't defended. Plus, ESA won't see a dime unless Divineo corporate assets are in the US (which I would doubt). Legault, Lourn, and Divineo UK are not subject to personal jurisdiction in the US, and any judgment against them most likely won't be enforceble in their home countries. I would guess Legault and Lourn didn't appear in the US to defend the suit. If the above is true, this case has absolutely no precedential value, despite what the ESA claims. Plus its a N.D.Ca decision, so even if it was a fully litigated case, this "precedent" is only be binding in that judicial district.
    • by zoftie (195518)
      Well this sort of sucks. Looks like they are setting up the nets to catch future chippers of future and current plaforms, if they ever to do business in United States. What is odd, say they can build up a set of cases using which they can try to streamline cases into playing. Like they can have a case UK case against an american company, and mutually exclusive precedents will be set up, by winning them.

      It should be required to have presence of company representative at these hearings, otherwise the case sho
  • ..for me never buying another new game console or new game. If they want to treat the equipment they *sold* me as still under their control, then they will pay and/or perform all maintenance on said equipment, and the same for the games. If the games they *sold* me are their property, then they will replace the media when it gets scratched/damaged for a minor, nominal fee to cover handling/shipping. Otherwise, I have better things to spend my money on, thank you very much.

    For that matter, if the consoles an
    • by Ant P. (974313)
      Funny you should say that, because you won't be able to buy PS3 games used anyway.
      • by BlueStrat (756137)
        Funny you should say that, because you won't be able to buy PS3 games used anyway.

        Yeah, really. I have a first-gen PS2 (the old thicker-styled one with seperate networking module add-on) that I bought a few years ago for $20, and that will almost certainly be my last game console ever, precisely beacause of all this type of B.S.. They've convinced me they really don't want to sell me anything, so I'll take them at their word.

        Cheers!

        Strat
  • The kick in the butt I needed to get this ordered. Thanks slashdot.
  • WTF wants to dig through a stack of cartridges/CD's to play a game? Mod chips were as much for convenience as they were for "Possible" circumvention. This is a perfect example of the wrong people making judgements.
  • I understand that the countries involved make it sort of a non-issue - though not being able to enter the US without being arrested might be a rather frustrating thing to work around, if I've understood the specifics of the case - but what frustrates me most is the innate assumption here that the tool WILL be used for piracy. I am the owner of a copy of the HDLoader software. I have used it many times, but never to run downloaded ROMs off the net or to play burned copies of games. I use it for three reas
  • The law outlaws circumventing measures which protect copyrighted content. These are defined as measures which require the application of information or some other process to render the copyrighted work accessible. For instance, DVDs are scrambled, and the DVD player must have a key to unscramble them. However, video games are not scrambled. They are not encrypted in any fashion. They're just signed. The "copy protection" mechanisms in video game systems do not protect the content. They protect the ha
  • ... we will be needing to ban crowbars. After all, they can be used to break locks so that people can steal things! We must enact new legislation straight away to make sure that crowbars and any other tool that might be used for crime is banned. After all, it's the creators of the tool that are criminals, not the people who used it to break the law.

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