Sony has recently filled a lawsuit against the online retailer ShopPSJalibreak, for selling a mod-chip that allows its users to bypass the DRM on Sony's PlayStation 3, giving them the ability play installed games on their hardrive without the need for an original disc.
Sony claims that selling the device breaches copyright laws. Sony is also also seeking a junction against the retailer's company, Zoomba LDC in order to block any more further sales of the device, claiming the product commits Trademark Infringement and violates the Digital Millennium Copyright Act.
As of now, Sony has succeeded in retrieving an injunction from the court, placing a temporary block on the sales of the device in Australia. The Australian developers responded by claiming that "[these were] scare tactics on Sony's part," and continued to argue that the device doesn't contain any content in violation of copyright - and therefore cannot be illegal. Sadly (for Sony), thanks to the internet, this will be a never ending issue - because copycat hacks have already started popping up.
Granted, I am no lawyer, but the device does sound like its breaking copyright law. Obviously the hack is ingenious, having the ability to play games on your PS3 without the need for a disk can easily become an instant way to save money.
Since imitations of the hack are already popping up throughout the internet, Sony is only temporarily beating back the storm with lawsuits. The best bet, and likely outcome, will be to take a tip from Apple and Nintendo -- and just release a firmware update disabling the hack's functionality.
Maybe if the next iteration of the PlayStation, was to go purely digital this problem wouldn't arise again.