Game developers don’t always rely on their own intellectual property when making a game. They don’t always develop their own game engines or tools software, or compose original soundtracks for their games, or even use characters and stories they’ve created.  Sometimes developers rely on third party intellectual property, or IP developed by someone else. To obtain third party IP, you need a license. Knowing what you can and cannot do with those licenses is mandatory. Understanding what you can and should negotiate is equally important. I will cover a few of the basics, but by no means all, in this series.

Music

Music licensing usually happens in one of two ways. You either only need the music and lyrics of a song and will re-record your own version or you need the original recording as performed on an album. In every case, there are three primary concerns you need to consider when dealing with music licenses: the fee, the scope of the license (how you can use the music) and the duration.

Let’s take a fictional example. Mercedes is the President of Bottom Line studios and is in the process of developing an MMO for teens and young adults called “Rebel Garden”*. She wants to incorporate some “Guitar Hero”-like mechanics in her game that allows kids to jam out online. She’s also incorporating listening parties and listening stations all over Rebel Garden that allow both indie and signed acts to promote their latest releases. Before she can do any of this she’ll need a licensing system in place to get all of the music she wants to include in Rebel Garden.

Music Licensing Basics

Copyright law treats music in a confusing way by providing two types of protection in a recorded work. First, there’s the musical composition. This is the melody, arrangement, and lyrics of a song. Next, there’s the sound recording. This is the specific recording of a song. So any recording in any format, whether physical or digital, will have at least two layers of copyright protection. What kind of license you need depends heavily on these two forms of protection.

Sync License

 Let’s go back to Mercedes and Bottom Line. For Rebel Garden’s rhythm and music mini-games she’s going to re-record the songs she wants to include. This will give her greater flexibility in how the songs can be performed on-line. If she includes some Tool and Puscifer songs she wants the ability to simplify the songs to make them more accessible to her younger audience. Because she’s not using the original recordings from albums like Ænima and “V” is for Vagina, she only needs a license for the musical composition. This is known as a sync license.

The sync license is obtained through the song’s publisher. Co-publishing deals (where the songwriter retains 50% or more of her publishing/musical composition rights) are common, but even in those cases the publisher will handle the licensing (also called “exploitation”) of a songwriter’s catalog and distribute royalties to the songwriter.

Master Use License (Master License)

What licenses will Mercedes need for Rebel Garden’s listening rooms and listening stations? These areas permit players to listen to the latest releases by their favorite artists. However, before Mercedes can include these recordings in her game she must be permitted to use both the underlying song and the recording itself. You can have a sync license without a master license, but you will always need a sync license for the underlying composition if you get a master license.

Unless an artist self-releases record labels hold the rights to reproduce recordings. You will need to contact the record label that released the specific recording you want to use to obtain a license.

Music License Deal Points

Fee: Sync licenses for video games are still relatively new to the publishing industry. Industry standards for fees are therefore still being established. Those fees currently vary depending on the publisher/record label and the developer’s leverage. The rate can be flat fee or royalty-based. A royalty-based sync license could include an advance on the royalty, a minimum guarantee, and any number of ways of defining “net receipts” on which the royalty is based. In short there are as many ways to negotiate the fee for a sync license as there are songs in the vast catalog Mercedes needs. If Bottom Line has the leverage and the budget a flat fee may be ideal. However, if Bottom Line is relying on a big payout at the end and doesn’t have much capital in the beginning a royalty rate can still net Mercedes the song, provided she can negotiate out of an advance. Minimum guarantees can be treacherous, as they will require Bottom Line to pay a set amount at a specific time after the release of the game regardless of whether the game has made any money.

Scope: Scope describes how you’re allowed to use the music. The “Scope” statement will include the title and a brief description of your game and limit use of the song to that game. Mercedes should keep the scope of use as broad as possible to allow for current and future distribution channels within Rebel Garden. The scope should include current and future technologies both known and not yet contrived, and the region covered should be universal.

Term: The perfect deal allows you to use the work for as long as the rights holder retains copyrights in the work. Similarly ideal licenses include words like “perpetual”. However, publishers and record labels may attempt to hedge you in by limiting you to a specific release cycle. For example, a license may say that it will endure for the three years that your game is in print. This isn’t always a bad thing as it may reduce the fee. However, in today’s digital distribution environment games are able to see sales long after the initial release cycle.

Additional Considerations: Sync licenses and Master Use licenses should match up as much as possible. This will avoid confusion in the future. If, for example, Mercedes is using a recording and her sync license is narrower in scope than her master use license, the narrower license trumps. Additional rights granted in the master use license become moot. Another point worth noting: Unless a developer commissions a song for their game, all licenses are non-exclusive; this means Mercedes isn’t the only one who can use it and her rights are limited to the scope of the license.

Movies

Film licensing has taken on a life of its own in the video game industry. Almost every notable film franchise has a game or series of games based on that franchise. These licenses are generally negotiated through the game publisher and are usually so fraught with restrictions and time constraints that the game becomes little more than a mediocre marketing tool for the film. This should be a major consideration when you’re developing for big screen properties; you generally will not enjoy the same freedoms and sense of accomplishment you probably enjoy when developing original IP.

And while a film IP license is often infinitely more complex than a sync or master use license, you still have a handful of major considerations: development time,  approvals and creative freedom/control, and of course the budget.

Let’s assume that Bottom Line Studios is approached via their publisher to produce a game for on an upcoming blockbuster based on a wildly successful book. What deal points should Bottom Line’s publisher fight for prior to accepting this project, and can Mercedes produce a game that’s more than your typical Marketing Department Debacle?

Development Time and Release Date: The single most important consideration for Bottom Line in creating a game based on film IP is lack of development time. The time Mercedes gets to develop a game based on film IP is constricted. A movie studio usually won’t consider licensing its IP for a game based on the film unless that film is 100% greenlit. This means all financing is secured, all necessary parties are committed to the deal, and principal photography is ready to begin. From beginning of principal photography to completion of post-production can take anywhere from 8 months to 2 years depending on the film’s budget, special effects, etc. However, by the time a studio gets around to finding a publisher, principal photography may be well under way unless a relationship with the publisher is already established.

Assuming a relationship isn’t established, principal photography has likely already begun by the time Mercedes is given the dubious honor of developing the game. Bottom Line must deliver the game by the end of post-production. Because film studios often do treat games like marketing tools, the game’s ideal street date is two weeks before the film’s release.

Any developer can tell you that it is impossible to produce a Triple A title in 6-8 months. Even a marginally polished, professional product is difficult to pull off with that much of a time crunch; and it will be crunch, hours and hours of it. And unfortunately, even if a relationship already exists between the publisher and the film studio development time usually isn’t negotiable, with some exceptions. Games based on already released film franchises, television shows, and long term film franchises (e.g., Harry Potter) are under less pressure to produce games quickly.

Creative Control: Another major drawback in developing games for film IP is getting necessary approvals throughout development. Milestone deliverables for a movie-based game are subject to an additional layer of approvals by the film studio in addition to the publisher’s approvals. In the studio’s mind this is necessary; studios need to preserve the integrity of their IP, and this includes monitoring the quality and content of any product licensing their IP. Unfortunately, this also means that the developer has fewer opportunities and less time to make the game fun. The additional approval process takes time away from development. If the publisher has considerable leverage and a working relationship with the studio, or if the film studio is actually interested in making a worthwhile game as opposed to making a merchandising opportunity, some of these approvals may be loosened. However, Mercedes should expect that every aspect of her game will be hedged in by licensing parameters, restrictions, and approvals over all content.

Budget: Unless the publisher is under the same roof as the film studio, studios don’t assist in the budget for the game. In fact budget for a third party IP game is generally less than average because of licensing fees to the studio and the shorter development time. The studio may require an advance or minimum guarantee that the publisher must pay in addition to the licensor’s royalty; this money frequently comes out of the game’s budget and the game’s bottom line. Mercedes will have to keep this in mind when preparing her milestone and payment schedule as the publisher will invariably try to make the budget as lean as possible.

All of this means that Mercedes will have less money, less creative control, and considerably less time to create the game she wants; in exchange, she gets free marketing for her game in the form of the film itself and the crossover customer benefit of the franchise. This paints a somewhat bleak picture for Bottom Line. But this should be familiar if you’ve examined the status quo of games based on movie franchises. Until and unless the movie industry treats games as valuable IP in and of itself, the intersection between games and film will continue to disappoint. However, in the uncharacteristic and unlikely situation that you get a film studio willing to grant you some modicum of creative control and all the stars are aligned granting you the time and budget to do so, you may be able to produce a game that can succeed independently from the licensed IP.

