Summary of ruling

On its December 3rd 2009 ruling, the 13th chamber of the Paris High Court (intellectual property specialist) found Divineo SARL France not-guilty in a case opposing Nintendo France and Japan. This case was related to the distribution of ‘linkers’ (Cyclo Evolution etc) for Nintendo DS and DS Lite. This decision follows other similar rulings in lower courts in other regions including Canada and Spain.

This decision has very promising far reaching implications that go beyond this specific case and defends the rights of all individuals as well small to medium sized companies in various industries.

Background of industry and parties involved

Nintendo is one of three main producers in the video game console market which also includes Sony and Microsoft. However, out of the three producers, both Microsoft and Nintendo have recently been found guilty of abusing their dominant market positions in exerting monopolistic market actions. It is acknowledged that attempts to establish total control of any market is an anti-competitive practice and can result heavy fines for those companies involved in such practices.

Divineo is a major player in the distribution of videogame accessories, with the same customer base as Nintendo, i.e. all the major retailers in this sector. Divineo is also a partner to a number of video game software producers who create games for Nintendo console and has also contributed to the success of some of the biggest third party game launches on the Nintendo DS.

Divineo SARL was sued by Nintendo in Hong Kong for the sale of linkers. However, Nintendo did not sue the biggest retailers at the respective time who were also selling linkers. These retailers included but are not limited to Amazon.com (U.S.A) and Yahoo.co.jp (Japan). Unable to defend itself due to a lack of finances which focused on such a remote destination, Nintendo managed to obtain a decision by default to fine Divineo SARL a fee of approximately 50 Million Euro’s. The respective amount was obviously absurd and lacked any objectivity as no sales took place to or from Hong Kong.

Nintendo appears to commonly deploy a tactic in which its selects to sue companies in remote jurisdictions as the opposing party usually lacks the financial means to defend itself. This can result in Nintendo gaining a decision by default and avoids the company having to face European law in which the opposing party can defend itself and be represented fairly.

Understanding the benefits of Linkers

Linkers (also known as flash carts) are accessories for Nintendo DS consoles that allow the loading of ‘homebrew’ software (games, applications) created by independent developers. Thousands of homebrew applications are available by development communities, making the homebrew catalog wider than the one offered by Nintendo. The respective catalog features a far more diverse range of software and functionality than offered by the game focused catalog of Nintendo. For example, the homebrew catalog enables functionalities such as multimedia playback, GPS, agenda and diary setting, various utilities and original game concepts.

Arguably seeing the benefits of the homebrew developments (such as media viewing), Nintendo produced an accessory largely inspired by linkers called the DSVision which is distributed solely in Japan. However, this product is not as powerful as linkers and the majority of software choice is controlled by Nintendo. Unfortunately, it also fails to provide compatibility with software created by individuals who are not working for Nintendo, not paying licensing fees or simply those applications deemed unwanted by the Japanese firm. Moreover, Nintendo also added functions that were first available on linkers, MP3, and video players to its new console (DSi) by default. Thus, Nintendo explicitly appreciate the value of homebrew functionalities by effectively offering their own versions by default on their new console.

Nintendo failing to respect inter-operability exception

Although it was obvious that none of the defendants were pirates, Nintendo constantly accused the defendants of piracy during its communication on the case. However, despite these false claims of piracy, the main charge filed from Nintendo was that the linkers sold by the defendants are breaking security protection on the console that prevents access to programs not approved by Nintendo. However, Divineo stated that if this protection exists from Nintendo, then it is illegal and abusive. The reason being is that the respective protection does not support European laws that prohibit a security protection from preventing a legitimate owner of a product from using independent software as they wish. Even if producers of linkers broke an eventual protection to access the console, they are entitled to do so to allow the inter-operability of their device with Nintendo console.

Based on this logic, it is clear Nintendo does not respect aspects of the French and European law especially in relation to the inter-operability exception. Instead of protecting its games, Nintendo simply blocked the access to its console. Its goal ...