Sony Australia and its parent companies had claimed that a Sydney vendor, Eddy Stevens, had infringed Australian trade mark and copyright laws by selling pirated games and mod-chips that could be used to run the games.
The Australian Copyright Amendment (Digital Agenda) Act of 2000 makes it an offence to make, sell or promote devices to override copy-protection technology. Mod-chips are devices that, once installed in a console, permit the use of imported games and back-up copies but can also be used to run pirated games.
The federal judge ruled that the vendor had infringed Sony's trade marks by selling pirated games. However he decided that chipping the consoles was not illegal, reasoning that modified chips overrode a device that only prevented copied games from being played and did not prevent them being copied at the first place.
Sony appealed the ruling, and the Court of Appeal issued its verdict on Wednesday. The Court unanimously held that federal judge was wrong. In its opinion, the fact that Sony's device makes the copied games unusable was sufficient to bring it under the protection of the Digital Agenda Act.
The Australian Competition and Consumer Commission told on-line publisher Australian IT that the ruling could force up the cost of computer games.
"Chipping has allowed consumers to modify their PlayStation console to play imported and backup copies of games", ACCC chairman Graeme Samuel said. "The Government recently legislated to ease the restrictions on parallel imports of computer software. Yesterday's decision may have the unintended consequence of eroding this advance for consumers."
The use of mod chips is still legal in Australia. It is only the supply of the devices that is now prohibited.