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June 19, 2024
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Decoding Intellectual Property Law for Video Game Developers | Arnall Golden Gregory LLP


Video games are the ultimate interactive experience in intellectual property (“IP”), combining overlapping layers of copyrights, trademarks, licenses, “work made for hire” contracts, and publicity rights, all of which require careful consideration by a game developer to avoid legal issues and prepare the game for distribution. The legal documentation demonstrating the developer has the rights it needs to release the game, including all of its constituent parts, constitute the “chain of title” to the game — a necessary precursor to satisfy the warranties required by most distributors. This article will examine those layers more closely to help developers think proactively about their IP strategy and anticipate legal issues before they arise.

Copyright

Let’s start by examining how copyright law applies to video games.

Copyright refers to a body of law (specifically, Title 17 of the U.S. Code) that “protects original works of authorship” fixed in a tangible medium —everything from books to music, paintings to choreographed dances, and movies to video games. Simply put, think of “copyright” as “the right to make copies.” That right belongs exclusively to the copyright owner(s) of an original work, unless or until that right is assigned to someone else. The copyright owner can either be the person/people who created the work or the person/entity who commissioned it via a “work made for hire” contract.

So, who owns the copyright to a video game? It depends. If, for example, one person creates an original video game entirely by herself, for herself, then she will likely be deemed the sole copyright owner of the game. If two or more people create a game together with the intention of combining their efforts into a final product, they will likely be considered equal co-owners of the copyright to the game, barring a contract that says otherwise. If a company hires employees or independent contractors to create a game for the company, then the company will likely engage that creator via a contract that requires the copyright belong to the company as a condition of engagement. Copyrights can be bought, sold, traded, and subdivided through written agreements and legal orders (like bankruptcy and divorce decrees), so ownership of IP can change over time.

Source Materials & References

Beyond ownership of the game itself, there are other copyright considerations in gaming, such as the role of source materials and outside references. For example, is the game a derivative, interpretation, or spin-off of a pre-existing work, like a comic book or a tv show? If so, has a license been acquired for the use of those source materials?

Does the game incorporate the name, likeness, or image of a real person (dead or alive)? If so, does the developer need to get permission from that person or their estate to avoid a lawsuit?

Does the game reference outside works that the developer believes are in the public domain (e.g., because the copyright has expired) or should be deemed “fair use” (e.g., parody)? If so, has the developer obtained an opinion letter from legal counsel to support that position?

A game is the sum of its constituent parts, and those parts, when properly created, acquired, licensed, or cleared via a written instrument, form the game’s “chain of title.”

Musical Score & Music Licensing

Video games are not just a visual medium, they also have a strong audio component, such as music. Some games, like “Guitar Hero,” rely heavily on pre-existing, popular music as a centerpiece to draw players in. Other developers commission new, original music as a signature characteristic of a game, oftentimes allowing for endless loops (think of the original Mario Bros. soundtrack).

For a game developer to include music in a game, two different types of rights must be legally cleared:

  1. the right to use the underlying composition in relation to the game’s visuals (a “synchronization” or “synch” license)
  2. the right to use a particular master recording in the game (a “master use” license”).

Some developers acquire a synch license for a desirable piece of popular music and then hire a producer to re-record it. And don’t forget, a license to use a piece of music in a game may or may not include the right to use that music in an ad for the game. A music law attorney can be instrumental in helping a game developer navigate the complex world of music licensing, music publishing, and master recording rights.

Trademark

Like parents naming a newborn baby, game developers invariably spend lots of time and attention naming their games, which is why it can be devastating to have to undergo a rebranding due to potential trademark issues.

What is a trademark? The U.S. Patent and Trademark Office (“USPTO”) describes it as “a word, phrase, symbol or design that identifies your goods and services.” In other words, the title of a video game has the power to identify both its contents and origins to prospective purchasers, distinguishing itself from other games and developers in the market. By contrast, if multiple games or game developers use the same or similar names, consumers could find themselves confused about which product they’re actually buying. The essence of trademark law is to protect both producers and consumers from confusion in the marketplace, including in the market for video games.

A trademark search and legal opinion is highly recommended for game developers before they get too invested in a game title. And it’s always a good idea to prepare alternate titles, in case the preferred one is unavailable. There’s even a process to secure temporary first rights to a trademark before the product is released, so clearing a game title can start early in the development phase. An experienced trademark attorney can advise developers on the various ways to move confidently forward with a game title selection without fear of infringement (or with significantly reduced risk as risk can never be entirely eliminated).

IP Ownership & Administration

As you secure the various links in the IP chain-of-title — the copyrights, contracts, source materials, name/image/likeness rights, music, trademark, etc. — it’s natural to wonder, who ultimately owns and administers this collection of rights and licenses to a video game? Although individuals and groups of people can own, control, and administer IP in their personal capacity, there are lots of great reasons to consolidate the rights and licenses to a video game under an IP holding company, like a limited liability company (“LLC”) or other incorporated entity.

Let’s consider the formation of an LLC for video games.

The first thing to understand is that an LLC is a legal means through which game developers and investors can organize their respective shares of ownership in a game and the right to earn profits from it. An LLC can even be a single-purpose entity, only holding the IP for a single game, separate and apart from the game development company itself and its other game properties.

Second, a key phrase in “LLC” is the limited liability part, which provides a certain level of legal protection to its members while they’re engaging in the company’s legitimate business dealings. Generally, if an LLC is sued for copyright infringement, the party claiming infringement can go after the finances and assets of the LLC, but not necessarily the finances or assets of the LLC’s individual members, unless particular circumstances are present. While an LLC’s liability protection should not be viewed as “bullet proof,” that protection can be maximized by using the LLC solely for business transactions, not for its members’ personal activities.

Third, an LLC (or other IP holding company) can oftentimes more readily engage in business for its games, as compared to a game owned by individual stakeholders, because the rights to the game are consolidated under one roof. The payment of expenses, collection of income, and distribution of profits for a game can be centralized through an LLC. Finally, an LLC can lend the developer a certain degree of credibility when contracting for services, acquiring licenses, and seeking distribution for a game, in part because the corporate entity, as opposed to individuals, can be easily located and verified through public registries.

So, when is the right time to form an LLC for a game or game development company? Consult with a lawyer, but typically, a good time would be when the developer decides to pursue a game as a commercial product rather than as a mere hobby.

Moral of the Story

Successful video game development and distribution oftentimes requires working knowledge of copyright law, trademarks, contracts, publicity rights, corporate governance, and other niche legal specialties, including many topics not covered here like data privacy, cybersecurity, and payment processing. But the good news is, a game developer doesn’t have to moonlight as a law student — they can outsource their legal needs to a seasoned lawyer, or even a team of lawyers, who understand the complexities of this particular art form and can help clear the path toward an infringement-free game dev experience. And then, once the game is released, the game owners must actively defend their IP against infringement, at the risk of losing their rights if they don’t, so a lawyer can help fulfill that obligation by issuing cease-and-desist orders, “take-down” notices, and, when necessary, filing lawsuits. Every game developer deserves a chance to make their vision come to life, and getting lost in legal morass doesn’t have to impede that journey if you invest in good counsel.



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