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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Nintendo Co Ltd v Sky UK Ltd & Ors [2019] EWHC 2376 (Ch) (10 September 2019) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2019/2376.html Cite as: [2019] EWHC 2376 (Ch), [2020] 3 All ER 83, [2020] ECC 7, [2020] ECDR 13, [2019] ETMR 60, [2019] Bus LR 2773, [2020] 2 All ER (Comm) 238, [2019] WLR(D) 504 |
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BUSINESS AND PROPERTY COURTS
INTELLECTUAL PROPERTY LIST (CHANCERY DIVISION)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
NINTENDO CO., LTD |
Claimant |
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| - and - |
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| (1) SKY UK LIMITED (2) BRITISH TELECOMMUNICATIONS PLC (3) EE LIMITED (4) TALKTALK TELECOM LIMITED (5) VIRGIN MEDIA LIMITED |
Defendants |
____________________
The Defendants were not represented
The application was considered on paper
____________________
Crown Copyright ©
MR JUSTICE ARNOLD :
Introduction
Nintendo
Switch games console to be circumvented. Two of the Target Websites ("the Team Xecuter Websites") are operated by the parties responsible for developing the circumvention devices. The third and fourth ("the R4 Website" and the "Stargate Website") are operated by UK resellers of the circumvention devices. All four Websites use NCL's trade marks.
NCL and its intellectual property rights
Nintendo
Switch. NCL has sold millions of
Nintendo
Switch consoles in the UK. Games for the
Nintendo
Switch are written both by NCL and by third parties referred to as "Authorised Developers" who operate under a programme which NCL says is cheap to join, user-friendly and benefits from extensive support from NCL. Out of the 2100 games currently available for the
Nintendo
Switch, 1804 were developed by Authorised Developers.
Nintendo
Switch and the games include copyright works such as the operating software (referred to as "firmware") embedded in the
Nintendo
Switch, the software for the games that run on the
Nintendo
Switch and various other copyright works such as the sound-track, graphics, text and so forth that are included in the operating environment and games.
i) EUTM No. 16070914 for the word markNINTENDO
SWITCH, which was registered on 4 May 2017.
ii) EUTM No. 016606873 for the figurative mark depicted below (referred to as "the Joycon logo"), which registered on 18 September 2017:
The TPMs
Nintendo
Switch.
Nintendo
Switch. NCL implemented a change to the
Nintendo
Switch to prevent this in June 2018, but there remains a very substantial number of the earlier, vulnerable
Nintendo
Switch consoles in circulation and there is evidence of active attempts being made to circumvent the TPMs even on the post-June 2018
Nintendo
Switches.
The circumvention devices
Nintendo
Switch together with the SX Pro. The user then goes to the second of the Target Websites and, using a licence key stored in the SX Pro, obtains a licence for SX OS, which is then operable on the user's
Nintendo
Switch.
The Target Websites
i) In a green bar at the top of the home page shown on page 12 are hyperlinks in yellow that link to various other parts of the website and, in the case of that entitled "SX Family Portal", link to the second Target Website discussed below.
ii) In the middle of the home page there is a headline "SX OS v2.8 Beta Announcement" below which is a picture of the screen of aNintendo
Switch with SX OS installed on it. The central icon of three icons displayed on the screen is NCL's Joycon logo.
iii) On the left-hand side is a box headed "where to purchase" that has the SX logo on the left and proclaims on the right: "If you are looking to buy our SX Family of Team Xecuter products, then please check out our Where To Buy page, listing all of our many valued local and worldwide resellers, as below is just a short recommended list by us."
iv) Below this on the left-hand side there are adverts for resellers in various countries such as Canada, and (on page 13) France, Germany, and Spain.
v) Turning to page 18, at the bottom of the page just above the video box, in a section headed "SX OS v2.7 Beta Announcement", there is a statement "Of course, behind the scenes we are also still working hard on our solution for those 'unhackable' switches. Good progress is being made, so hang in there!".
vi) Page 24 shows the "About Us" page. On the left is a PayPal Instant Delivery advert that offers "USA/EU shipping". The About Us section explains:
"Team Xecuter have developed hardware and software for the Xbox Scene since 2001. The initial roots of the group were based on the Xbox homebrew hacking scene, however where we started as a small group of hardcore enthusiasts dealing with extremely gray area market products, we have now grown into a large electrical manufacturer that develops products for many companies around the world.
