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Nintendo of America Inc. v. Chan

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


July 21, 2009

NINTENDO OF AMERICA INC., A WASHINGTON CORPORATION, PLAINTIFF,
v.
DANIEL MAN TIK CHAN, AN INDIVIDUAL, D/B/A WWW.DSELITE.COM, WWW.THEDSDEALS.COM, WWW.INSPIRETECH.COM, INSPIRE TECHNOLOGIES, AND INSPIRETECH ELECTRONICS; AND INSPIRE ELECTRONICS, INC.; DEFENDANTS.

The opinion of the court was delivered by: Hon. John F. Walter

NOTE: CHANGES MADE BY THE COURT

ORDER GRANTING PRELIMINARY INJUNCTION

1. Plaintiff Nintendo of America Inc. ("NOA") moved for a preliminary injunction pursuant to Federal Rule of Civil Procedure 65 and 17 U.S.C. §§ 1203 and 502, to enjoin Defendants from importing, marketing, or trafficking in products or devices that are primarily designed, and have only limited commercially significant purpose other than, to circumvent the technological security measures in Nintendo's DS video game systems (which include the Nintendo DS, Nintendo DS Lite, and Nintendo DSi) (collectively, the "Nintendo DS"). The accused devices are also marketed for use in circumventing the technological security measures of the Nintendo DS, and include products that are marketed and sold under the brand names AceKard, AceKard 2 for DSi, DSTT, DSTTi, DS Xtreme, Edge DS, EZ Flash, EZ Flash Vi, iTouch DS, M3 DS Real, N5 Revolution, ND1 Revolution, R4 DS Revolution, R4DS SDHC, R4i SDHC, and SuperCard DS One. The accused devices are collectively referred to herein as "Game Copiers."

The Court, having considered NOA's Motion and supporting Memorandum and Declarations, the Complaint, and the other records on file in this matter, and good cause appearing therefore, hereby GRANTS NOA's Motion for Preliminary Injunction. NOA is likely to succeed in showing that Defendants' importation, marketing, and sale of Game Copiers infringes NOA's intellectual property rights and violates the Digital Millennium Copyright Act, 17 U.S.C. §1201 et seq. ("DMCA"). It appears to the Court that the following Preliminary Injunction is necessary to ensure that NOA does not suffer irreparable harm pending trial of this action.

BACKGROUND

2. NOA is a Washington corporation headquartered in Redmond, Washington. NOA is a wholly-owned subsidiary of Nintendo Co. Ltd. ("NCL"), a Japanese company headquartered in Kyoto, Japan (collectively, NOA and NCL are referred to herein as "Nintendo").

3. Defendant Daniel Man Tik Chan (aka Morjn Chan or Morgan Chan) is an individual who resides in this District. Defendant Chan owns or serves as President or CEO of Defendant Inspire Electronics, Inc. Defendant Chan also does business as Inspire Technologies, Inspiretech Electronics, www.dselite.com, www.thedsdeals.com, and www.inspiretech.com. Defendant Chan is engaged in the business of importing, marketing, and trafficking in Game Copiers, and personally benefits from those sales.

4. Defendant Inspire Electronics, Inc. ("Inspire Electronics") is a corporation with an address of 20819 Currier Rd., Suite 200, Walnut, California. Inspire Electronics does business in this District and on the Internet as www.inspiretech.com, www.dselite.com, and www.thedsdeals.com, and is engaged in the business of importing, marketing, and trafficking in, among other things, Game Copiers.

5. The Defendants presently market and traffic in Game Copiers, including without limitation AceKard, AceKard 2 for DSi, DSTT, DSTTi, Edge DS, EZ Flash, EZ Flash Vi, iTouch DS, M3 DS Real, N5 Revolution, ND1 Revolution, R4 DS Revolution, R4DS SDHC, R4i SDHC, and SuperCard DS One.

6. Each of the Defendants is an agent of the other.

7. Defendant Inspire Electronics is the alter ego of Defendant Chan.

8. Defendant Chan owns, operates, or otherwise controls Defendant Inspire Electronics, personally participated in or had the right and ability to direct and control the wrongful conduct alleged in this Complaint, and derived direct financial benefit from that wrongful conduct.

