In a opinion handed down September 11th, but reported in this week's BNA PTCJ, Sony Computer Entertainment America Inc. v. Devino Inc., Judge Claudia Wilken (N.D. Calif.) granted summary judgment and a default judgment to Sony in a DMCA case involving its Playstation 2, HD Loader (here is a link to wikipedia on the product), mod chips, and whether valid downstream defenses get one off the hook for a Section 1201 violation. The answer to that last question is no. One defendant proceeded pro s (the summary judgment), while the corporate defendants had default entered for lack of counsel (among other reasons).
HD Loader is software that allows consumers to play games on the PS2 on an optional hard drive peripheral. Games are stored on the hard drive, from which they are more quickly accessible than waiting around for the PS2 console to read data off the disc. Sony had a different view of their utility. Defendant also sold mod chips that could alter the play of the games.
The DMCA claim was over the PS2 authentication process, which was held to be a "technological measure" within the meaning of the DMCA. The primary purpose of defendant's products was held to be to circumvent the authentication process. The interesting part of the opinion is the court's finding that defendant's products may be used in a manner that constitutes fair use by consumers and which would constitute reverse engineering under Section 1201(f). Nevertheless, the court held that "downstream consumers' lawful or fair use of circumvention devices does not relieve [defendant] from liability for trafficking in such devices under the DMCA," citing 321 Studios v. MGM Studios, Inc., 307 F. Supp.2d 1085, 1097 (N.D. Cal. 2004); United States v. Elcom, Ltd., 203 F. Supp.2d 1111, 1120 (N.D. Cal. 2002).
321 Studios itself cited the Second Circuit's Corley opinion, which construed Section 1201(c)(1)'s language "nothing in this section shall affect ... defenses ... including fair use" as relevant only to post-circumvention activity. In straight copyright infringement actions involving secondary liability, downstream use has been relevant on occasion. For example, in the Betamax case (where Sony was a defendant), Sony got off the hook because of what the downstream consumers did. By excluding such possibilities under the DMCA, the DMCA has indeed become an uber-protectionist piece of legislation.