Clearance

One additional concern in all third-party licensing is the matter of clearance and chain of title. Is it Mercedes’ job to ensure that Bottom Line can use certain properties and assets from the film in the game? For example, whether Bottom Line can use likenesses of the actors in the movie depends on whether publisher, studio, and developer have permission from the actor to use his likeness in derivative products other than the film. Whether Mercedes can use the film score depends on if the studio owns those rights. Locations, trademarks, product placement; all of these individual components of IP must be separately licensed or included in the third-party license prior to moving forward.

Missing even one seemingly unimportant license can get the publisher and developer into a world of legal trouble. Ideally Bottom Line has negotiated a publishing deal that lay this responsibility wholly on the publisher. The publisher, in turn, will likely demand some assurances and warranties concerning these assets from the film studio. At no point should clearance be Bottom Line’s problem when creating games for licensed IP. The cost of clearance should also be in addition to the budget and at the Publisher’s expense, not Bottom Line’s.

Conclusion

Third party licensing is a part of the games industry. It is neither simple nor, in many cases, fair. Every game studio will be confronted with it at some point; how you fare depends on what you’re licensing, why, and your bargaining position.

• Special thanks to David Nonaka at Lionsgate and Patrick Sweeney at Reed Smith for their assistance and expertise.

* All characters, events, companies, and game concepts are fictional.

Article Author: Mona Ibrahim

Reproduced with permission from http://underdevelopmentlaw.com/

I had the honor of speaking at the LOGIN 2010 Conference in Seattle during the week of May 10, 2010. During my panel Tom Buscaglia, Randy Price, Nick Mitchell and I fielded questions concerning legal issues for studio start-ups; as an example we addressed several questions concerning rights ownership, work-for-hire agreements, collaboration agreements, etc.

The panel focused primarily on contracts and rights issues. We discussed the kinds of contracts a developer needs to have in place before and during the development process (collaboration agreements, assignments of rights, licenses, work-for-hire agreements for independent contractors) and the types of deals you can negotiate when immediate compensation isn’t an option (credit-based deals and back-end deals are the usual suspects).

I also sat in on a few panels, lectures and keynotes. One in particular stood out for me. Jason Della Rocca’s talk, “Failing to Succeed”, concerned the need to remain flexible and adaptable as a developer. Developers who rigidly remain married to a single idea or game concept will have difficulty moving forward and will rarely achieve the same success as those who are willing to fail and fail often. Trial and error, fluidity in thought, and having an adaptable nature that isn’t afraid to fail is a more proven recipe for success than the restrictive alternative of constantly fearing failure and taking fewer risks.

You need a similar mindset when committing to intellectual property in your game. It’s wise to avoid the kind of rigid commitment to an idea that will make it impossible for you to complete your game should you have to go without the “perfect name” or the “perfect song”.

Let’s look at a hypothetical: Mysty’s* game studio is developing an online flash RPG that loosely involves a magical school, a series of puzzles, and a riveting conclusion: a tournament between the protagonist and her two rivals. She’s decides to name the game “The Triwizard Tournament” in honor of the ending. Her attorney advises her that this may give rise to a potential trademark claim from J.K. Rowling and her publisher, but Mysty is determined to use the name. After all, none of Ms. Rowling’s books use the name as a title, and it’s so descriptive that it shouldn’t be a problem… right? She releases the game with her chosen name—it becomes an immediate success in the casual games market and soon ports across several mobile systems and social networking sites.

A few months later Mysty’s studio receives a Cease and Desist from the publisher of the Harry Potter novels. She still believes that she is in the right, but the publisher contends that Mysty’s success is based on the confusion the name has created in the marketplace; people purchase and play the game because it seems closely tied to the Harry Potter franchise. Mysty is insulted; in her mind nothing in her game even remotely resembles Harry Potter—it’s not as if that franchise was the first IP to us a school of magic or magical tournaments.

Mysty wants to fight even though her attorney warns her that this may become a long and tedious battle. She might lose. Still, she is committed to the name and won’t give it up. The game has generated a lot of revenue and the brand clearly has value.

Mysty becomes so entrenched in the fight that she’s unable to commit the time to create new content. She spends hundreds of thousands of dollars on legal fees and expenses and there is still no end in sight. The mobile markets and social networking sites that once hosted her game have removed it and the game is no longer generating revenue. Mysty begins to see that her game studio is suffering severely at the hands of this dispute. She becomes jaded and angry with the system that forced her into this fight and eventually quits making games all together.

A more flexible mindset and a conscious effort to make fun games instead of catchy titles would cure Mysty’s woes. The mindset of being married to a name or an idea that closely resembles someone else’s intellectual property will almost always create risks in the future, but it happens all the time. Examining your game from this angle early and coming up with palatable alternatives can easily prevent the kind of downward spiral Mysty experienced. This isn’t limited to trademarks—music, artwork styles, and other game elements can just as easily create similar disputes.

It’s important to remember that for as “right” you think you are the opposing party will usually maintain equal conviction that you’re wrong. Morality, ethics and the law do not always act in unison. It may take years to prove that you’re “right” morally but quite wrong legally. And proving that you are right may distract you from what’s truly important: making games that people want to play.

Article Author: Mona Ibrahim

Reproduced with permission from http://underdevelopmentlaw.com/

Actually, they’re not – but, you have to admit, the headline did get your attention…

[Tim Christian kicks off a series of articles about the auditing process for royalties. This is essential reading for anyone working with a publisher.]

I’ve been in the UK computer games industry since 1991, initially on the publishing side as the head of the European operations at Accolade, Microprose and finally Hasbro Interactive and I’d like to think that during that time I ran a tight ship and certainly didn’t intentionally defraud the developers on whose creative talents we depended to make a living.

Fast forward from 2000, when I left Hasbro Interactive, to the present day as the owner of TC Associates Ltd, part of which has become the games industry’s leading independent royalty auditor, through an earlier involvement with Media Forensics Ltd., which I also founded, and an unhappily-ending flirtation running my own development business, and what do I have to report? Well, the good news is that the games industry continues to thrive, albeit in an ever-changing and very dynamic guise. Those early days of the Commodore 64 and 5 ¼ inch PC floppy disks are unrecognisable as the technology-changing times that they undoubtedly then were. In 2010, all the talk is of apps, mobile, digital download and the end of retail as we know it. However, somewhat depressingly, the majority of publishers’ accounting systems haven’t advanced as fast or as far as we could have expected. In fact, from a royalty audit point of view, I can still boast a 100% record of having discovered previously unreported royalties in almost every single royalty audit I’ve ever undertaken. In other words, almost every single royalty audit throws up errors and, interestingly, those errors are almost always in favour of the developer.

Now, as I said earlier, it’s not that (with the exception of a very tiny minority) games publishers go out of their way to short-change the developers, but it’s important to remember three things. Firstly, royalties are a cost, and the publishers will always interpret the contract to their best advantage. Secondly, the people who put the royalty statements together are only human and, yes, they make mistakes. Lastly, whilst the finance department may well rely on a multi-million dollar accounting system, the end royalty statement will almost always be generated on an Excel spreadsheet, which is not always the most sophisticated or error-free way of doing things. In the 8 years I’ve been in the audit business, I can only name two companies which I would say had deliberately set out to misrepresent the performance of a title to their own financial benefit. So, all the other royalty finds – which ranged from several thousands to a few millions of dollars – were down to questions of contractual interpretation or weaknesses in the financial systems.

So, where am I going with this? Well, over the next few months I hope to follow this article up with further detailed advice on why, when and how to carry out a royalty audit, as well as some observations on the games industry itself – its ups, downs and developments. In the meantime, with regard to the thoughts above, think about the following good business practices to get into the habit of following.

• Have your development contract professionally reviewed before you sign it (no, really, there are stories I could tell!). There are a number of experienced – and reasonably-priced – law firms with a specific games practice. If you can afford it, have your lawyer help you through the negotiation process too. Spending a few quid here could save you a bundle later.
• Make sure there is a right-to-audit clause in the contract (no, really, there are stories I could tell!). Again, no lawyer worth their salt would overlook this.
• Make the net receipts/royalty calculation clause as clear and as transparent as possible. A worked example of the royalty report layout can always be included in the contract as an exhibit. Again, time spent on this will save money later. If there’s no room for misinterpretation, there’s little room for argument other than over the maths. In my experience, when errors in the maths are found, there is no defence.
• Don’t fall for the publisher saying that unless you formally object to a royalty report within one year of its publication, the report can’t be challenged. This is designed to stop you from auditing. Hold out for two years at least – unless you do intend to audit within one year of release. If you do intend to audit every year, make sure you put the relevant dates in your calendar. Time flies …… and suddenly it’s too late.
• If the title recoups, or is close to doing so, or if you really think there’s something wrong with the royalty calculation and your questions aren’t being taken seriously, then audit the publisher. Trust me, they’re used to it and far from taking it badly, the publisher will actually respect your seriousness and professionalism. The costs of the audit are always negotiable and sometimes can be far less than you think – and if there’s an error in excess of 5% or 10%, the publisher will be obliged to pay for the audit (assuming you negotiated that in the first place).

