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In the first case of its kind, a California video game maker is suing an entire community of software tinkerers for reverse engineering and modifying Xbox games that they legally purchased.

Tecmo, Inc., a subsidiary of a Japanese company, announced a federal lawsuit Wednesday against Mike Greiling of Eden Prairie, Minn., and Will Glynn from Davie, Fla, for alleged violations of US copyright law and the controversial Digital Millennium Copyright Act.

According to the complaint, Greiling and Glynn were webmasters of ninjahacker.net, an online forum dedicated to creating custom content and modifications for certain video games. Also included in the suit, filed January 21st in Illinois, are up to 100 anonymous users of the site, whose identities the company vowed to unmask.

"[W]e believe it is our duty to uphold the integrity of our work," said John Inada, general manager for Tecmo, in a statement. "Hacking of this kind will not be tolerated and we intend to take all necessary measures to protect our intellectual property."

The lawsuit claims the ninjahacker.net users decompiled the code to several Tecmo titles, including Ninja Gaiden, Dead or Alive 3, and Dead or Alive Xtreme Beach Volleyball, and figured out how to create their own "skins" that change the appearance of game characters. They swapped modding techniques and hundreds of custom skins over the website message board.

The defendants are not accused of pirating the games, and the modifications and methods at issue appear no different than those employed by hobbyists on other video games - from Halo to the Sims 2 --for years. But according to the lawsuit, Tecmo suffers in the practice anyway.

"Most of the skins posted on the Message Board by defendants show Tecmo Characters with appearances that are different from the original Tecmo designs," the complaint notes. "Several... are designed to make Tecmo Characters appear naked."

The harm isn't just to the wholesome values of Dead or Alive Xtreme Beach Volleyball, hinted Tecmo spokesperson Melody Pfeiffer. There's a principle at stake. "Hackers, if they're allowed to do this kind of thing, will be allowed to hack into any game, anywhere," Pfeiffer warns. "We spent millions of dollars to develop these games, and people are coming in and changing the code to their liking, and that's illegal."

Jason Schultz, an attorney with the non-profit Electronic Frontier Foundation, couldn't disagree more. "This complaint is absurd," said Schultz. "The law allows for fair use of other people's copyrighted works without any permission needed, and one of the key things that you're allowed to do is make copies in order to reverse engineer and understand how they work."

Everything the complaint accuses the defendants of doing is completely legal under well-established law, says Schultz. "If they'd offered a competing video game with Tecmo's code in it, it's a legal issue. But here, they have simply offered a way for legitimate game owners to modify how the game looks on their screen. Its like a home customization kit. It's not competing in any way with Tecmo's product. In fact, you have to own Tecmo's product to use this stuff."

Tecmo's Pfeiffer says the company is seeking $1,000 to $100,000 in damages for every custom skin swapped over the website.

"The key issue is going to be, do [the defendants] have the resource to fight back against a company that apparently has quite significant revenues," says Schultz.

A message on ninjahacker.net reports the site was taken down on January 25th, a few days after the lawsuit was filed. Greiling did not return a phone message Wednesday. In a telephone interview, Glynn said he hosted ninjahacker.net as a favor to Greiling, but that he had no other interaction with the site or its users. "Basically, I was hosting this website," Glynn says. "I don't own an Xbox and I wasn't into modding or skinning things."

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