Nintendo of America Inc. v King, 2017 FC 246

Why Is This Case Important?

This decision is a landmark in copyright law, particularly in the enforcement of technological protection measures (TPMs) in Canada. It is the first major case to apply the anti-circumvention provisions introduced in 2012, confirming that trafficking in devices designed to bypass TPMs is a serious violation.

The Court provided clarity on (i) what qualifies as a (TPM); (ii) what it means to circumvent a TPM; (iii) the scope of liability for trafficking in circumvention devices; (iv) how statutory damages for TPM circumvention should be calculated; and (v) it found that the definition of “circumvent” is open-ended and not limited to the list enumerated in section 41, and thus, the “replication” of the TPM (e.g., mimicking the physical game card configuration) also amounted to a circumvention.

The Court awarded maximum statutory damages and punitive damages, setting a precedent for future enforcement actions. The ruling also clarified the scope of the interoperability defence under section 41.12 and emphasized the importance of deterrence in protecting digital content industries, especially video games.

Summary

Nintendo of America Inc. brought an application against Go Cyber Shopping (2005) Ltd., a retailer and online seller of mod chips and game copiers. Nintendo alleged that the respondent had infringed its copyright in three registered works (Header Data used in Nintendo DS and 3DS consoles), circumvented TPMs protecting access to 585 copyrighted Nintendo video games, trafficked in devices designed to bypass TPMs, and provided installation services for mod chips on Wii consoles. The individual respondent settled with Nintendo before the hearing, but the corporate respondent continued to contest the claims. The respondent did not present evidence or cross-examine Nintendo’s witnesses, relying solely on its written submissions.

Court Finding

The Federal Court found in favour of Nintendo on all claims. It held that the respondent infringed Nintendo’s copyright in all three Header Data works by selling devices containing or facilitating unauthorized copies. All of Nintendo’s access control measures—including physical configuration, boot-up security checks, encryption/scrambling, and Wii copy protection—were found to be TPMs under section 41 of the Copyright Act. The respondent’s devices circumvented these TPMs, and the Court rejected the respondent’s interoperability defence under section 41.12, finding no evidence of legitimate use with homebrew software.

The Court awarded Nintendo the maximum statutory damages of $20,000 per work for TPM circumvention of 585 games, and copyright infringement of three Header Data works, totalling $11.76 million. It also awarded $1 million in punitive damages due to the respondent’s deliberate and large-scale infringement, bad faith, and disregard for Nintendo’s rights. The respondent was permanently enjoined from further infringement and ordered to deliver up all infringing devices. Elevated costs were awarded under Column V of Tariff B of the Federal Courts Rules.

Key Takeaway

This decision confirms that circumventing TPMs and trafficking in circumvention devices are serious violations of Canadian copyright law. Courts will award maximum statutory and punitive damages where infringement is deliberate and commercial. The ruling also clarifies that TPMs do not need to prevent copying to be effective and that the interoperability defence under section 41.12 requires clear evidence of legitimate use. The case sets a precedent for protecting digital content and deterring piracy in Canada.