So, a few do’s and don’ts with which to kick of this series of articles – they’re common sense, I know, but it does no harm to draw attention to them every so often.

As I said, I’ll be back over the next few months (assuming I’m invited!) to share more thoughts on royalty auditing in particular and the computer games industry in general. In the meantime, feel free to contact me at tc@tc-ltd.com or via www.tc-ltd.com

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I realize that this has little to do with game development or games law, but as an ode to free speech and the internetz, it’s a hard Fail to resist. Since we’re on the topic of Trademarks, here’s an interesting case concerning trademarks and what I would probably consider an abusive use of a cease & desist letter.

FailBlog

FailBlog received a cease and desist for the use of GWR’s trademark in a screen capture. This brings up some very basic questions as to when someone can legally use a trademark and what constitutes fair use, which is sometimes trickier than it sounds. Traditionally trademark fair use is a far cry from the fair use you may expect under copyright law. Unfortunately these two standards are frequently confused.

There are a few forms of fair use under trademark, and it’s worth becoming familiar with them. In the event that you receive a cease & desist like the one linked above, or want to use a particular mark in a way that may or may not fall under fair use, this will hopefully give you enough information to know when you should start seeking out an attorney to protect your rights.

• Note: This is a point I’ve made in the past, but it bears repeating—a fair use is an affirmative defense. It is not a right. It is a shield you can raise in the event that your use is legally challenged. If you don’t want to go through the trouble of defending your use against rightful trademark registrants/owners, you’re better off not using the mark at all. However, I’m not a fan of cease & desist letters that brazenly disregard valid fair uses because exposing people to litigation costs is frequently threat enough. So while it’s no one’s right to urge you to challenge a cease & desist, it may still be useful to know when you can.

Classic Fair Use

A “classic” fair use under trademark law permits a defense where the protected mark is used only to describe the goods or services of an opposing party. Marks that are more descriptive than distinctive are frequently the subject of classic fair use, because they contain terms that may identify something other than the origin of the product or service. For instance, if a company used the trademark “California Car Repair,” this would create a problem for every other car repair located in California unless some limits were placed on the scope of protection for the mark. As a result trademark law does not allow a trademark holder or registrant to “appropriate a descriptive term for his exclusive use and so prevent others from accurately describing a characteristic of their goods.” Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1185 (5th Cir. 1980). Simply put, if your mark is made up of terms that do little more than describe the product or service you’re selling as opposed to something suggestive or distinctive (e.g., something that fancifully suggests the kind of product you’re selling, or a made up word or a term or word generally unrelated to the type of product/service you’re selling), you do so at your own risk. Others may use those same descriptive words in connection with their own product on a limited basis.

This sounds deceptively simple, but there are some excellent examples that arise in game development, particularly when it comes to media publications. For instance, Game Developer Magazine is almost purely descriptive—there is little to nothing that is distinctive in the term used in the brand, and therefore another magazine that uses the term “a game developer magazine” to describe its own product may have a valid classic fair use claim.

It’s important to note that to qualify for a classic fair use defense the term itself cannot be used as a trademark—for instance, if another company called itself “Game Developer Magazine,” it wouldn’t be subject to a classic fair use defense. On the other hand, if someone used trademark “X” and described the product in publications and its website as “a game developer magazine”, the classic fair use defense would probably apply. Furthermore, the defense only applies when the trademark in question has both a primary and a secondary meaning, and the classic fair use employs the primary meaning. In this case, a game developer magazine’s primary meaning would be a magazine dedicated to game developers and game development. Its secondary meaning would be the existing brand, Game Developer Magazine. Use of the primary meaning to describe your own product is a classic fair use. Use of the secondary meaning is not.

Meanwhile a publication like Gamasutra experiences considerably more protection because the mark is non-existent in the English language and therefore can’t reasonably be used to describe anyone else’s product.

Nominative Fair Use

So what happens if you want to use Gamasutra’s mark, or a competitor’s mark, or even the name of a brand, product, or company in a review or publication? Another fair use defense, called “nominative fair use”, exists when a defendant uses the plaintiff’s mark to describe or identify the plaintiff’s own product. In short, if you’re using another company’s mark to identify that company’s product as opposed to your own, your use of that mark is a nominative fair use. This is the case even if your ultimate goal is to describe your own product. An example of a nominative fair use that is ultimately intended to describe your own mark is the use of another mark to encourage consumer comparison: “Like X brand games? Then try my product!”

This comes down to the simple philosophy that it is impossible to refer to a company’s brand or product for purposes of comparison or criticism without using their mark. Trademark and Unfair Competition law therefore permit a defendant to raise a nominative fair use defense when the use of the mark clearly identifies the mark’s registrant. It’s assumed that this use is unlikely to raise a lot of consumer confusion—if you’re accurately attributing the mark to the mark holder, and it’s clear that you’re not using the mark as your own, there’s less of a chance of consumer confusion.

However, one problem that may arise is “false endorsement”, which renders null the nominative fair use defense. This means that your use of the mark suggests that the other company or brand is endorsing or sponsoring your product. This is a tricky area and is the reason why it is almost always dangerous to use popular brands in your game without permission or a license. For instance, if you create a racing game where your cars are “sponsored” by certain brands, or the brand names of the cars themselves are readily identifiable, the trademark owner may argue that those uses suggest sponsorship or endorsement of your game. This would destroy any nominative fair use argument you may want to raise.

This is, however, exactly where GWR’s cease & desist fails and where a nominative fair use is painfully obvious. There is no question that GWR’s mark is being improperly used to suggest endorsement, nor does it falsely identify the origin of the work. On the contrary, FailBlog is more or less dedicated to humorously pointing out failures, and they have no intention of misleading their audience in believing that the failure is their own.

First Amendment Protection

In the case of creative and artistic works (including video games, for reference see E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. Cal. 2008)), it is generally accepted that the public interest in avoiding consumer confusion must outweigh the public interest in free expression for a trademark infringement/Lanham Act claim to survive. This is an incredibly steep test, actually; according to the 9^th and 2^nd Circuits, an artistic work’s use of a trademark that would otherwise violate the Lanham Act isn’t actionable “unless the [use of the mark] has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless [it] explicitly misleads as to the source or the content of the work.” Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 902 (9th Cir. 2002). As most pornographic works survive the Miller obscenity test based on the “artistic relevance” test alone, it’s fair to say that anything above zero artistic merit is sufficient. Humor and parody are typically viewed as having at least some artistic relevance, even if the humor is somewhat tasteless. There is also little to suggest that FailBlog’s use of the mark improperly misleads consumers—on the contrary, it points directly to the actual source of the Fail.

I’m using the FailBlog example pretty liberally, because it’s an easy example. The First Amendment protection is particularly appropriate, however, when looking at the use of trademarks in games; because video games, no matter how crude or grotesque, are typically protected under first amendment due to their artistic value, they may be subject to greater first amendment protection than a product website that uses another company’s mark as a basis of comparison. This is something you may want to consider when weighing the risks of using a trademark or a parody of a mark in your game.

Trademark Abandonment

Recently there has been a lot of talk about Tim Langdell’s trademark, “EDGE”. Many have a very strong opinion about the matter, particularly considering Langdell’s involvement with the IGDA. This post has nothing to do with anyone’s personal opinion, and I have none in the matter. Rather the trademark question raises various issues relevant in the games industry—for instance, when is a mark sufficiently distinctive under trademark law? When has a mark obtained a secondary meaning for trademark purposes? Is it readily identifiable to consumers? There are a variety of factors that may be used to determine whether a mark is valid, and like fair use this is frequently determined on a case by case basis. 

Another question is whether licensing the mark in the manner Langdell’s company has is an appropriate use of trademark protection. Iit should be noted that the trademark wasn’t filed for registration until 2006– although the claim of first use is 1984, and apparently the mark was “licensed” to various other products prior to the date of filing. Based on the website, and if rumors are to be believed, the company allegedly licenses its name to various unrelated projects and products without engaging in any continuous sale of a product of its own (although the website says the store is “closed during maintenance”)—and presumably without having any oversight or involvement with the products licensing the name. If this is a case of trademark squatting (e.g., “owning” a trademark for the sole purpose of licensing the name to others without the mark satisfying any of the requirements of trademark law, such as identifying the source of a product in commerce or being sufficiently distinctive—relatively similar to patent trolling), then several arguments may be raised. One is whether the mark has been so “diluted” by indiscriminatory licensing so as to make the mark invalid. Another is trademark abandonment.

