Thanks to Derek Slater for pointing out an incredible decision in the Italian courts (Mod-Chippers Win in Italian DMCA Case). I'm not terribly familiar with Italian law, so I have no idea how important this decision is, but it is wonderfully drafted, though lacking the copious footnotes of a US decision. The decision, which was first noted by IP Justice, essentially defends mod-chipping of consoles vs arguments based on the European version of the DMCA as well as on copyright grounds (Italian Court Rejects First EU Copyright Directive Seizure). Read the decision (English translation by Electronic Frontiers Italy) here: Tribunal of rehearing of Bolzano. The original Italian here: Tribunale di Bolzano.

The arguments are very straight forward, mostly hinging on the rights of the consumer to make whatever private uses of the device they want. Although it is acknowledged that mod chips can be used for playing infringing versions of games, that is dismissed out of hand in light of the numerous legitimate uses enabled, such as avoiding region coding, allowing third party game developers, making backup copies and using the PlayStation as a computer.

Indeed, the court seemed most enamored of the use of consoles as full-fleged computers. For example, there is this quote (something similar will eventually arise in US courts as well):

Ironically, [it is Sony who first] had supported strongly the thesis that a playstation is a true computer and not just a game console, when asked by the EU to pay for custom duties imposed over the consoles (while computers aren’t subjected to this tax).

Ooops. Avoid those taxes, create an opening for the argument that the PlayStation is a computer (the use of which should be unrestricted). Later, the decision notes that:

But if the device [Xbox], with a few hacks, may run Linux, why in the world shouldn’t a user be free of use it in all the ways he likes?

Good stuff. Unlikely to be persuasive to a US judge, but great news for the Europeans.