Market Court rules on piracy of PS3 games

Introduction
On 29th November 2011 the Market Court passed judgment in a case brought by Sony Computer Entertainment Europe Limited against Krusan AB, Wechip HB and PM Konsul o Data i Tranås. The case concerned the USB module “PSJailbreak”, a chipset used to enable the unauthorised copying of Sony Playstation 3 (PS3) games or homebrew games. As the PSJailbreak product was considered to violate the Copyright Act and was thus illegal, the marketing of the product was held to violate the Marketing Practices Act – in particular, the act’s prohibition on marketing which creates the impression that a product can be legally sold when it cannot.

Background
According to Sony, the PS3 video game has long been exempt from intrusions in the form of so-called "jailbreak" products (ie, products created with the specific purpose of manipulating the technical restrictions that prevent unauthorised copying). However, in August 2010 news started circulating that such a jailbreak product had been launched under the name “PSJailbreak”. The official PSJailbreak website offered the opportunity for local retailers to order the product and register as an official retailer. In September 2010 the three defendants were announced on the PSJailbreak website as such retailers.

Sony, the legal holder of the rights to the PS3 video games, took action on an international scale to prevent the distribution and sale of PSJailbreak. In Sweden, a writ of summons was submitted against the defendants before the Market Court in September 2010. On 28th September 2010 the Market Court issued an interlocutory injunction prohibiting the marketing of the PSJailbreak product.

Krusan has objected to the claims made by Sony, but the other two defendants consented to Sony’s suit.

Reasoning and judgment
The Market Court judges viewed sequences of a PS3 game as part of the proceedings. Considering that the film clips included in the game were pre-recorded and could not be changed by the player, the court held that the game had copyright protection under the Copyright Act at least as cinematographic works and computer programs.

The court continued by acknowledging the protection for technological measures against pirate copying in relation to both computer programs and other copyright-protected works (set out in Articles 52b, 52e and 57a of the Copyright Act), and that the measures taken by Sony to this effect were protected under these articles. Taking into account the function of PSJailbreak, the way it had been marketed and its price (approximately €135), the court found that the real intention of the product must have been to circumvent Sony’s technical measures to enable pirate copying and not, as suggested by Krusan, to facilitate “homebrews”, to create back-up copies or to exist as an empty USB flash stick.

Marketing carried out in violation with other laws or that is intended to lead to law-breaking is a violation of the principle of unlawfulness established by the Market Court’s case law (and thus a violation of the general principle of good marketing practices). Article 9 of Annex 1 of EU Directive 2005/29/EC, the so-called “black list”, also prohibits marketing which creates an impression that a product can be legally sold when it cannot. This black list, and thus Article 9, have been implemented into the Marketing Practices Act. As the defendants’ handling of PSJailbreak violated the Copyright Act, the marketing of the product was consequently found to violate the Marketing Practices Act.

Under risk of a penalty of SKr1 million (approximately €115,000), the defendants were prohibited from marketing PSJailbreak or any substantially similar products in Sweden. The defendants were also ordered to pay collective legal costs of collectively Skr1,340,000 (approximately €150,000), of which the largest part was ordered to be paid by Krusan.

The decision cannot be appealed, since the Market Court is the highest instance for such cases.

Alternative approach
This case clearly demonstrates that in addition to or as an alternative to copyright infringement action, copyright holders can choose to take action before the Market Court based on the Marketing Practices Act. A major benefit of this strategy is that the Market Court usually handles its cases efficiently, strives to expedite a final judgment within one year of the writ of summons being submitted and interlocutory decisions can be obtained within one week. Copyright infringement cases under the Copyright Act, which take place before the district court at first instance, are often more time consuming, and an interlocutory decision is likely to take longer to obtain. On the other hand, the judges of the Market Court are not experts on copyright law and not all of them are lawyers, so the court is often reluctant to assess copyright protection. Further, when such assessments are made, they are unlikely to be detailed in character. Thus, for more complex copyright assessments, the Market Court may not be the best venue to bring a cases.

Comment
A copyright holder should consider whether proceedings before the Market Court are suitable as an alternative or a complementary action to “ordinary” copyright infringement proceedings when assessing and determining its strategy in these types of case.