Nintendo v Yuzu: the legal boundaries of games console emulators

On February 26 2024, Nintendo of America (Nintendo) filed a lawsuit in the state court of Rhode Island against Tropic Haze, the developer of Yuzu, an emulator for the Nintendo Switch games console (Yuzu). In the complaint, Nintendo accused Yuzu of illegally bypassing software encryption measures designed to prevent unauthorised copies of games from being played on non-Switch hardware and “facilitating piracy at a colossal scale”.

Nintendo alleged that these actions caused “manifest and irreparable” harm in violation of Article 1201(a)(2) of the Digital Millennium Copyright Act (DMCA) and Title 17 of the US Code, and sought, on these grounds:

• Monetary damages of $2,500 for each violation of the anti-circumvention and anti-trafficking provisions of the DMCA;

• $150,000 for each copyright infringement; and

• The permanent shutdown of the emulator and its related services to prevent further infringement of Nintendo’s intellectual property (IP) rights.

However, in just over a week, things took an unexpected turn. On March 4, according to documents jointly filed to the court, Yuzu fully accepted Nintendo’s terms and agreed to:

• Pay $2.4 million in damages to settle the lawsuit;

• Immediately cease development and take down the Yuzu emulator in its entirety;

• Commit to permanently ceasing Yuzu’s development; and

• Transfer the domain name yuzu-emu.org to the Nintendo website.

Since its introduction in 2018, Yuzu had gained immense popularity as an emulator focused on the Nintendo Switch. As of March 2024, its servers on the social software Discord had more than 200,000 users.

This article will analyse this case and the issue of how to define and push the boundaries of the legality of games console emulators from three aspects:

• The legal risks of games consoles;

• Prior jurisprudence; and

• Nintendo’s litigation claims in the case.

Console emulators are a class of software tools that simulate the hardware and operating system environments of games consoles, making it possible to run games on different platforms that would otherwise only run on a particular console. Their history can be traced back to the mid-1990s and what is now known as the “games console trio” – namely, Sony, Nintendo, and Microsoft – with a first generation of machines. Since this period, the improvement of PC performance and the rise and popularisation of graphical operating systems has provided strong support for the growth of console emulators.

The initial console emulators were made by individual programming enthusiasts, were lower in performance, and had poorer reproduction of games. With the passage of time, however, the simulators have gradually evolved and made significant progress.

The emergence of console emulators has made it possible to cross the gap between console and PC gaming, but this technological advancement is not a boon to everyone. Firstly, the emergence of console emulators has made games consoles replaceable, and the purchase of a games console is no longer a requirement for enjoying the fun of gaming. Secondly, players have a natural preference for clearer and smoother game graphics. The graphics performance of high-end PCs may be much better than that of games consoles, allowing them to render game images with higher resolution and frame rates. The combination of PCs and emulators is therefore favoured by many players.

The gaming market is large and lucrative, and emulators, which are generally viewed as a substitute for games consoles, are likely to have a negative impact on console sales.

There are two major legal risks associated with games console emulators.

The first is that during the development process, the ultimate function of the emulator is to reproduce game graphics and interactions, so it is critical to reproduce the BIOS (Basic Input/Output System) of the original hardware. The legality of an emulator program is usually protected by law, provided that it does not include any code from the system it is trying to emulate and that the re-implemented code is the product of complete reverse engineering.

Secondly, the legality of game ROMs (read-only memories) run by emulator software involves copyrighted game material during the software’s operation. While it is perfectly legal for an individual in possession of a legitimate copy of a game to legally obtain the key and use the game on an emulator, the source of the key is difficult to argue, and pirated decrypted files involving illegal ‘cracking’ (removing copy protection from a piece of software) or distribution are prone to cause confusion and infringement issues. Both these points will be analysed below.

The turn-of-the-century case of Sony Computer Entertainment v Connectix Corporation (the Connectix case) is generally regarded as a landmark that delineated the boundaries of the legality of console emulators. In this case, the US Court of Appeals for the Ninth Circuit ruled that copying a copyrighted BIOS during the development of software for an emulator does not constitute copyright infringement but is fair use.

In July 1998, Connectix began developing Virtual Game Station (VGS), a Macintosh software application that emulated the hardware and firmware of Sony’s popular PlayStation video games console. This allowed VGS users to play games developed for the PlayStation on Macintosh hardware, with a Windows PC-compatible version planned for release at a later date.

Connectix’s strategy was to develop its own BIOS by reverse engineering the PlayStation’s BIOS firmware, firstly by developing a hardware emulation using the unaltered BIOS, and then developing its own BIOS using the original firmware as a debugging aid. During the development process, Connectix contacted Sony to request “technical support” to complete the VGS, but this request was ultimately denied in September 1998. Connectix completed the development through reverse engineering and officially released the VGS in January 1999. The VGS makes it possible to run licensed Sony games on Apple systems, which was instantly a huge hit with the market.

In response, Sony filed a lawsuit on January 27 1999 against Connectix. Initially, Sony’s request was upheld and it succeeded in obtaining an injunction preventing Connectix from copying or using Sony’s BIOS code in the development of the VGS and from selling the VGS. However, this decision was quickly reversed as Connectix appealed. In the second trial, the court cited, to a large extent, the case of Sega Enterprises Ltd. v Accolade, Inc. (1992) to support the proposition that “copying for the purpose of reverse engineering is fair use”.

Under the section of US law dealing with copyright and fair use, Section 107 of Title 17 of the US Code: “Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include –

• the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

• the nature of the copyrighted work;

• the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

• the effect of the use upon the potential market for or value of the copyrighted work.”

In this case, to determine whether Connectix’s reverse engineering was fair use, the court conducted a detailed examination of the above four elements.