    While games such as Bobby Bearing (originally published in 1986) have been re-released in mobile form, most of the games listed on the company’s website were developed in the 80s for platforms that are now nothing short of antique. The company lists various “forthcoming” titles, but there is a considerable platform generation gap between previous publication and what will supposedly become available. This raises a novel argument for trademark abandonment.

    This isn’t to say that this is a great argument in light of the facts (few of which are readily available)– this is mostly my excuse to discuss something I’ve wanted to talk about for a while.

    The law of trademark abandonment, also referred to as “non-use” and “cancellation”, is international in scope. While the time frame and specific definition for non-use and abandonment vary slightly from country to country, countries that acknowledge trademark rights permit opposition to the mark on the basis of abandonment and cancellation by non-use. A mark is considered abandoned under Section 45 of the Lanham Act, for instance, when “its use has been discontinued with intent not to resume such use.”

    The period of discontinued use in the U.S. is three years. In many countries the period for non-use is as many as five years. Typically the burden of proof lay on the opponent of the mark. That burden varies drastically from country to country. The law on abandonment seems deceptively simple. At a glance it seems as though a mark is abandoned if the registrant (or the common-law owner of the mark) fails to use the mark in commerce for a set period of time. But what happens if the non-use is involuntary? What constitutes use? When is a use considered a nominal and valueless use that is solely intended to unlawfully preserve a mark? These are all issues that must be considered when determining whether a mark is in fact abandoned.

    The question becomes even trickier when international standards are at issue. The law of cancellation in Egypt, for instance, sets out clear exceptions to non-use cancellation. Other countries may not acknowledge those exceptions or may set forth different standards when evaluating those exceptions. A mark that is used internationally is subject to all of these varying standards.

    This post focuses predominantly on U.S. trademark abandonment law. However, the issues discussed below may also apply to the laws of other countries.

Involuntary Non-Use

Trademarks are exposed to a variety of risks. Mergers, bankruptcy, or government seizure of a business may result in the unintentional non-use of a mark even if that business has no intention of abandoning the mark. Some courts have found that a mark is abandoned notwithstanding exigent circumstances. Other courts have ruled the opposite. Frequently the determination is based on the actual provable intent of the business and the likelihood of continued future use. Many claims for abandonment have been rejected based on a showing of “intent” not to abandon.

    One notable example comes in the form of the popular cordial Chartreuse. This liqueur was originally developed using a secret process by the Order of Carthusian Monks. It was named after the mother house of the order, the Monastery of the Grande Chartruese (located in France). The liqueur became popular in the late 19th century and was sold both locally and internationally. However, the French Government confiscated and liquidated the monks’ business in 1901. The liquidator then sought to reproduce the monk’s recipe in order to continue distribution under the old name “Chartreuse”. As trustee of the business’s estate the liquidator claimed he owned legal title to the international mark.

    Ever perseverant, the monks moved to Spain and continued to make the liquor by importing the required herbs from France. They distributed the old secret recipe under the name “Peres Chartreux” and stated on the bottle that it was the only liqueur that was made in the identical manner as that made in the Monastery of the Grande Chartruese. The monks also pursued legal action in several countries and distributed to the U.S. under the old label to preclude a claim of abandonment.

    SCOTUS found that a) the liquidation did not include rights to the trademark outside of France, as the business and good will associated with the mark arose from the secret process through which the liqueur was made and not the location, and b) the adoption of the new mark did not show the requisite intent to abandon. The Court found that the adoption of the new mark was necessary as the old mark could not be used within France, and it was natural that the monks would want to adopt a mark that could be used in France as well as abroad. The monks demonstrated their desire to avoid abandonment by their prompt assertion of trademark rights in other countries. See Baglin, Superior General of the Order of Carthusian Monks v. Cusenier Co., 221 U.S. 580 (1911).

    It should be noted, however, that U.S. courts (including the Second Circuit) will now typically apply a different intent test; i.e. “no intent to resume use in a reasonably foreseeable future.” This is the precedential norm in the U.S. due to the language of the Lanham Act, and particularly relevant in the Edge Games trademark question due to the substantial platform generation gap mentioned previously. By this standard even a good faith intent to not abandon will not preclude abandonment if the intent to resume is vague, unspecific, or impossible within the reasonably foreseeable future, as may be the case in bankruptcy or insolvency.

    Courts seem to be slightly more lenient in the event of merger. The Sixth Circuit found that the mark of one of the merging companies was not abandoned if the name was still invoked or used in the course of business or where some portion of the work continued under the prior name. Stilson & Assocs. V. Stilson Consulting Group, 129 Fed. Appx. 993 (6th Cir. 2005). Similarly, the 9th Circuit recently found that sell off of remaining stock and inventory under the former trademark was sufficient “use” to negate the claim of abandonment. See Grocery Outlet Inc. v. Albertsons, Inc., No. 06-2173 (N.D. Calif. 2008)

This raises another major issue: use.

The Quality and Quantity of Use

Even if a trademark is still technically “in use” it may be deemed abandoned. The quality and nature of the use is therefore important when determining whether the use precludes abandonment. Courts will examine the number of goods sold that make use of the mark and whether the mark is being used for commercial purposes or token purposes. Generally the use must be continuous and deliberate. Regardless of this generalize standard, there is no black letter law that sets out whether a use precludes abandonment; typically this is determined on a case by case basis.

    However, U.S. companies may not hoard trademarks. In fact most countries have some regulation that prohibits “token” use of a mark to prevent cancellation. Trademark “maintenance” programs such as limited arranged sales will not protect a mark from abandonment. Exxon Corp. v. Humble Exploration Co., 695 F.2d 96 (5th Cir. 1985). Typically, when a mark is discontinued, any future intent to resume must be an actual good faith commercial use. This raises the question of whether re-releases of old titles like Bobby Bearing are merely “token” exercises to maintain a trademark employed otherwise exclusively as licensing tool.

Conclusion

Even in the U.S. it is not always easy to determine whether a trademark is abandoned. Frequently it is determined on a case by case basis. There are also other considerations such as geographical abandonment (when the non-use only occurs in a particular region) that may also play a role in a Court’s determination. In the case of international abandonment of a mark there are dozens of other considerations at play, including presentation of evidence and burden of proof. It is imperative that a business takes these considerations into account when deciding to discontinue or suspend use of a mark.

    The Edge mark in particular raises quite a few grey areas as to what constitutes “abandonment”. Although it is unlikely that the current licensing model used by Edge Games will be challenged in the near future, it would be interesting to see the outcome and to further interpret the definition of abandonment and dilution.

Article Author: Mona Ibrahim

Reproduced with permission from http://underdevelopmentlaw.com/

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This issue has a lot of angles and typically two or more sides to each story. On the one hand you have the enforcer, or anyone who owns original IP. An example of the stereotypical enforcer includes Microsoft, who put a complete stop to the independent development of a Command and Conquer “HaloGen” mod that employed Halo’s intellectual property, developed by a small studio called Slipstream. MS subsequently went on to have Ensemble develop Halo Wars, which is, you guessed it, a Halo RTS. Another philosophically controversial “enforcer” example is Apple, who has worked continuously to enforce its EULA against the owners of jailbroken iPhones.

At the other side of this debate is the alleged infringer, which could be an indie like Slipstream or, more problematically, the crackers and black hats who hack DRM and pirate games in a manner that damages the entire industry. This is, in fact, one of the biggest problems arising from jailbroken iPhones; it has rapidly become a problem that creates constant strain in the application and casual game markets.

Regardless of your personal philosophy concerning the identity of the enforcer or the infringer, IP enforcement is an important aspect of protecting what you create. It’s as important in commercial works as it is in open source projects even though the ideals behind enforcement may differ. The issue here is control and access, and who has that control and access. Without this article will explain intellectual property enforcement methodology without touching on personal philosophy or the identity of the infringer or enforcer. It is my belief that it is just as important for independent developers to protect their IP as it is for the majors, and as such the tools for enforcement should be available to all.

Getting it in Writing

Contracts such as EULAs, licenses, and employment agreements are the first line of defense in IP enforcement. The more clearly your contracts set out your intellectual property rights and your remedies in the event of infringement or breach, the more likely the people you contract with are to comply. This is particularly true with regard to proprietary technology, trade secrets, and ideas you want to keep confidential.

Identifying Intellectual Property. The first step in protecting your IP is identifying what you consider protected under the shield of the contract. In the case of employment agreements and NDAs you need to be as specific as possible with regard to trade secrets and proprietary technology. With regard to EULAs you need to identify all components of what you want to protect, including content you’ve licensed from third parties. One example of how this can be done* is demonstrated in the World of Warcraft EULA, which identifies IP in two places: it sets out the game, patches, and manuals in the introduction, and expounds on those basics in the “Ownership” section further down.