Our heart still lies within the games console community and we are always active in developing new and innovative products that we ourselves use in our gaming lives. Whereas we have long digressed from trading in areas that have now been made illegal in most countries over the years, our ambition is to continue to product quality items at an affordable price."
vii) Page 27 show the "Where to Buy" page. This explains, in the middle of the page, that "On this page you will find a updated list of all our authorized resellers around the world that have available our latest Xecuter SX Family Products". Below that is listed a reseller that is said to offer "Shipping worldwide".
viii) Starting at page 29 is a "List of Resellers operating within Europe (choose the one best for your area for shipping rates)."
ix) On page 30, beside an Irish flag, are listings for "Stores Based in Ireland" that includes, as the first listed, the fourth Target Website (Stargate).
x) On page 32, beside a Union flag, is a list of "Stores based in the United Kingdom". The second link down is to the third Target Website (R4).
i) On page 35 there is statement "Introducing SX by Team Xecuter The ultimate solution for jailbreaking yourNintendo
Switch has arrived".
ii) Turning to page 37, in the middle of the page there is a heading SX OS, below which it is explained that "SX OS is our revolutionary Custom Firmware forNintendo
Switch". In the images below this is shown, as the top picture, the screen of a
Nintendo
Switch onto which SX OS has been installed, with, in the central picture, the Joycon logo displayed. Around the images are various pieces of information about SX OS. At top left it is explained that it works "with every
Nintendo
Switch console released before June 2018". On the left at the bottom of the page it is explained that you can "Play All Games!"
iii) On page 38, under heading "Homebrew Games & Apps" it is stated that "Using SX OS homebrew menu launcher you can enjoy all the quality games and software by independent developers".
iv) On pages 40-41 are instructions for the use of SX Pro and SX OS. Installing the SX OS promises, as stage 5, that the user can "Enjoy the latest games and homebrew!".
i) At page 43, in the top right, below the box marked "Cart", there is a hyperlink labelled "HACK AMIIBO/SWITCH". In the second row of "new arrivals" on the left there is advertised the "Switch Xecuter SX OS" and "Switch Xecuter SX Pro and OS".
ii) On page 44 in the top left there are two more adverts for the circumvention devices. The second of these shows aNintendo
Switch on which can be seen the screen with SX OS loaded and, in the centre, the Joycon logo. The prices are all in sterling.
iii) On page 45, middle right, is a section entitled "Hack your Switch 3DS New 2DS by a flashcart." Below the title it states "Flashcard is the best choice to play free games in UK Ireland". The fourth line states "To hackNintendo
Switch, just buy the Xecuter SX Pro and OS". In the bottom right, under "Store Information" it states "SX Flashcart UK".
iv) On page 46 is the page reached by clicking the hyperlink "HACK AMIIBO/SWITCH" referred to in the opening sub-paragraph above. In the title box it states "…We support all kinds ofNintendo
Switch accessories to play
Nintendo
Switch games." Below that are further adverts for the circumvention devices including the image of the
Nintendo
Switch with the custom firmware installed on which the Joycon logo appears.
v) On page 47 are various adverts for the circumvention devices. Among them, on the left-hand column and accompanied by an image of theNintendo
Switch, is an offer for "Switch Xecuter SX Pro and OS" with the words "The
Nintendo
Switch has been hacked already by Xecuter SX Pro and OS" appearing beneath.
vi) On page 50 is the page reached by clicking the hyperlink for one of the adverts for "Switch Xecuter SX Pro and OS". The blurb beneath the title states "TheNintendo
Switch has been hacked… with this Switch flashcart Xecuter SX the players can enjoy free custom firmware without limits… It can support all the regions…." Similar information is given under the heading "More Info" at the bottom of the page.