With respect to the purpose and nature of the use, the court found that the ultimate purpose and nature of Connectix’s use of Sony’s BIOS, which was to create a new platform for Sony PlayStation games, was a legitimate purpose, and that there is only one means of achieving that purpose – namely, reverse engineering – and thus it could be considered fair use.

In terms of the nature of the copyrighted work, the court held that the PlayStation firmware was subject to a lesser degree of copyright protection because it contained functional elements that could not be examined without copying.

As regards the content and quantity of the use, since the VGS did not contain any Sony-copyrighted BIOS, the court found this standard to be of little significance in this case.

Finally, with respect to the effect of the use on the potential market, the court found that Sony understandably sought control over the market for devices capable of playing the games it produced or licensed, but that the rights granted by copyright law did not imply a natural monopoly position. Although the VGS may have affected sales of Sony’s PlayStation console, it innovated in the dimension of allowing PlayStation games to be played on a Macintosh, which made it a legitimate competitor of Sony, and therefore Sony’s economic loss as a result of such competition was not a legitimate reason to deny fair use.

Based on this analysis, the Court of Appeals for the Ninth Circuit reversed its decision and lifted the injunction against Connectix. Sony then unsuccessfully attempted to appeal to the Supreme Court, and the two companies reached an out-of-court settlement in 2000.

The significance of this case lies in its promotion of competition by clarifying the scope of “fair use”. It establishes that an emulator’s reverse engineering of a functionally similar product that does not “actually contain any copyrighted BIOS source code” fulfils the fair use requirement of Section 107.

The Connectix case broadened the boundaries of the legality of emulators, and as an important precedent, its holding was cited for a long time in cases, such as Sony Computer Entertainment America v Bleem, contributing to the emergence of the gaming console emulator industry. There has since been an explosion of performance- and functionality-optimised console emulators, including PPSSPP, Citra, Dolphin Emulator, and Yuzu.

However, host manufacturers have never given up on asserting their rights and have begun to employ a variety of legal weapons beyond litigation. A recent example is Dolphin Emulator, against which Nintendo issued a warning letter in 2023 based on the DMCA. Nintendo claimed that “the emulator illegally circumvents Nintendo’s protections and runs illegal copies of games. The use of illegal emulators or illegal copies of games harms development and ultimately stifles innovation. Nintendo respects the IP of other companies and in turn expects other companies to do the same.”

The warning letter proved so effective that the Dolphin Emulator project team announced a few days later that it had “indefinitely postponed” a release on Steam Store, the digital distribution service.

There were two main arguments in Nintendo’s brief in the Yuzu case.

Firstly, Yuzu illegally bypassed software encryption measures designed to prevent unauthorised copies of games from being played on non-Switch hardware, thereby “contributing to piracy on a massive scale”. Specifically, Nintendo asserted that Yuzu violated the DMCA’s prohibition against circumventing software protections by dynamically decrypting runtime-encrypted Switch game ROMs using ‘prod.keys’ (product keys used by a Switch to decrypt games before running them) obtained from legitimate Switch hardware.

As explained in the preceding section, the Connectix case established the right to use reverse engineering techniques to emulate one piece of hardware on another, and the vast majority of emulators are protected by this legal precedent. In this regard, Yuzu’s strict ‘bring your own decryption’ model minimises compliance risks, unlike Dolphin Emulator, which included the Wii Common Key in its open-source code. However, in its lawsuit, Nintendo referenced a quick-start guide available on Yuzu’s official website, which detailed how to “hack” into the Switch to dump decryption keys and/or game files to “start playing games with Yuzu”. Nintendo considered this to be a “blatant admission by Yuzu’s developers that using Yuzu requires hacking or breaking into the Nintendo Switch”.

In addition, on Yuzu’s officially operated Discord server, emulator developers and users discuss how to run copyrighted games on the emulator, and publicly available telemetry data shows that the developers were “aware” that the emulator was widely used to run pirated games.

Secondly, Nintendo argued that Yuzu contributes to piracy on a large scale. In the lawsuit, it stated that the vast majority of Yuzu users use Yuzu to play pirated games downloaded on Yuzu, and Yuzu knows this. For example, leaked copies of The Legend of Zelda: Tears of the Kingdom were downloaded one million times in the week and a half prior to the game’s release, a period in which “thousands of paying members” joined Yuzu’s Patreon account. Yuzu is therefore considered ‘secondarily liable’ for ‘inducing’ this infringement of IP rights.

Although the settlement of this case did not establish a binding precedent under stare decisis, it was significant in another sense. The swift resolution of the case and Yuzu’s acceptance of Nintendo’s allegations have caused the gaming industry and the IP rights field to reflect on the legal and ethical risks associated with the development and use of emulators. For games console manufacturers, this highlights the legal challenges they face, particularly in the digital age, in protecting their hardware and software from the unauthorised use of emulators.

Under precedents and regulatory frameworks, the actions of emulator developers and users are often controversial because they may both promote the gaming industry and infringe on the rights of copyright holders. On the one hand, Nintendo’s legal action sends a clear message that it is committed to protecting its copyrighted works and fighting digital piracy. On the other hand, emulators mostly use open-source code, and Yuzu’s offline status does not block the availability of similar, or even homogeneous, emulators.

In fact, the removal of Yuzu has exacerbated the confrontation between console manufacturers and emulator service providers, with Nuzu, Suyu, and other alternative versions of Yuzu appearing just hours after it was removed. Suyu, while announcing that it would learn from Yuzu’s experience and strengthen compliance to avoid lawsuits, openly ‘declared war’ against Nintendo on its GitHub homepage.