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Mod chip crackdown at Christmas

From Kristie Lu Stout
CNN Tech correspondent

Nintendo, Sony and Microsoft have all filed a lawsuit against Lik Sang for selling mod chips
Nintendo, Sony and Microsoft have all filed a lawsuit against Lik Sang for selling mod chips

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Denying charges of software piracy, an online retailer is taking on video-game makers in a fight over how much gamers can alter their systems. CNN's Kristie Lu Stout reports (December 16)
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HONG KONG, China (CNN) -- Boxes at's warehouse in Hong Kong hold everything a hard-core gamer would want -- video game software, controllers, cables.

"Since this morning actually the orders are coming back to us, and the payments also. So things are improving," says Pascal Clarysse, marketing manager of

Improving, since the online retailer was shut down. On September 16, Microsoft, Nintendo and Sony filed a lawsuit against Lik Sang in the High Court of Hong Kong.

The offense? Selling mod chips, a device used to play copied games. "Modification," tinkering with a game console to play legally and illegally copied software, is a practice that has turned into a legal landmine for the video game sector.

Back in business

Lik Sang, one of the world's leading distributors of mod chips, is now back in business, under new management and no longer selling the controversial product.

But as Clarysse braces for the holiday rush, founder Alex Kampl is on the sidelines -- prepping his legal defense.

"This is an absolute crackdown on the technology," says Kampl.

"And it doesn't only happen to Lik Sang International Limited in Hong Kong now. It happens everywhere all around the world."

The use of mod chips has bothered the video game business for years. Some believe it encourages game play, others view it as a violation of the Digital Millennium Copyright Act, or DMCA.

Losing sales

Under the DMCA, if a game maker uses a technological measure to protect a copyrighted work, it is illegal to try to break it.

Sony and Nintendo declined to comment on the issue, but Microsoft told CNN: "Entertainment software piracy and the modification chips ('mod chips') that enable it, pose a serious problem for the video game industry."

A problem that can translate into millions of dollars of lost software sales.

"They've set a business model that relies on making money on game sales rather than box sales. That's part of their problem," says Dan Gillmor, tech columnist at San Jose Mercury news.

"It's as if the TV was sold to you at a loss and they're going to somehow make up the money on the programming. They'll be very anxious to make you watch only the certain kind of programming."

'Regarded as a pirate company'

For Lik Sang, there is cause for hope. Earlier this year Sony sued a mod chip retailer in Australia under the country's version of the DMCA. The court ruled in favor of the retailer.

But Kampl is confident he can fight the video game Goliaths, while Clarysse gets the shipments out.

"At the moment, we're more regarded as a pirate company or something, which we are absolutely not," says Clarysse.

"And the fan base we had was already there before the mod chips, before the court case, before all the press interviews and all that stuff."

It also has a reputation to maintain. Lik Sang has serviced 200,000 customers, die-hard gamers who want their consoles in time for Christmas.

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