Identifying Permissible Use of Intellectual Property. The next step in protecting your IP via contract is clearly stating what the licensor/end user/employee CAN do. Explain what is permissible: in the case of your game’s EULA, explain what users can do with your software; in the case of your employee agreements, explain how and when employees may access or use information; in the case of non-disclosures and confidentiality agreements, explain who information may be disclosed to or when confidentiality may be waived.

Identifying Impermissible/Infringing Use of Intellectual Property. Once you’ve explained what people CAN do with your IP, you need to explain what they can’t do. For example, in the case of games, computer programs, and hardware, one major issue of contention is reverse engineering. Under the Copyright Act reverse engineering is generally (but be careful, because this is a devilishly tricky area of the law) permissible if it is done exclusively for the purpose of interoperability. However, you may not want your game or software to work on jailbroken iPhones or other gaming devices that you plan on porting to down the road. This is something that may arguably (although this is by no means settled law) be limited by the EULA. Most major content owners seem to think so. If it’s something you deem necessary to protect your future interests, you should consider including it.

Identify Remedies and Damages. This is where you let the people you’re contracting with know what they risk if they infringe or impermissibly use your IP. You should include all available equitable remedies (remedies not grounded in monetary damages), including injunctions and restraining orders, as well as statutory and actual damages or profits resulting from infringement.

DRM and Keeping Secrets. If you’re using DRM technology, you need to let people know that you’re using it. You also need to explain that the disruption or removal of that DRM will expose them to additional Copyright Act liability if they choose to crack it. In the case of employment agreements, if you’re trying to protect trade secrets you must take steps to keep information secret. This includes DRM, password protection, encryption, and making it clear to employees that disclosing that information to anyone outside of their department is a big No No.

Cracking Skulls

There’s always a possibility that someone will breach your contractual provisions, or your game will be cracked and pirated, or you’ll find an inferior clone that passes itself off as the original. You will be angry and you will want to do everything you can to stop this from happening. First, calm down. Immediately calling a lawyer and filing a complaint or otherwise throwing a fit is expensive and probably bad for your health and peace of mind. Next, evaluate the validity of your claim. Do you have a claim? Is it really infringement? Would you know if it weren’t? For example, if the product is similar or identical to your own but released prior to or very shortly after your own, there’s a strong presumption of independent creation (which isn’t infringement under Copyright Law). You may want to talk to an attorney before going further. Take a deep breath and review the suggestions below, from most cost efficient to least. In some cases you may want to skip the first option, but as you’re an independent developer you may garner more sympathy from other small collectives, pirates, or studios who are (perhaps unwittingly) infringing on your rights.

Contact the people directly. A polite phone call or casual e-mail as a first step can go a long way in preventing future ill will or the need to lawyer up. If the infringer isn’t aware that the material is infringing or if they don’t understand the basics of IP law, they may comply with a friendly request without any further cost to you. This isn’t always the case, but as I said above, you’re an indie. There’s camaraderie among your fellow compatriots and there’s nothing wrong with taking advantage of that good will to protect your IP.

Send a Cease & Desist. If the first approach is unrealistic or ineffective the next option is a more formal C&D. This should typically come from a lawyer, but if you’re still trying to avoid the need to lawyer up you will want to at least include the following:

• An introduction that sets out your name, your product, and where your product can be found;
• A description of the rights you hold in the work, including any music, artwork, engines or code you’ve exclusively licensed;
• A description of their work, and how it is infringing;
• A citation of the laws being infringed, including Copyright law, Copyright Circumvention laws, trademark and unfair competition;
• A list of actions that they must cease and desist;
• A request for damages, if relevant;
• A “respond to by” date;
• Your preferred contact method.

Before you go any further. Have you registered your work/trademark? Under U.S. law you can’t bring an action for copyright infringement against anyone until you’ve filed your application, paid your fee and submitted your deposit. In the case of trademark, monetary damages including profits aren’t available unless your mark is registered and you’ve included the ® symbol or some other notice of registration. The sooner you register the better. Under Copyright law you’re entitled to statutory damages so long as the infringement occurred after you’ve fully completed your application and submitted your fee/deposit, or within three months of the infringement. Since the minimum statutory award is $750 for each infringement registration really shouldn’t be put off. In fact you should make it a policy to register as soon as you complete a project and have something to submit to the copyright office.

Send Takedown Notices. Send takedown notices wherever you find your infringed work. Bear in mind that the DMCA safe harbor only applies to those sites with a registered DMCA agent. If the site or service provider doesn’t have an agent you may want to instead send another C&D explaining why they are also infringers.

File a Complaint. This is certainly the point of no return. If you haven’t lawyered up yet, do so now. If your C&Ds have gone ignored or the infringer has sent a put back up notice in response to your take down, the only way to get that infringing material taken down again is to file a complaint and send a copy of that complaint with a second take down notice. Most websites with DMCA provisions will explain that process in their EULA. You will likely be filing your complaint in federal court and you will want to include every possible cause of action available, including all possible state claims.

At this point the conflict could take a few turns. If this catches the infringer’s attention, you can try to achieve settlement quickly or use some of the mediation or arbitration techniques described previously. It’s typically at this point that enforcement gets pricy and time consuming, but it may be a necessary step to protect your rights.

*  Direct copying from any document including EULAs and other contracts without permission from the original drafter or document owner is typically considered copyright infringement. Draft your own or hire an attorney to draft it for you.

Article Author: Mona Ibrahim

Reproduced with permission from http://underdevelopmentlaw.com/

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It is no secret that digital distribution of video games is considered by many as the future of video game distribution.  One debate appears to be when (not if) this distribution channel will leapfrog retail.  Satoru Iawata, for example, believes that such a sea change of distribution may take decades, however in the meantime, digital distribution is a useful tool in expanding the lifespan of products.

I am not so sure that it will take this long, particularly after the success of Xbox Live and PSN (amongst others) and the emergence of new business models.  While the increasing use of broadband and mobile technology in the games industry points to the fact that consumers want their games distributed in this manner.

One thing that is certain is that developers are increasing their use of this business model.  Often it is the easiest and most cost effective way for smaller studios to enter the market.  No longer does the developer have to wait to be courted by the “big bad publisher” (although it is nice to get such financial backing!).  The current opportunities of small studios can be compared to the indie music boom of the mid 80’s.  The barriers to market are getting less and less.

Okay, so we have established that this is potentially a golden era for many developers, what is the downside?  Unfortunately, this new distribution channel is fraught with legal pitfalls.

The world of digital distribution is embryonic and the next few years will see developers grappling with the inevitable legal teething problems that any new business model will face.  This, coupled with the “wild west” nature of the net means that developers should be careful when using this distribution channel.

1. 1.               Who are you contracting with?

 One of the main problems, from a legal perspective, with digital distribution is the global nature of the marketplace and the relative anonymity of the end user.

 The importance of this point will depend upon the nature and content of the game.  For example, some USA states have effectively banned any digitally distributed products which have a gambling aspect.  How can you be sure that you are not inadvertently breaking such laws (which may entail a criminal offence) by allowing an end user to download your game?

Similarly, how can you be sure that you are not supplying a minor with a product which contains adult content?

Unfortunately, until we have more reliable technology the answer is, you cannot be sure.

Although not failsafe, you may mitigate this risk by including a term within the game’s terms of use that the end user is legally entitled to play the game in the relevant territory, that he is not a minor and has legal capacity to enter into the contract.  You should delay distribution until the end user has confirmed such details.

However, this may assist with, as opposed to solve, the problem.  Therefore, you have to be diligent.

1. 2.                Observe local law

Leading on from the point above, the global nature of this distribution channel means that there is an increased chance of the developer breaching local laws and offending local customs.

For example, depending upon the content of the game, as distribution hits more territories there is an increased risk of the game being deemed offensive, obscene or blasphemous, within certain territories.  Don’t forget, this issue is live within our shores; remember the Manchester Cathedral case?

This risk is compounded by the uploading of user generated content.  Is such content adequately monitored for potential offence, obscenity or blasphemy?

Also, within some territories, certain terms may be implied.  That is, incorporated into the contract if you like it or not!  While others may be prohibited and therefore won’t apply.

 One solution is to monitor closely which territories you are distributing to.  If the legal risks are too great in a certain territory, do your utmost not to distribute there.

 If possible, obtain legal advice in relation to specific territories.  It is better to be safe than sorry.

1. 3.                Who’s laws apply?

Remember end users are usually consumers, and therefore, often you cannot impose the laws of your own country upon the contract.  For example, many countries state that the laws of the end user’s country of residence will apply notwithstanding what laws you state govern the contract.

Again, advice should be taken in relation to relevant laws, particularly those relating to consumers and governing laws.

