Legal Issues
It is unusual for copyright holders to object to fan translations. This is probably largely because the electronic games in question are generally not considered commercially viable in the target language, so the translation is rarely seen as a source of lost revenue.
However, in 1999, one well-known incident in which copyright holders took action involved the translation of a Windows game maker called RPG Maker 95. The Japanese company ASCII had their lawyers send a cease and desist e-mail to the translation group KanjiHack Translations. However, unlike most translation groups, KanjiHack was caught linking to a site to illegally download the entire then-recently-released RPG Maker 95 software (including a copy-protection crack). The group shut down immediately but others eventually finished the project. Titles from the RPG Maker series were eventually localized and officially released in the US for the PlayStation and PlayStation 2.
A popular belief in the fan translation community is that distributing only a binary patch, which must be applied to the full, original game, is legal. The reasoning is that the patch only contains the new data and directives for where it is to be placed, and does not have the original copyrighted material included in any form, and therefore it is useless unless the user applies it to a (copyrighted) ROM, the acquisition and legality of which they are left completely accountable for. This belief is untested in court. Regardless, the patch must still contain a translated script that is derived from the copyrighted script of the original, but this anti-software piracy attitude by the fan translation community may have convinced copyright holders to, by and large, turn a blind eye.
There have never been any legal cases involving fan translation issues, and such projects have been relatively widespread over the Internet for years. In recent years, anime fansubbers have started to attract the attention of some American anime distributors; and as of 2004 one manga scanlator has been handed a cease and desist by a Japanese company, but most of this attention has been restricted to polite entreaties asking fan translators to refrain from dealing with licensed material. As with the fansub and scanlation scenes, most sites devoted to translation hacks will not acknowledge projects that compete with commercially available localizations, and respected groups will generally attempt to steer clear of projects that may see localization.
Read more about this topic: Fan Translation (video Gaming)
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