In the U.S., it seems that, in general, copyright owners have a prima facie case against users' modifications and the issue is about whether users can establish a fair use defense. For example, in the case of Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 964 F.2d 965 (9th Cir. 1992), the producer of Genie Video Game Enhancer, which allows players to alter the video game, the court held that consumer's temporarily altering the video game does not create derivative work and that the fair use doctrine is applicable for the usage of the Enhancer for personal enjoyment (Note, however, that the case is distinguished by Micro Star v. FormGen Inc., 154 F.3d 1107 (9th Cir. 1998).). A not identical, but similar case was litigated in Japan. The Konami v. Spec Computers, 55-1 Minshu 87 (February 13, 2001), or Tokimeki Memorial case.
Konami, a major games company in Japan produced a game called "Tokimeki Memorial." It is a kind of dating simulation where the hero (which the player controls) communicates with female classmates in a high school and if the hero satisfies certain requirements such as a certain amount of artistic skills, sport skills, intelligence and other parameters, the hero will receive a declaration of love from the heroines at the time of graduation and have a happy ending of the game. Many people played the "original" version of the game, but some people felt that meeting the requirement for a happy ending is not easy. Also, under the original version, it takes some time and effort to attain a certain amount of parameters until the female student characters come up during the story (that means that at the beginning of the game, the hero can only meet with male classmates until the time the hero has enough parameters) and some people felt that it was not a good idea. Spec Computer, the defendant, sold special memory cards with which the parameters information are already recorded. By making use of the memory card, game players can easily meet the requirements and receive a declaration of love. Moreover, because of the high parameters, the players can meet with female characters at the beginning of the game, which was originally impossible. Konami sued Spec Computer for damages.
Konami could argue the creation of derivative work but they did not. Rather, Konami chose the route of moral rights infringement, which seems to be easy in Japan. Different from the U.S., in Japan the moral rights of the authors are widely protected. You may think it odd to think of the moral rights of game software authors, but I believe that Japan imported a European copyright law, which embodies the so called "personhood" theory of copyright.
(Right of preserving the integrity)
Article 20. (1) The author shall have the right to preserve the integrity of his work and its title against any distortion, mutilation or other modification against his will.
Article 20 of the Japanese Copyright Law provides the rights of the author to preserve the integrity of the work. The Supreme Court found that the memory card changed the parameters of the hero and as a result the story of the game was narrated beyond the originally planned scope and thus "modifi[ed]" the story.
Spec Computers argued that it was not they but the users who were altering the story. However, the supreme court did not buy the argument. The court found something similar to the American concept of inducement theory held in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). Spec Computers sold the memory card knowing that users could actually use the memory card to modify the story. The court ruled that Spec Computers indued a third party (namely, the users) to infringe the copyright of Konami and were thus liable for their contribution.
As the facts are different between Nintendo and Konami, I cannot conclusively say that the same thing as Konami would happen in Japan if the Nintendo case were to be brought to Japan. But I think this is an example of an interesting contrast between Japanese and American copyright laws, especially on moral rights.
March 14, 2013: I encountered an interesting article on Grokster, which you may want to read.
DISCLAIMER: "IT Law issues in Japan" only provides general information about Japanese information technology law and does not, under any circumstances, constitute legal advice. You should first obtain the advice of professional legal counsel who is qualified in Japan before acting or refraining from acting based on this blog.
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