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Mod Chip Sellers Ordered to Pay $9M in Piracy Case

The Entertainment Software Association announced a "major victory" today in the fight against copyright violations and piracy. A group of mod chip sellers and distributors of the HDLoader software have been penalized over $9 million.

In what has been labeled a "major victory" for the entertainment software industry, the Entertainment Software Association (ESA) announced today that a federal court in California has ordered a group of defendants to pay over $9 million in damages for violations of the Digital Millennium Copyright Act (DMCA).

The decision was made on September 11 when Judge Claudia Wilken, U.S. District Court, Northern District of California, awarded $3,750,200.00 in damages against corporate defendant Divineo, Inc., and Canadian resident Frederic Legault. Judge Wilken also awarded $5,791,400.00 in damages against corporate defendants Divineo U.K. and Divineo SARL, and French resident Max Louarn.

The defendants had apparently violated the DMCA by trafficking mod chips and the HDLoader software application that enables users to copy whole video games to a hard drive's console. Once the entire video game file is on the console's hard drive it probably isn't too difficult for a hacker to transfer it to his PC and then illegally distribute it on the web. Mod chips then can be used to allow a console to play illegally obtained/pirated games. Both the mod chips and HDLoader application therefore circumvent the copyright protection technology built into video game consoles and video game software and are in direct violation of the DMCA.

"Mod chips and HDLoaders are key elements in facilitating video game piracy because they allow people to play illegally copied games on illegally modified video game consoles," said Ric Hirsch, Senior Vice President of Intellectual Property Enforcement for the ESA. "This Court order is very important because it recognizes the significant damage that mod chips and HDLoaders cause the entertainment software industry and delivers the clear message that trafficking in circumvention devices that enable game piracy will result in heavy penalties."

This isn't the first such mod chip case in the U.S. In December 2005 Ohio resident Steven Filipiak was ordered to pay more than $6 million for distributing mod chips for the PS1 and PS2. That was actually the first published decision to apply the statutory damages provision of the DMCA.

The DMCA was enacted in 1998 to prohibit the manufacture, distribution and sale of products or services that circumvent technological protection measures designed to prevent unauthorized access to, and copying of, copyrighted materials. Although the video game industry continues to fight piracy, mod chips and illegal copies of games are still rampant, especially in parts of Asia.

Posted by Ed. on October 09.

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