Sony claims victory in PS2-is-a-PC battle

Court sided with plaintiff, not European Commission

Sony today reiterated its view that it has prevailed in its attempt to force the European Commission (EC) to treat the PlayStation 2 as a computer and not a games console for the purpose of calculating import duty on the machine.

Sony's statement follows media reports that the EC had won the legal battle, begun in October 2001 and which came to a conclusion this past Tuesday when the European Court issued its verdict.

A Court spokesman initially detailed Sony's victory - then, bizarrely, made a 180-degree turn and stated that the judgment had gone the EC's way. A number of news sources subsequently said the spokesman had first misreported the Court's ruling.

However, the final judgement seems clear enough: according to the text of the verdict, the Court annulled an EC regulation - number 1400/2001 - which effectively classified the PS2 as a console.

The Tribunal also ordered "the defendant to pay all the costs".

Regulation 1400/2001 was issued on 10 July 2001, and contradicted a 12 June 2001 decision taken by British Customs & Excise that the PS2 should be classified as a computer under the definitions laid down in European law. As such it is zero-rated for import duty - unlike a games console.

For the purposes of calculating import duty, the European regulations offer a number of criteria by which a device may be considered a computer - specifically, an "automatic data processing machine". The key factor in the PS2 case was whether the machine can be programmed by customers and users. Sony contended that the availability of a version of Linux for the PS2, along with appropriate programming tools, ensured the machine is indeed freely programmable.

The EC argued that since the PS2 is primarily used for gaming, it should be considered as such for the purpose of calculating import duty.

The Court agreed with the EC's logic, but ruled that since UK Customs had already decided that the PS2 should be counted as a computer and not a console - a judgment held to be binding upon other European Community members - that's how the machine must now be regarded. The EC erred in law when it drew up the July 2001 regulation, which was intended to reverse the UK decision.

The Court's annulment of the regulation that enshrines the EC's judgement now paves the way for Sony to recover from the EC the duty it has paid since July 2001 - a figure in the "low tens of millions", according to a Sony spokesman. In the meantime, the EC has two months to appeal against the Court's verdict. ®

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