Federal authorities on Thursday dropped their prosecution of a southern California man charged with two felonies for modifying Xbox 360 consoles, following a severe berating by a judge and an admission they made procedural errors, Wired.com reported.

The criminal trial against 28-year-old Matthew Crippen was the first to test how anti-circumvention provisions of the Digital Millennium Copyright Act applied to game consoles. The 1998 law prohibits the hacking of technology intended to prevent access to copyrighted material. Matthew Crippen of Anaheim, California, was arrested in 2009 on charges related to modifications he made to the optical disc drives of two Microsoft consoles.

According to Wired.com, which was providing gavel-to-gavel coverage of the trial, opening statements were delayed on Wednesday after US District Judge Philip Gutierrez blasted prosecutors for a series of missteps. They included alleged unlawful behavior by government witness Tony Rosario, who secretly videotaped Crippen as he accepted $60 to modify an Xbox. The judge also lashed out at prosecutors' proposed jury instructions that he said were harmful to the defense.

“I really don’t understand what we’re doing here,” Gutierrez was quoted as telling prosecutors.

The government responded by asking for a recess, but later pressed on with the case.

On Thursday, Rosario, an undercover agent for the Entertainment Software Association, testified that during his 2008 meeting with Crippen, the hacker inserted a pirated video game into the modified console, a key detail in the prosecution that had never been aired before. After defense attorneys objected, the prosecution admitted they first became aware of the new claim on Sunday but had failed to alert Crippen's defense team.

Assistant US Attorney Allen Chiu then agreed to dismiss the charges in light of the omission and “based on fairness,” Wired.com reported.

The dismissal comes a week after Gutierrez said Crippen wouldn't be allowed to use fair use grounds to defend himself. The ruling was based on his determination that the fair use exception – which takes into account whether the use is for nonprofit educational purposes or only a small portion of the overall work is used – was “irrelevant” to the DMCA's anti-circumvention provisions.

The two-year odyssey, while turning out well for Crippen, is decidedly less clear for other hardware modders. A ruling that fair use exceptions don't apply to anti-circumvention provisions, should it be widely adopted, could be disastrous to those who believe they should have the right to hack the hardware they bought and own. Crippen's case didn't necessarily fit well into that argument since he was accused of running a business that modded Xbox optical drives to make them capable of running pirated or unauthorized games.

Wired.com's article is here. ®