The Australian High Court has ruled that mod chips that allow consoles to play out-of-region games and games that are being played off of backup discs are legal. The heart of the ruling is that the law against breaking software locks (the anticircumvention law) only prohibits breaking locks that prevent infringement, not merely those that prevent access. Since region control and preventing backup aren't part of the rightsholder's copyright monopoly, the presence of software locks to accomplish these ends is not protected under Aussie law.
The free trade agreement which Australia signed with the US last year and which came into effect this year stipulates that copyright laws here have to be aligned with those in the US by 2007.
According to the FTA, consumers cannot circumvent "effective technological measures" that control access to a tech device.
All six judges of the High Court held that widely used mod-chips are legal and that playing a game on a consumer's machine does not constitute an illegal copy.