9. NOA is likely to succeed in showing the following.

NINTENDO AND ITS PRODUCTS

10. Nintendo video game systems (such as the Nintendo DS, Nintendo DS Lite, Nintendo DSi, Game Boy, and Wii) and Nintendo games and characters (such as Super Mario Bros., Mario Kart, Pokémon, Donkey Kong, and Zelda) are well-known and popular.

11. The Nintendo DS video game systems are proprietary dual-screen handheld portable video game systems featuring a clamshell design with two LCD screens inside, the bottom one a touchscreen. Every version of the Nintendo DS has enjoyed immense popularity. A user plays a video game on the Nintendo DS by inserting an authorized game card into the Nintendo DS for game play. NOA does not authorize the copying or downloading of Nintendo DS Games onto devices, such as Game Copiers, that mimic authorized Nintendo DS Game Cards and bypass the security measures that protect the Nintendo DS. NOA does not authorize Nintendo DS Games to be copied onto personal computers or to be downloaded from personal computers to devices like Game Copiers.

12. Nintendo and its authorized licensees have created and published many popular video games specifically and exclusively for play on Nintendo video game systems (software games created by Nintendo and its authorized licensees for the Nintendo DS are collectively referred to herein as "Nintendo DS Games"). Nintendo DS Games can take years and millions of dollars to develop. NOA holds copyrights in and to Nintendo video game systems and many Nintendo DS Games.

NINTENDO'S EFFORTS TO PROTECT ITS INTELLECTUAL PROPERTY RIGHTS

13. The popularity of the Nintendo DS has made Nintendo the victim of intellectual property pirates, who benefit from Nintendo's innovation and investment by making unauthorized copies of Nintendo DS Games, or by creating (and profiting from) the means by which others can play pirated Nintendo DS Games on Nintendo video game systems. Game Copiers are one of the most popular ways to play pirated Nintendo DS Games on the Nintendo DS.

14. Illegal copying of video game software is an international problem of enormous proportion and great financial consequence for Nintendo. Nintendo has taken many steps to halt the illegal copying, marketing, sale, and distribution of Nintendo DS Games, including registration of the intellectual property rights in and to its video game systems and software, legal actions to stop individuals and companies from trafficking in Game Copiers, and security measures built into the video game systems themselves.

15. As to the Nintendo DS, the security employed by Nintendo includes both design-based and technological measures. Nintendo designed the Nintendo DS so that it will play only game cards that have a particular shape, with unique external geometry and electrical connections. The technological measures contained in the Nintendo DS implement a process by which commands and data are exchanged between the Nintendo DS and the game card that is inserted into the Nintendo DS for play. During the operation of the Nintendo DS security system and the game play that occurs if the security measures are passed, multiple copyrighted programs are repeatedly accessed and copied.

16. The technological measures of the Nintendo DS ensure that even if a user inserts into the Nintendo DS a game card that fits perfectly into the uniquely-shaped Nintendo DS card slot, unless the game card also has the software necessary to pass (or to circumvent) the Nintendo DS technological security measures, the game card cannot be played on the DS.

DEFENDANTS' INFRINGING ACTIVITIES

17. The Game Copiers that Defendants market and traffic in enable those who use them to download games to portable memory storage devices and to circumvent the technological measures employed by Nintendo to control access to its copyrighted works and to protect its rights as a copyright owner.

18. Game Copiers typically employ (1) a game card (referred to herein as the "Game Copier Card") that is substantially the same shape, and has substantially the same electrical connection configuration, as Nintendo's proprietary Nintendo DS Game Cards, so that a Game Copier Card fits perfectly in the Nintendo DS and resembles an authorized Nintendo DS Game Card; and (2) a memory device that can hold multiple pirated Nintendo DS Games and that is inserted into the Game Copier Card for game play.

19. When Game Copiers are used as Defendants instruct, they bypass Nintendo's technological security measures and gain the same access to the Nintendo DS, and to certain of NOA's copyrighted programs, as an authorized Nintendo DS Game Card would have.

20. Because Game Copier cards are specifically designed to accommodate portable memory devices that hold enormous amounts of data, hundreds of pirated games may be downloaded onto just one Game Copier card, enabling the user to play any of these pirated games on a Nintendo DS.

21. Nintendo has never authorized any Game Copiers, and the specific brands of Game Copiers sold by Defendants were not authorized by Nintendo or on its behalf.

