(CN) - Without copying of the games themselves, it is legal to bypass encryption systems on video game consoles, Europe's highest court ruled Thursday.
Nintendo sued the Italian company PC Box for bundling DS and Wii consoles with equipment that deactivates the gaming systems' encryption codes. While PC Box argued the equipment was necessary to run third-party applications and other media on the consoles, Nintendo said PC Box installed the devices solely to circumvent the copy-protection measures encoded into its games, a practice commonly known as "jailbreaking."
A district court in Milan asked the Court of Justice of the European Union whether EU copyright law extended to Nintendo's copy-protection technology. European law expressly permits right holders to use technology to protect their copyrighted material "without preventing the normal operation of electronic equipment and its technological development."
The Luxembourg-based high court acknowledged Thursday that Nintendo has right to copy-protect its games but said the company "must not go beyond what is necessary for this purpose."
To determine that, the Italian court must look at whether encryption codes installed on both consoles and games is overkill by Nintendo, according to the ruling.
"In those circumstances, it is necessary to examine whether other measures or measures which are not installed in consoles could have caused less interference with the activities of third parties not requiring authorization by the right holder of copyright or fewer limitations to those activities, while still providing comparable protection of that right holder's rights," the judges wrote.
On remand the Milan court must examine how often PC Box customers use the jailbreaking equipment to either make illegal copies of Nintendo games or trick the consoles into playing unlicensed titles.
"That court must also examine the purpose of devices, products or components which are capable of circumventing those technological measures," the EU court wrote. "In that regard, the evidence of use which third parties actually make of them will, in the light of the circumstances at issue, be particularly relevant. The national court may, in particular, examine how often those devices, products or components are in fact used in disregard of copyright and how often they are used for purposes which do not infringe copyright."
Nintendo filed a similar lawsuit against NXPGame in 2010, claiming the company instructed users "how to download material from the Internet, including directing users to third-party Web sites to download pirated Nintendo games, load the material into game copiers, and play the material on a Nintendo DS."
Nintendo and NXPGame settled the case for $200,000 and a permanent injunction in 2011.