1. 4.                Do not overdo it

Given the uncertain nature of the net and constant evolution of viruses, for example, ensure that you are not liable to the end user for any unavoidable “ghosts in the machine”.  Expressly limit (as far as possible) such liability in the game’s terms of use.

Also, if support is provided, ensure that you do not inadvertently promise too much.  State what support is offered and highlight what costs, if any, it will entail.  Unsurprisingly, consumers and courts alike dislike hidden charges.

Manage your promises carefully, do not promise the earth, as there is a chance (even with your best intentions) that you cannot deliver and will be in breach of the contract.

To avoid heightened exposure, state within the contract your limit of liability.  Often digital distributors will limit their liability to the costs of the download to avoid unlimited liability under the contract.

1. 5.                Protect your assets

As all developers appreciate, your IP is the foundation of your business.  Do not give it away cheaply.

The industry is well aware that digital distribution has increased the plague of piracy.  Although the problem is not novel, advances in technology have exacerbated it.  Due to the net’s lack of borders and geographical boundaries, a digital product may be shared with another user on the other side of the world.  Such freebies do not fit any business model.

Although governments are closing in on digital pirates, as end users are ultimately anonymous (if they wish to be), up until now this has had limited results.  Only time will tell if law can curb this beast.

In the meantime, developers should utilise any technology it has up its sleeve to prevent piracy.  And, in the game’s terms of use, include robust terms prohibiting copying together with an indemnity in relation to any losses you suffer due to such piracy.  It should be noted, however, that it may be difficult to track down an end user to sue if the contract has been breached.  While an indemnity is only as good as the bank balance of the person giving it.

Effectively, such anti copying clauses are more often used as a deterrent as opposed to the basis of a court action.

1. 6.                 Protect yourself from third party assets

The increasing use of user generated content in digitally distributed games, multiplies the publisher’s potential liability.  As discussed above, you should be vigilant in relation to any uploaded content.  Again, the global nature of such distribution increases the chances of such content offending the laws of certain territories.  And, remember it will be you ‘on the hook’ in most cases.

Obviously indemnities from an uploader in the game’s terms of use are useful but, depending upon the status of the uploader, they are not a cast iron remedy.  There is no substitute to vigorous monitoring of uploaded content prior to it going live.

In summary, therefore, although the world of digital distribution is your oyster there are a number of legal pitfalls associated with the model.  Do not take a chance, speak to your lawyer. 

Article Author: Sean Crotty
Weightmans

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There are a few misconceptions in the indie development community concerning the definition and legality of clone games. Some take it as given that a legal clone can be a fan game including many of the same visual and sound elements as the original. Others believe that because some game companies don’t enforce their IP rights against fan game developers all fan games must be legal. Some may even believe that a game is simple and general enough to not warrant IP protection. This entry is designed to dispel some of the confusion and inaccuracy surrounding clone games and fan games.

Let’s say you’re a huge fan of Zelda, you’re a programmer and competent indie developer, and you and your friends want to create a tribute game to the world of the Hylian race, Princess Zelda, Ganon, and, of course, Link. In your game you will likely create something akin to fan fiction as far as your storyline and script, and you want to implement the same characters in some way because you are, like most of us, somewhat attached to those icons. Obviously you want to use similar game rules and mechanics. Can you? Should you? What legal complications will arise, what risks are involved, and how can you avoid threats from the very entity to intend to honor?

Defining a “Clone”

According to Wiki a video game “clone” is a game that is “very similar” to or “heavily inspired” by another game. This is woefully vague from a legal perspective. A “legal” clone is one that does little more than implement unpatented game mechanics, rules, operations, and physics. Some “ideas” for games may also fall into the legal clone category for the simple reason that they are so common or vague that they no longer warrant copyright protection as unique expressions—for instance, a platformer or RPG with a male protagonist seeking a kidnapped princess is so common to the genre as to constitute scènes à faire under Copyright law.  On the other hand an illegal clone relies heavily on the creative content of a game—namely the trademarks and trade dress of a game product, as well as the unique audiovisual and scripted elements of that game. Note that game clones containing patented mechanics may also run afoul of intellectual property law.

Layers of Protection

Games aren’t all about code. Just because you wrote your clone or fan game from scratch does not guarantee that it is legal. The intellectual property contained in a video game is truly vast. For instance the copyrights alone may include (but are by no means limited to):

• Audiovisual display
• Sound recordings
• Voice recordings
• Script
• Screenplay
• Background drawings
• Sprite drawings
• Musical compositions
• Source Code
• Object Code

Furthermore you have trademark, trade dress and unfair competition claims in the original work to worry about, including:

• Game name
• Company name
• Character names
• Character appearance and clothing
• The game’s look and feel
• game packaging

And last but not least you may even have some random claims out of left field by game actors/SAG members, including:

• Name and likeness
• Defamation
• Privacy rights

If you use any of this in your “clone” game, you may draw unwanted attention and create a legal risk for yourself. The Tetris Company has relied on several of the above-mentioned rights, including “look and feel” under both trademark and copyright law, to enforce IP rights against games that closely resemble its product. Furthermore the risk of legal action isn’t limited to clones of video game products. Creating a video game clone of board games, card games, and the like could create just as many problems. One famous example is the suit brought by Hasbro against the developers of Scrabulous, a well-known Facebook application.

As far as programming and code goes, commonplace commands are exceptions to the general rule of copyright protection. This is notable only because the most frequent argument I’ll hear concerning a person’s clone or fan game is that the “code is different” or that they “created the game from scratch”. Unfortunately the law doesn’t really care and is not on your side here if you relied on or used any of the other elements noted above. Even if you create the images, sound recordings, etc. from scratch, if those same components are clearly derived or ripped off from the original game, all your hard work may mean absolutely nothing from a legal perspective.

Protecting your Clone/Fan Game

You have a few choices here:

1. Make a “legal” clone. Rely on unprotected game elements, mechanics and processes that are so common and prolific in the game industry as to no longer warrant protection, copyright, patent or otherwise. If you’re unsure whether your particular idea falls into that category, contact an attorney.

2. Ask permission. Yes, this does put you on the owner’s “radar”, but show some respect. If you’re making a clone or fan game, at least be sincere about it—obviously you enjoy the game, so show some respect to the game’s creators and publishers and inform them of what you want to do. If they say yes, you have carte blanche right to use whatever you’ve told them you wanted to use in your product. If they don’t respond, you have a good faith laches/waiver defense. In English this means that the company/publisher has waited, with knowledge of the fact that the infringement was going to happen, until you’d already put yourself past the point of no return as far as production and distribution, before acting. Generally this conduct is frowned upon by the Court and is therefore treated as a “waiver”; otherwise the Court will honor your laches defense—this is especially true if notice to the company came in the form of a request for permission.

If the company says no, you’ve probably chosen the wrong IP to clone.

3. Come up with your own game. This is probably the best approach. If another game has inspired you, that is a wonderful thing. Let that propel your own creativity and make something unique that is truly worth playing.

Article Author: Mona Ibrahim.

Reproduced with permission from http://underdevelopmentlaw.com/

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Basically, what is the deal with using an impersonator to do celebrity voice-a-likes in a game?

In the UK there is no automatic right of “personality” (unlike other countries – such as Germany).

However the law does protect against “false endorsement” – through the law of ‘Passing Off’.

So, if a consumer would get the wrong impression that (say) John Motson was endorsing your service or was engaged to provide commentary in a game then you are likely to be held to be passing off.

Passing off occurs where there is:

1. a trading reputation on the part of the claimant (such as the Celebrity);

2. a misrepresentation that deceives or makes the public believe that the defendant is associated with or endorsed by the claimant and (such as the voice over on a site that promotes a service making a consumer believe the claimant endorses or supports the service or goods);

3. damage as a result (which includes loss of income).

So if the public believes that the Celebrity is endorsing the game and the celebrity believes he or she has suffered damage as a result (which could be that he would normally get a fee for that endorsement), he can bring a claim for passing off and sue for damages / an account of profits or apply for an injunction restraining the acts.

The key is therefore to make absolutely clear that it is an impersonator.

The confusion / erroneous belief on the part of the consumer has to be reasonable (the moron in a hurry does not count). So one suggestion would be to make the impersonations obvious.

In other words, make it very difficult for anyone to believe that you are making a misrepresentation and saying (or implying) something that isn’t in fact so.

Incidentally it is worth mentioning that the circumstances of the use are also important. If for example it is a satirical game where there is no likelihood that someone would believe there to be endorsements etc then there would be unlikely to be a false endorsement claim. In those circumstances it would however pay to have appropriate disclaimers.

Oh and one point to emphasise is that this is the case in the UK and is likely to be the case in jurisdictions which are based on UK law – there are however countries where personality rights are protected per se and in that case it would be necessary to consider all the circumstances.