vii) On page 51 further information about the product is provided. The second bullet point under "Why buy Switch Xecuter SX?" explains "An original Switch cartridge is too expensive, we can save our money to enjoy free games." At the bottom of the page are customer reviews, two of which are from "Ryan P": the top one states "…I ordered from the UK and item was here in 6 days with free shipping method…." The second one states "… I used free postage option to the UK, it took about 8 days to arrive…"
viii) On page 52 the second review from the bottom from "Ash B" states "arrived in the UK 05/06/2018".
i) At page 60 is the home page. The website is entitled "Stargate3DS" and next to the title is a ".UK" logo. In the middle of the page there are three purchase options for the circumvention devices, all priced in sterling. The image of the left-hand option shows theNintendo
Switch with SX OS installed and displaying a screen that has on it the Joycon logo.
ii) On page 61 in the right-hand column are brief explanations of the Switch Xecuter SX OS "…software to hackNintendo
Switch console…" and the Switch Team Xecuter SX Pro and OS modchip which "hacks
Nintendo
Switch".
iii) On page 63 at the bottom right is "Store Information", which gives an address in "Staybridge UK".
iv) At page 65 is the page one reaches by clicking on the option to buy the Switch Xecuter SX OS. The description of the product states "The Switch Xecuter SX OS is a software to hackNintendo
Switch console. It's easy and cheap to pirate a Switch. With Switch Xecuter SX OS, the players can play all kinds of Switch games freely."
v) On page 66 the "characteristics" of the product are said to include "Compatible with games outside the regions". Below that is a section headed "Why buy Xecuter SX OS in stargate3ds.org?" The third bullet point promises "All orders in stargate3ds.org are sent free with the tracking number and arrived quickly in UK!"
vi) At page 68 is shown the page one reaches by clicking on the option to buy the Switch Team Xecuter SX Pro and OS modchip. The description includes information similar to that shown on page 65 but also states in the final sentence "To pre order a Switch SX flashcart to begin your hack journey in UK and Ireland". At the bottom of the page under "More Info" it explains "The main function of Switch Xecuter SX flashcart is to install CFW [Custom FirmWare] on yourNintendo
Switch consoles. After the custom firmware setup on the console you can start to play downloaded free
Nintendo
Switch games so that we don't need to buy expensive retail cartridge from amazon or ebay."
UK access and test purchases
Nintendo
Switch and then download and run unauthorised games. Similarly, the device purchased from Stargate could be installed on a
Nintendo
Switch.
Trade mark infringement
Nintendo
Switch on which the software has been loaded is viewed by third parties and the Joycon logo that appears on the loading screen of SX OS is seen: see in particular Case C-206/01 Arsenal Football Club plc v Reed [2002] ECR I-10273.
Circumvention of the TPMs
"(1) This section applies where—
(a) effective technological measures have been applied to a copyright work other than a computer program; and
(b) a person (C) manufactures, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire, or has in his possession for commercial purposes any device, product or component, or provides services which—
(i) are promoted, advertised or marketed for the purpose of the circumvention of, or
(ii) have only a limited commercially significant purpose or use other than to circumvent, or
(iii) are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of, those measures.
(2) The following persons have the same rights against C as a copyright owner has in respect of an infringement of copyright—
(a) a person—
(i) issuing to the public copies of, or
(ii) communicating to the public,
the work to which effective technological measures have been applied;
(b) the copyright owner or his exclusive licensee, if he is not the person specified in paragraph (a); and
(c) the owner or exclusive licensee of any intellectual property right in the effective technological measures applied to the work."
Nintendo
Company Ltd v Playables Ltd [2010] EWHC 1932 (Ch), [2010] FSR 36. Since then, the Court of Justice of the European Union has considered Article 6 of the Information Society Directive in Case C-355/12
Nintendo
Co Ltd v PC Box Srl [EU:C:2014:25].
Nintendo
Switch console. It is no objection that these copyright works are supplied as part of the software: see Playables at [25].
