In July 2004, the UK High Court ruled that the promotion and sale of Messiah2 chips (a type of "mod chip" or "modified chip") constituted a breach of the Copyright, Designs and Patents Act 1988 (UK) ("CDPA") in the case of Sony Computer Entertainment, Inc v Ball  F.S.R. 9. Mr Ball designed, manufactured, promoted, sold and installed mod chips called Messiah2 which could be fitted into a Sony Playstation 2 ("PS2") games console. Authorised versions of Sony's PS2 games contain a code and when loaded into a PS2 console, the PS2 console searches for the code and only once found, allows the user to play the game. The Messiah2 tricked the console into believing that the code it was searching for was on any game loaded into the PS2 console regardless of whether that game was an authorised product of Sony or otherwise. This allowed pirated copies of Sony's games to be played as well as Sony games legitimately purchased from other jurisdictions (Sony's codes are region specific so, for example, Sony games bought in the USA could not be read on PS2 games consoles purchased in the UK).
In the Ball case, Laddie J held that Mr Ball's actions in relation to the Messiah2 chips amounted to a breach of the CDPA. Sony's use of codes was designed to prevent all uses of pirated PS2 game CDs and DVDs on PS2 games consoles and all uses of Sony games CDs and DVDs legitimately purchased in a different region. Under section 296 of the CDPA, where a technical device has been applied to a computer program and a person manufactures, promotes, sells or has in his possession "any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of that technical device" and that person knows or has reason to believe that the means he is using will be used to make infringing copies, that person is guilty of infringing copyright. A "technical device" is any device intended to prevent or restrict acts that are not authorised by the copyright owner. Mr Ball tried to put forward arguments that his Messiah2 chip was not solely intended to circumvent Sony's technical device (ie Sony's use of the "lock and key" codes) but it could be used for making backup copies of games and to enable legitimate Sony games purchased in other regions to be played. Laddie J held that this argument could only succeed if any of these acts were authorised by Sony but they were not (as backups for CDs and DVDs is no longer a necessity due to their durability and Sony clearly had not authorised the circumvention to get around its region-specific codes). In addition, Mr Ball tried to argue that the protection under the CDPA only applied to protection mechanisms used on software and therefore, as Sony's protection device was installed on hardware (the PS2 console), there was no infringement. Laddie J held that the definition of "technical device" does not designate where the device should be and therefore, it could be placed on the hardware as well as the software itself. Therefore, Mr Ball's Messiah2 chips were being used to circumvent Sony's technical device to allow users to undertake acts in relation to the PS2 games which were not authorised by Sony as copyright owner of the PS2 games.
The UK is not the only jurisdiction where Sony has been actively pursuing promoters, sellers and makers of mod chips. In 2002 in the USA, Sony was awarded damages against Channel Technology for manufacturing Messiah chips. In December 2005, Sony was awarded US$6 million in damages against Filipiak, an online business which sold mod chips (as devices which are primarily designed to circumvent technological measures that control access to copyrighted works). Filipiak was fined US$800 per mod chip sold prior to June 2004 (when an injunction against Filipiak had been granted) and then US$2,500 for every mod chip sold thereafter.
However, there have been recent unusual developments in relation to mod chips in Australia. In October 2005, the Australian High Court unanimously ruled that mod chips were legal and did not breach the anti-circumvention device provisions of the Australian Copyright Act 1968 ("CA") in the case of Stevens v Kabushiki Kaisha Sony Computer Entertainment  HCA 58.
The High Court focused on the fact that the mod chips were not a measure designed and used to illegally copy the games (without Sony's authorisation) but allowed access to allow the playing of games already copied. This was an important distinction. It was disputed that mod chips were a circumvention device designed to circumvent a technological protection measure as they were not designed to prevent unauthorised copying but merely discourage users from copying games. The High Court decided that the intention of the wording of the CA was not to create a right to control access generally. In addition, it was felt that Sony's use of the codes to prevent legitimately purchased games from other regions to be played had anti-competitive overtones. (In fact, some have mused whether the High Court would have reasoned as it did if Sony only used the codes to actually prevent use of pirated games.)
In any event, the recent Australian High Court decision draws an interesting distinction regarding the purposes of Sony's protection mechanisms and mod chips. It is correct that mod chips do not facilitate illegal copying of copyright works but they do allow access to be able to use infringing works thus the exact wording of the provisions in all relevant copyright legislation must be carefully analysed before being applied. Whether Sony and the mod chip industry will rely on this decision in the future remains to be seen.