CONCLUSIONS OF LAW

22. This Court has subject matter jurisdiction over the claims in this action and personal jurisdiction over the parties, and venue is proper in this Court.

23. The Nintendo DS security system is a technological measure that effectively controls access to a copyrighted work under sections 1201(a) and 1201(b) of the DMCA, 17 U.S.C. 1201 et seq. The Nintendo DS security system is a process that includes repeated transfers of information to gain access to the IPL and Boot Code programs, and to gain access to any copyrighted Nintendo DS Game for play on the Nintendo DS. The technological measures in the Nintendo DS control access to NOA's copyrighted works.

24. Game Copiers defeat the control over access to NOA's copyrighted works that is exercised by these technological measures. Game Copiers are designed to precisely mimic the shape and electrical connections of an authorized Nintendo DS Game Card. Game Copiers were designed for the primary purpose of bypassing the technological measures of the Nintendo DS, and have only limited commercially significant purpose other than to achieve such circumvention.

25. Absent an injunction NOA will suffer irreparable injury. The DMCA violations and copyright infringement induced by Defendants' Game Copiers cause NOA great harm. Just one Game Copier enables the use of portable memory with storage capacities that allow the Game Copier to act as a vehicle to play hundreds of copyrighted Nintendo DS games. The sale of just a single Game Copier enables the user of that device to engage in infringement of NOA's copyrighted software on a massive scale.

26. Game Copiers harm NOA's goodwill, detract from NOA's consumer base, and enable widespread illegal and undetectable copying. For a variety of reasons, including the scope and the underground nature of the intellectual property infringement involved, damages are an inadequate remedy.

27. Unless Defendants' infringement is immediately enjoined, others will be encouraged to import, market, and traffic in Game Copiers, which will accelerate and exacerbate the harm to Nintendo's intellectual property rights, the damage to Nintendo's position in the marketplace, and the harm to Nintendo's reputation.

28. NOA therefore has shown a combination of probable success on the merits and the possibility of irreparable injury if relief is not granted; or the existence of serious questions going to the merits and that the balance of hardships tips sharply in its favor.

PRELIMINARY INJUNCTION

IT IS HEREBY ORDERED that pending trial in this action, Defendants, their officers, agents, servants, employees, attorneys, any persons involved in the operation of the websites http://www.TheDSDeals.com, http://www.DSElite.com, and http://www.inspiretech.com, and any other persons acting in active concert or participation with any of them who receive actual notice of this Preliminary Injunction, be, and hereby are, immediately enjoined and restrained from:

a) importing, manufacturing, offering to the public, providing, selling, using, or otherwise trafficking in the following products: AceKard, AceKard 2 for DSi, DSTT, DSTTi, Edge DS, EZ Flash, EZ Flash Vi, iTouch DS, M3 DS Real, N5 Revolution, ND1 Revolution, R4 DS Revolution, R4DS SDHC, R4i SDHC, and SuperCard DS One;

b) importing, manufacturing, offering to the public, providing, selling using or otherwise trafficking in any technology, product, service, device, component or part thereof (including Game Copiers), that (i) is primarily designed or produced to circumvent a technological measure that effectively protects NOA's rights as a copyright owner, or controls access to any work to which NOA holds a registered copyright; or (ii) is marketed by Defendants or others acting in concert with them for use in circumventing a technological measure that effectively protects NOA's rights as a copyright owner, or controls access to any work to which NOA holds a registered copyright;

c) exporting, shipping, transferring, returning, destroying, concealing or otherwise moving, storing or disposing of any Game Copier, and

d) exporting, transferring, destroying, deleting, modifying, concealing, or spoliating any Document or record relating to Defendants' importation, sale, marketing, or other trafficking in Game Copiers ("Document" includes papers, supplier names and addresses, shipment records, books of accounts, receipts, specifications, packaging and containers, and other hard copy business records as well as all electronic records such as computer tapes, computer disks, emails, and other electronic data). Defendants must immediately suspend any automated processes or document retention protocols that would result in the loss or destruction of any such Document.

IT IS HEREBY ORDERED that NOA shall post a bond in the amount of $50,000 to secure payment of any damages sustained by Defendants if they are later found to have been wrongfully enjoined.

20090721

© 1992-2009 VersusLaw Inc.



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