Nintendo
Switch. Nor does the presence of the TPMs inhibit independent development of video games for the
Nintendo
Switch since NCL provides an easy route to doing so via its Authorised Developer program. Accordingly, I am satisfied that the TPMs are proportionate.
Nintendo
Switch.
"(1) This section applies where--
(a) a technical device has been applied to a computer program; and
(b) a person (A) knowing or having reason to believe that it will be used to make infringing copies--
(i) manufactures for sale or hire, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire or has in his possession for commercial purposes any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of the technical device; or
(ii) publishes information intended to enable or assist persons to remove or circumvent the technical device.
(2) The following persons have the same rights against A as a copyright owner has in respect of an infringement of copyright--
(a) a person--
(i) issuing to the public copies of, or
(ii) communicating to the public,
the computer program to which the technical device has been applied;
(b) the copyright owner or his exclusive licensee, if he is not the person specified in paragraph (a);
(c) the owner or exclusive licensee of any intellectual property right in the technical device applied to the computer program."
Jurisdiction to grant a website-blocking injunction
"Website blocking orders clearly require more than the mere disclosure of information. But I think that it is clear from the authorities and correct in principle that orders for the disclosure of information are only one, admittedly common, category of order which a court may make against a third party to prevent the use of his facilities to commit or facilitate a wrong. I therefore agree with the view expressed by Briggs LJ in his dissenting judgment in the Court of Appeal that the website blocking order made in this case could have been made quite apart from the power derived from European law, on ordinary principles of equity."
Threshold conditions
i) the defendants are intermediaries within the meaning of Article 11 of the Enforcement Directive,
ii) the users and/or operators of the website are infringing the claimants' IP rights,
iii) those users and/or operators are using the defendants' services to infringe; and
iv) the defendants have actual knowledge of this (which may be as a result of being notified by the rightholder).
i) it is well established that the Defendants are intermediaries;
ii) for the reasons given above, the operators of the Target Websites are infringing NCL's rights in the UK;
iii) the evidence establishes that the operators are using the Defendants' services to do this; and
iv) the Defendants have actual knowledge of this, because they have been notified by NCL.
Should an injunction be granted?
i) The injunction sought is necessary to prevent, or at least reduce, substantial damage to NCL. It appears that substantial sales of the circumvention devices have been made in the UK, that substantial quantities of pirated games have been downloaded in the UK and installed onNintendo Switches using the circumvention devices and that NCL has sustained significant losses as a result. No alternative measures are realistically available to NCL since NCL has been unable to identity the operators of the Target Websites, who may well be abroad. Cease and desist letters sent by NCL's solicitors have been ignored, except that both the R4 and Stargates Websites changed their URLs following the sending of the letters. Take-down requests to the relevant hosting providers, to the extent that these can be identified, have likewise been ignored. Take-down requests sent by NCL to platforms such as YouTube, Amazon and ebay are actioned by the platforms, but the relevant listings are simply replaced by new ones.
ii) The evidence in the Cartier case showed that, although quite easily circumvented, blocking injunctions are effective in reducing traffic to the target websites.
iii) Similarly, blocking injunctions are dissuasive. Moreover, the Defendants are required to display information about the block, which helps to dissuade users.
iv) Blocking injunctions are not difficult for the Defendants to implement. On the contrary, they already have the necessary technology. Moreover, as a result of the decision of the Supreme Court in Cartier, NCL must bear the Defendants' incremental costs of implementing the injunction, and so there is no additional cost for the Defendants.
v) The injunction sought by NCL will have no impact on legitimate trade, because none of the Target Websites appears to carry on any legitimate trade.
vi) The injunction strikes a fair balance between protecting NCL's rights and the rights engaged, because the Defendants' right to carry on business is unaffected and the public has no legitimate interest in being informed about or purchasing circumvention devices whose sole purpose is to circumvent NCL's TPMs and infringe its rights to NCL's significant detriment.
vii) For the reasons given above, the injunction is proportionate.
viii) The order proposed by NCL contains the usual safeguards adopted in previous cases.
Conclusion