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Cablegate: Spain Ipr: Aberrant Mod Chip Ruling

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS MADRID 001853

SIPDIS

STATE FOR EUR/WE AND EB/IPC URBAN

E.O. 12958: N/A
TAGS: KIPR ETRD ECON SP
SUBJECT: SPAIN IPR: ABERRANT MOD CHIP RULING

REF: A. URBAN-YOUTH EMAILS
B. MADRID 639

1. According to an April 2004 ruling made by Barcelona Penal
Court 3, the installation of mod chips (devices that allow
customers to alter their video game consoles so they can
operate games downloaded from the internet or from other
regions) is legal. The Guardia Civil had investigated the
practice and filed the suit against the Barcelona games
shops, Innovagames. The case was weak as the Guardia Civil
did not have any evidence of mod chip installation and was
only able to find two mod chips after combing the premises.

2. The judge ruled in favor of Innovagames, basing his
decision on what he views as a loophole in Spanish
Intellectual Property laws. Article 270 of the Spanish Penal
Code prohibits the "manufacture, distribution or possession
of means to crack computer program security codes," but makes
no reference to what the ruling refers to as "electronic
instruments destined to copy video and sound software."
While the case has been cause for alarm in some circles and
celebration in others, the victory for pirates will be
short-lived. Spain's amended Penal Code enters into force on
October 1, 2004 and much more clearly defines IP protection,
specifically extending protection to audio, visual and
audiovisual instruments.

3. The Guardia Civil does not appeal court decisions, and the
IP industry associations who would normally become involved
have decided to keep a low profile to reduce the "buzz" on
the decision. They acknowledge the case is so weak that it
is extremely unlikely they would get a favorable decision on
appeal.

4. In addition, the decision is at odds with the rulings on
four similar cases in Spain that found the use of mod chips
clearly violates the intellectual property rights of video
game console and program manufacturers. In 2001, in the
first Spanish court case against mod chips, a Madrid court
ruled that mod-chips are illegal because they permit use of
illegal copies. In October 2002 a Barcelona court found that
possession of mod chips is a punishable offense because they
are a "mechanism to neutralize protection measures in
software." A Leon court concluded in November 2003 that the
distribution and installation of mod chips are IP crimes. In
February 2004, a Logrono court differentiated between mod
chip installation and possession. It found the former to be
a crime, but not the latter.

5. In a recent press release, the International Intellectual
Property Alliance (IIPA) condemned the 2004 Barcelona court
ruling, saying that it was "damaging." While we agree the
court decision is of concern, we do not consider it
representative of the view in Spain. Our contacts at the
Ministry of Culture's Copyright Office had not been aware of
the ruling until we brought the IIPA release to their
attention. They do not see the decision as significant or
trendsetting. They have been working with the new Minister
of Culture to prepare the transposition of the European
Copyright Directive into Spanish law (details to be reported
septel). Since the Directive requires EC member states to
provide "adequate legal protection against circumvention of
any effective technological measures," Spanish transposition
of the Directive may also help clarify the legal status of
mod chips. We plan to track the transposition of the
directive closely.
ARGYROS

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