Lot of hot takes in this thread. There is a key distinction between owning hardware and software, modifying that software legally (and illegally) under copyright law, the DMCA, and fair use doctrines, what copyright exactly applies to in the US, what countries have signed onto copyright conventions respecting the US (or Japan's laws) and many other nuances.
The key thing is that copyright under the US constitution's regime provides the copyright holder the ability to reproduce work you own the copyright in yourself and prevent others from recreating those same works. That includes software in its executable form, artwork, sprites, and even individual code portions since US Supreme Court has never definitively stated whether computer code is copyrightable. But it extends to save files, digital games, physical games, etc.
With respect to the gentleman jailed in Japan, he apparently bought Switches and then loaded them with pirated software. Just in the same way buying a book doesn't allow you to operate a printing press and make copies, buying a video game doesn't allow you to modify its contents and spread it all over the internet or to reload it onto compatible modified hardware that you bought.
Once you get into selling others copyrighted content, all bets are off. Just because you buy a video game does not give you the right to edit it and sell it in a derivative form, such as romhacks. Derivative works that use copyrighted material are not even covered themselves by copyright. See
Micro Star v. FormGen Inc. 154 F.3d 1107 (9th Cir. 1998)
Modifying hardware and software is a different story, and sometimes this is permissible even from a commerciality pespective. But you cant transfer others copyrighted material, even for free. If anyone is interested in these issues, they should read these cases:
Midway Manufacturing Co. v. Artic International, Inc., 704 F.2d 1009 (7th Cir. 1983) (Video games are covered by copyright, distributed arcade ROM speedup hacks of Pac-Man and Galaxian violated copyright law)
Galoob v. Nintendo, 9th Circuit 1992 (Game Genie editing NES cartridges found legal under fair use)
Sega Enterprises Ltd. v. Accolade, Inc., 977
F.2d 1510 (
9th Cir. 1992) (Unlicensed software written for Sega Genesis that reverse engineered and bypassed TMSS lockout system found legal under fair use)
Sony Computer Entertainment v. Connectix Corporation, 203
F.3d 596 (2000) (Using copyrighted Playstation BIOS found legal under fair use)
The nuances are key in copyright and fair use law, and there is a lot of litigation under the road as to why a majority of game sales from the major companies have switched to digital, and why the physical cartridges have become very difficult to dump or otherwise alter as opposed to the NES, SNES, and Genesis days. I may be able to reverse engineer a console so that it can run my unlicensed code, and then design a piece of physical hardware to modify that code to change features of the game, but I can't repackage someone else's material and redistribute it without their permission.
At the end of the day, the video game companies are not just protecting their sales, they are protecting their artistic and play choices in a sense. If I'm a game developer and I want Mario to have 5 lives and him to be voiced by someone other than Charles Martinet, I'm not going to just allow someone to modify the code and replace the voice in Super Mario Wonder with soundbites from Charles Martinet in New Super Mario Bros U Deluxe and repackage it and sell it to others.