Thanks to Alex Chapman for this article (Sheridans).

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So someone asks – “how can I protect my idea?”

Someone else says “put it in an envelope and post it to yourself.”

Someone responds that that does nothing and is useless.

What is the reality?

Answer:

It’s not useless to post to yourself as evidentially this has some value. It has more value than not doing so but the key is that it is “evidence”.

It’s all about evidence when it comes to copyright. Copyright arises automatically on the creation of an original work – there is no need for registration to get it (though I believe that in the US you need registration to litigate it).

So you have to prove that you created it and when.

Posting a full copy of the design history etc works more because of the fact that there is a full design / development history.

You will be the only one with the full design / development history and this is something that an infringer will not have.

So that means keeping (and not overwriting) all files and each iteration of the design, program etc. – from the first to the last

What you do then is icing on the cake. FTP to a secure server can verify date of submission (not creation unless you do it daily). Email to yourself or a secure hotmail / googlemail account should have the same effect as posting to yourself – if not more because it is less easy to fake.

But of course this all relates to copyright which only protects the expression of an idea not the idea itself AND which can only be infringed if someone else copies it.

Of course the best way to avoid someone copying your idea is to keep it confidential.

Which creates the big dilemma – if no one knows about it then no one can copy it – Great. but if someone independently comes up with the same idea there is nothing you can do about it.

then there is also the problem that copyright only protects the expression of an idea – not the idea itself. So if someone takes your idea and expresses in a different way then there is no protection that copyright gives.

Also functionality per se isn’t protected by copyright and so with web applications and software you have to rely on the code as a literary work or the visual appearance as an artistic work – to the extent that it can be protected as an artistic work.

Practically therefore if you want to protect functionality mechanics then you have to look at writing down all the component elements, producing flow charts, design drawings and committing as much as possible to paper in the same way they do in film and TV when they create “Format Bibles” to try and protect game show ideas etc.

There is no great certainty whether this will work either – buts its all about doing the best you can with the rights you have since a bare idea is not protectable.

Enter Patents – which can protect the idea / invention itself – if it is novel, capable of industrial application and inventive (i.e. not discoveries). These cost money. In Europe software is not patentable per se (though the technical effect it has on hardware can be). In the USA business processes and software are patentable but the costs can vary from $15000 for a provisional “holding” filing to many 1,000s for the full thing – if you want it done properly.

Then we have trade marks (spelt trademarks in the US) which are essentially used to protect names, logos and marks that differentiate your goods and services from those of other i.e. brands that designate the origin of goods or services as being yours.

These can be registered or unregistered – though for you to have enforceable rights in an unregistered trade mark you will have to have made use of it in such a way as to give you good will and reputation in it.

As I say – so much to say – too much to cover it all here but the key rule with intellectual property is to:

• Identify – what rights exist
• Protect – them as best you can
• Enforce – use them or lose them
• Exploit – make them work for you

IP is the single most important asset of a software business and if you don’t look after it at then its like leaving your house unlocked.

If nothing else following a few simple steps at least give you the option down the line.

Oh and one final point – make sure anyone who creates anything for you enters into an agreement confirming that you own the IP in it (wherever you intend to do so).

The whole of the above can fall down if someone else can claim rights in the work.

Thanks to Alex Chapman for this article (Sheridans).

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What’s the situation when someone develops a game or product based on third party software (with permission) i.e a “vanilla” product or engine that is made available for that purpose – then someone else comes along and uses it?

In true lawyer style I have to say it depends on what the licence terms of the “vanilla” software are.

Use of middleware is extremely common in games and other applications but each have there own terms concerning modifications, adaptations and improvements etc – so it all turns on what they say.

Non-derivative works i.e. those that aren’t derived from the “vanilla” code should belong to you.

The code in that work would be protected as a literary work so that a substantial part of the code could not be reused by someone else without consent. Also art and visual assets would be protected as artist copyright works.

However functionality per se is not protectable.

So if someone has just copied the ideas then its hard to do anything.

If the owner of the “vanilla” tech has taken his mods and is entitled to under the “Vanilla” licence then its hard to do anything.

However if someone has copied his original work or a substantial part then its possibly copyright infringement.

The key is to make sure that before using any third party software you understand the terms – and if someone does copy your work to look to enforce your rights once you have understood what they are.

Thanks to Alex Chapman for this article (Sheridans).

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I often get asked about disclaimers and notices in email footers and the requirements for providing information in web sites and emails. Its something I have commented on before on Chinwag and elsewhere but I thought it would be good to refresh the topic.

The long and the short of it is that you must include the company’s name, place of registration, address of its registered office and registered number in emails but there are some optional extras that you might want to consider. These are the kind of things you might normally expect to be included a subject header or (if it was a letter) in the main body or heading such as “subject to contract”, “confidential” etc.. However it has become common to include them in the email footer “just in case”. There is some uncertainty as to the enforceability of these notices and disclaimers but the accepted thinking is that they can’t hurt and their enforceability will depend on the circumstances of each case.

Confidentiality Notices You use these already and the purpose of that is to remind or notify the recipient that the information disclosed in the email may be confidential. This is also intended to help protect you if the email falls into the wrong hands or goes astray. In that case it may be an idea to add to your notice that the email is for the intended recipient only and that if it is received by someone other than the intended recipient it should not be used etc.

Contractual Notices You may also find that you are negotiating deals through email. In those cases it can be sensible to head the email “subject to contract” so that you aren’t deemed to be entering into an agreement through email when in fact you intend there to be further negotiation and the final deal to be subject to a signed negotiated agreement. Therefore in case you / your team forget to include it in the subject header or main body including it in an email footer can be the next best thing.

Disclaimers Sending emails have their own inherent risks. For example the attachments may have viruses and there may be technical problems such as email going astray (as described above). Therefore there is the opportunity to include a disclaimer to try to limit or remove your liability for these things.

Email Monitoring You may want to monitor emails sent and received by your employees. In that case you should include a notice saying that this is possible.

THE FOLLOWING IS A MORE COMPREHENSIVE SUMMARY OF THE ISSUES

Business Names and Information Disclosure – a summary of the issues

 Alex Chapman

The law concerning what information a business should disclose has recently been updated to clarify that companies must now disclose their full name, registered address and registration number in all its web sites and all letters, order forms, notices and other official publications whether those are in electronic form or not.

That includes emails which relate to the business of the company.

All companies should therefore review their web sites and emails to make sure they are compliant.

For email we would recommend that you include the information as a footer to the standard email template and for web sites you should consider updating your “terms and conditions”, “about us” or “contact” pages.

The new regulations should also be considered in conjunction with some existing rules that it can’t hurt to be reminded of and these are set out below

 Company’s name to appear in its correspondence, etc

 Every company must have the company’s place of registration, address of its registered office and the number with which it is registered mentioned legibly in all business letters, order forms and web sites of the company.

 The legislation specifically states that references to a type of document include all such documents, whether in hard copy, electronic or any other form and that therefore includes all emails sent by or on behalf of the company.

Every company must have its name in legible characters:

(a) in all business letters and order forms of the company;

(b) in all its notices and other official publications;

(c) in all its web sites;

(d) in all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, invoices, receipts and letters of credit.

However a web site is not a company’s web site for the purposes of these rules if-

(a) its content is determined solely by persons other than the company, or

(b) it does not relate to the company, its business or its operations.

Business Names Generally

 In the case of businesses that are not companies the general rule is that they should state legibly on all business letters, orders, invoices and receipts and written demands for the payment of debts:

(i) the name of each partner in the case of a partnership,

(ii) in the case of an individual, his name,

(iii) in relation to each person so named, an address in Great Britain at which service of any document relating in any way to the business will be effective (this could be the principal place of business and would not have to be a different address for each person).

Also in any premises where the business is carried on and to which its customers or suppliers have access, a notice containing such names and addresses is to be displayed in a prominent position so that it may easily be read by such customers or suppliers.

The E-Commerce Regulations

 The effect of this is that any business sending an email or similar communication for marketing purposes must comply with certain requirements of the Directive including that:

• The effect of this is that any business sending an email or similar communication for marketing purposes must comply with certain requirements of the Directive including that:

o       they give at least their name, e-mail address, geographic address and the particulars of their regulator;

o       whether it is solicited or unsolicited the email must clearly identify:

§         that it is email marketing;

§         the business on whose behalf it was sent;

§         whether a promotional offer is made and that it is a promotion together with its conditions in clear and unambiguous terms;

§         the terms of any promotional competition or game in an easily accessible manner and that it is promotional competition or game.

o       as soon as individuals receive unsolicited commercial communications they must be clearly identifiable as such i.e. in the subject header and therefore without reading the email

o       those involved in email marketing regularly consult and respect any
opt-out registers such as the E-mail Preference Service scheme supported by the Direct Marketing Association.

