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The CJEU ruled, in response to questions referred by the German Federal Court of Justice (BGH), that the Action Replay software for the PlayStation Portable (PSP) likely does not constitute copyright infringement. The case, initiated by Sony against the third-party provider Datel, centered on whether the modification of game elements, such as unlocking additional content, infringes Sony’s protected copyrights. This ruling has far-reaching implications for the digital space and may impact the use of mods and similar tools in other software sectors as well.

I.          Facts – What is Action Replay and Why is the CJEU Concerned with It?

Since the early 1980s, at the latest with the release of the Famicom (also known as the NES), gaming consoles for home use, as well as handhelds for on-the-go, have become indispensable in the entertainment market. Microsoft, with its Xbox series, Sony with its PlayStation consoles, and Nintendo, perhaps the most well-known brand in gaming, have established themselves as the leaders in the field over the years.

1.          What is Action Replay?

Almost as long as there have been stationary game consoles and handhelds, third-party products have existed that interact with the consoles and aim to “enhance” the user experience. Leading the pack are software and hardware modules designed to modify and manipulate various aspects of games (often referred to as “cheat software” or “hacking devices”). One of the oldest providers of such modules is the British company Datel, with its “Action Replay,” which was first available for the Commodore 64.

Since then, Datel has released a multitude of Action Replay products for various game consoles and handhelds, including the classic Xbox, PlayStation 2, various Nintendo handhelds, and the PlayStation Portable (short: “PSP”).

The “Action Replay PSP” software operates by connecting the PSP console to a computer and inserting a USB stick with the software into the console. After restarting the PSP console, users gain access to an additional menu option called “Action Replay,” which offers game options not originally intended by Sony at this stage of the game. For example, options under this menu might allow the removal of restrictions on the use of the “Turbo” (“Booster”) or the availability of additional drivers, who would otherwise only be unlocked after reaching certain scores. “Tilt FX” is a sensor that connects to the PSP console, enabling motion-based control of the console, and also allows users to activate unlimited Turbo in racing games.

2.         The Legal Dispute Between Sony and Datel

Due to the “Action Replay PSP” for the PSP and the “Tilt FX” for the PSP, Sony initially sought an injunction against Datel before the Regional Court of Hamburg.

After a lengthy legal dispute, with all avenues of appeal exhausted, the Federal Court of Justice (“BGH”) concluded that the case would be decided based on the interpretation of European legal norms, which were implemented in the German Copyright Act (“UrhG”), and referred two questions to the Court of Justice of the European Union (“CJEU”) on February 23, 2023, for a preliminary ruling in order to clarify the legal situation under Union law.

II.         Decision of the CJEU

The CJEU ruled on the referred legal questions on October 17, 2024. It held that the case should be decided based on the interpretation of the Software Directive (Directive 2009/24/EC).

According to Art. 1(1), (2), (3) of the Software Directive, computer programs are protected by copyright as literary works in all forms of expression, provided they are original in the sense that they are the author’s own intellectual creation. The “forms of expression” of a computer program, according to the CJEU’s case law, are those that allow the program to be reproduced in different computer languages, such as source code and object code. Thus, the intellectual creation reflected in the text of the source code and object code is protected, while other elements of the program, such as its functionalities, which are merely an expression of the computer program, are not protected by the Software Directive.

The Action Replay software, which users install on the PSP console, runs simultaneously with Sony’s game software. According to the CJEU, however, it neither alters nor reproduces the object or source code, nor the internal structure and organization of the software used by Sony on the PSP. Instead, it only modifies the content of variables that Sony’s games temporarily store in the PSP’s memory and use during gameplay, allowing the game to proceed based on the altered variable content. Since Datel’s software only modifies the content of variables stored in a computer’s memory by a program and used during its execution, without copying the software (or any part of it), and since it requires the software to run simultaneously, the CJEU ruled that no copyright infringement of Sony’s software occurs if the variable content is an element of the software used by users to exploit its functionalities. However, this is a matter for the referring court (the BGH) to examine.

III.        Impact on the Gaming Industry and Beyond

Although the retro gaming market continues to grow, meaning the decision is not entirely irrelevant with respect to the specific PSP console and the Action Replay version in question, the significance of the ruling extends beyond this particular case, as the functionality at issue in the case is still used today—despite advancements in technology and anti-cheat software—and goes beyond gaming consoles.

Since the BGH had already determined that the Action Replay PSP software merely alters the content of variables temporarily stored in the memory of a game console, which are used by the user to exploit the game’s functionalities, without reproducing the game or creating a new program from it, it is highly likely that Sony’s claim will ultimately be dismissed.

The modification of variable data that a protected computer program has stored in a computer’s memory and uses during the program’s execution is not limited to modifications (briefly: “mods”) of video games but can also apply to other software, such as browser add-ons, which can affect the functionality of a website. As such, the decision has far-reaching implications for the entire copyright sector in the digital realm.

The CJEU’s decision significantly reduces legal uncertainties regarding the use of third-party software and mods. However, it also highlights the importance of a clear strategy for dealing with software modifications to minimize the risk of legal disputes, as the outcome depends on the specific technology of the software modification. Companies should ensure that their software development and use are always in line with the latest legal developments.

Do you have questions about the legal situation concerning software modifications in the gaming industry or are you seeking legal advice in the field of copyright and digital platforms? Our law firm is here to assist you as a competent partner.