I just found out from Wikipedia by searching "modchip". USA legality under DMCA The Digital Millennium Copyright Act (DMCA) cites that circumvention devices, including, but not limited to mod-chips, are illegal, because the device circumvents the copy-protection features of their host systems. In reality, the mod-chips themselves are not illegal, they are just pieces of hardware inserted into the gaming console to override system defaults. The software is what is illegal because it was made to perform illegal actions such as decoding DVDs and copying games onto the Hard Drive. In early 2003, iSONEWS.com was raided by the FBI, presumably for selling Xbox modchips with pre-flashed BIOSes. The impetus for the raid was likely the fact that iSO News was distributing hacked versions of the original Microsoft BIOS, thus redistributing Microsoft's copyrighted software without permission. Many companies are now selling modchips without any possibly DMCA-infringing BIOS code loaded onto the EEPROM portion of the chip module, or loading it with a totally legal BIOS containing none of the manufacturer's copyrighted code (for example the Cromwell BIOS developed by the Xbox Linux Project). It is then up to the customer to separately obtain a copy of their desired (possibly illegal) firmware and then to flash it into EEPROM. On September 11 2006, Judge Claudia Wilken of the U.S. District Court awarded $3,750,200.00 in damages against corporate defendant Divineo, Inc. Divineo is a major international distributor of modchips, and the HDLoader Software for which it was sued by the ESA.