These Regulations became law in 2002 and deal specifically but not exclusively with the issue of commercial communications. These are broadly defined as being any form of communication designed to promote the goods, services or image of a business and, insofar as they form part of an “information society service” such as the Internet, they will be covered by the E-Commerce Regulations.

Thanks to Alex Chapman for this article (Sheridans).

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The recent administration of Empire and Oxygen and the furore surrounding the purchase of the agreements by third parties taking over certain parts of their businesses has demonstrated the precarious nature of intellectual property licences in insolvency. Licences drafted and negotiated during the boom years have often overlooked the implications of the insolvency of either the licensor or the licensee and the effect that insolvency of either party will have on the licensed intellectual property rights. Developers are most often the licensors and generally speaking their publishing contracts focus more on developer insolvency than publisher insolvency – with the consequence that protections are not included for the developer. However there is more to it than clauses dealing with insolvency events. There are the consequences of the licensee’s non-performance to consider specifically. Licensors are finding that their IP is now being sold by entities different from whom they originally licensed it to and those buying IP from administrators are finding that they often have not necessarily bought what they thought.

Often these problems arise as a result of pre-pack administrations where the valuable assets of a company are quickly sold leaving little time for proper due diligence and reviews of all licences but they can arise in any assignment, grant or transfer of an IP licence whether the licensee is in administration or not. Pre-packs can often have the effect of leaving the less desirable assets behind with the company now in administration and its creditors disgruntled. Licensors, who are often creditors, become increasingly disgruntled when they realise that the IP that they have licensed to the now insolvent business has been purported to be sold to a new company which can often be run by people who were employed by the now insolvent licensee company.

Issues such as this are only likely to increase as the economy recovers, as experience shows that the bulk of insolvencies occur when the economy picks up. The rise in insolvencies during upturns is attributed to banks believing that the conditions are right to allow them to call in their debts, put companies into administration and realise their security by selling the company onto new owners. Other companies simply find that the downturn has exhausted their capital reserves and they cannot survive despite what can be a promising pipeline of future work.

So if you are licensor of IP and the licensee goes into administration where do you stand and what can you do? Can a purchaser buy the licence of your IP from the administrator and leave you with debts from an insolvent company and a new distributor who is purporting to distribute on the same terms as originally agreed between you and the now insolvent company? Terms that may have been negotiated in light of other considerations between the specific parties and that may contain less favourable terms to the licensor as would have been negotiated with another third party.

The answers to what the legal positions of the parties are depend on the wording of the licence. Those licences which have insolvency related provisions (e.g. Insolvency Event and Non-Assignment) will see these clauses triggered so that the licence may be cancelled. For example these clauses may say that the licensor can terminate in the event of the insolvency of the licensee or that there is a contractual restriction against the licensee transferring the agreement or licence to a third party.

What if there are no clauses, can a purchaser simply buy a licence and continue on the same terms?

Often this depends on the terms of the licence and the specific wording concerning any payment for the IP rights. If the IP rights have been expressed to have been licensed for a lump sum which has been paid then, for the most part, the licence can be bought by a party from out of the administration.

If the licence of rights is expressed to be in consideration for the payment of all sums due or becoming due under the licence and sums are still owed by the now insolvent licensee (whether from a lump sum or from royalties) then the licence may be ineffective while the sums remain unpaid. More precisely, the licence to the licensee may be considered to be ineffective so it cannot be passed on OR ELSE in order for it to become effective all payments that are due must be made. This is the case provided that those payments are due.

If the IP has been and is currently being used by a new purchaser, this new purchaser may be infringing the IP of the licensor along with any third party who deals in the IP on its behalf or with its authority. The licensor can assert its rights and demand payment or that the parties stop their use of its IP. These actions can be especially effective since a purchaser who has deemed the licence valuable and important enough to attempt to buy and who continues distributing the products will often rather make the appropriate payments rather than lose the right to deal in the product.

So what are the lessons to learn from this?

If you are buying licences of IP from out of a company in administration it is essential that you check the terms of all licences to ascertain the effect of administration on them and whether they can be transferred to any third party. You should also check that the terms have been met.

Additionally, it is worth talking to the licensor early rather than having the licensor alert any third parties that you distribute to regarding their infringement. If you are the licensor you should keep checks on all licensees and monitor their status if it looks like that they might become insolvent. Licensors can also benefit from a review of their contracts and any payments made, due or becoming due under them. All new contracts should also incorporate standard insolvency related terms. If the terms are expressed as reciprocal, it is often difficult for either party to refuse having them in the new contract.

Licensees should consider the position in their licences and if they are affected look at the agreement they have to see what they can do about it. If they owe money to a licensor and that money relates to the use of the licensor IP then arguably there is something that the licensor can do about it and the licensee needs to be aware of this.

Thanks to Alex Tutty and Alex Chapman for this article (Sheridans).

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Hopefully most indie’s know the value of IP; without IP it is fairly unlikely you will be able to sustain a business longer term. However, do you also take steps to protect your IP?

Many large corporations and businesses operate dedicated IP holding companies; a separate company that owns the intellectual property assets of the group and then licenses assets to affiliated companies as needed for their use. The reasons for adopting such a structure are varied, ranging from the ability to more easily manage the intellectual property portfolio, protecting your IP from legal claims, to beneficial tax treatment that may be obtained in some jurisdictions.

You need to establish the holding company early in the development of your intellectual property — before the IP has significant value (presumably prior to commercialization). Once IP rights are transferred, you usually pay royalties to the holding company in exchange for use of the IP, note that it is wise to set a royalty rate as if it were between third parties in an arm’s-length transaction.

If your IP is separate from your main trading company, this offers significant protection for your IP in the event of legal action, or in the event of the trading company entering into administration.

Where to Base?

You can set-up a holding company in your own jurisdiction, but by far the best approach is to set the company up in a separate country entirely. Although this can be a little daunting, providing you are transparent with your local tax authority, it is all perfectly legal and above board.

Some of the best locations to base a holding company are:

• Austria
• Belgium
• Denmark
• Hong Kong
• Luxemburg
• Malta
• Netherlands
• Switzerland
• UK

If you shop around you can find some very reasonable company formation packages.

One final word – this is a very complex area and you really must seek professional advice.

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This article, by Alex Chapman at Sheridans, provides an overview of trademark useage, rights and registration. Note that this is a UK/EU perspective and laws do vary across territories.

1.  A trade mark is anything that identifies the goods and services of a business or distinguishes them from those of another.

2.  A registered trade mark gives statutory protection and an effective monopoly in respect of that mark for the goods or services it is registered for AND for similar marks with the same or similar goods where there is a likelihood of confusion. Well known registered trade marks have additional protection if used by others for different goods or services to those for which they are registered if that use takes unfair advantage of or is detrimental to the repute of the well known registered mark.

3.  Marks that are not registered have common law protection through passing off – which occurs if a third party uses a trading name, style or get up that misrepresents a connection or association with the owner of goodwill in a business undertaken under or by reference to that trading name, style or get up and in doing so causes damage to the owner. That damage includes lost revenue that it would have received had the “infringer” entered into a licence agreement with the owner.

4.  Certain trade marks can’t be registered and can’t be said to have sufficient goodwill for passing off. These include geographical indications, signs that designate the nature or intended use of the goods or services or are otherwise devoid of distinctive character and incapable of distinguishing the goods and services of one entity from those of another. For example Egg for eggs or Cake for cakes is a NO but Egg for financial services and Cake for PR is a YES.

5.  Marks that are otherwise devoid of distinctive character can however be registered and can have goodwill in them if they become distinctive through the use made of them.

6.  If you don’t use a registered trade mark for a continuing period of 5 years it becomes liable to be revoked.

7.  If you don’t enforce your rights as a trade mark owner and don’t object to someone else’s use of your mark you can be considered to have acquiesced and lose the right to enforce – but this is more complex than it sounds.

8.  You should apply to register your key brands as registered trade marks [contact Alex Chapman directly for more information].

9.  If you threaten someone with a registered trade mark infringement action without good grounds then you can be liable to pay damages for “groundless threats”.

10. It is a criminal offence to say a trade mark is registered when it isn’t.

11. Trade mark registration is territorial though a single European application can be made covering all countries of the EU.

12. Trade Marks are registered in respect of classes of goods and services. There are 45 different classes and when making an application you need to draft an appropriate specification in each class.

13. Making an application also gives 6 months priority in other territories so that additional applications can be made in other territories and back dated in that time.

14. A registration would last 10 years but can be renewed at that time.

15. Trade Mark registration is by far the best way to protect your brand but understanding trade marks is also important so that you don’t infringe someone else’s.

Thanks to Alex Chapman for this article.

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