Legal Issues for Rookie Development Studios Part II

The games we make are ultimately reduced to code. 1s and 0s. But we know there is a lot more to what goes into a game than just code. Art, sounds, textures, models, animations and, of course, the engines that make them go. Legally, this stuff is all termed Intellectual Property or IP for short. IP is a form of "personal" property (as opposed to "real" property like real estate). Personal property is, basically, everything that is not real estate. But, this gives IP certain legal qualities due to its nature as "personalty" -- it is "owned" by someone. And it can be sold or licensed, governed by contracts, and even abandoned or given away. But because it is property it has to be treated in some very special ways to retain its value to the owner.

Keep in mind, there is no way to protect only an idea (except perhaps "trade secrets"...but, more on that later). So ideas are wrapped in IP to make them proprietary and subject to ownership. An idea for a painting, for example, cannot be protected. But once drawn, the artist owns the "work". Similarly, the idea for an invention is not protectable. But once designed or built, if it is unique and original, it can be patented and thereby protected. Confused yet? Like Yoda said, "You will be!" Well, let's try to work through this a little to make it clearer.

WARNING! THE FOLLOWING SECTION IS RATHER THICK

If you want to avoid a headache just read the copyright stuff and then go to the *** below.

There are several basic types of IP: copyrighted works, patented inventions, trade and service marks, and trade secrets. Let's take a closer look at the different types of IP to better understand their differences and similarities.


Copyrights
Copyrighted "works" can be anything created by an individual or group of individuals that originates the "work." Examples we are all familiar with are sound recordings, photographs, sculptures, books, articles (like this one), code, and several other types of works. The Copyright office puts it like this:

The really cool thing about copyrights is that pretty much anyone can figure out how to register a copyright by going to the Copyright Office web site and downloading the form, filling it out and sending it in. Of course, it is the creation of the "work" that instills ownership on the author. But the act of registering the copyright gives the owner access to all of the enforcement capabilities of the Federal Statutes and courts in enforcing those rights.


Patents
Patents apply to inventions. They are purely statutory rights created to provide the inventor with a legal "monopoly" in their invention for 20 years. But patents are much more difficult to obtain and after the 20 years are up the invention becomes public domain and anyone can make it. This from the U.S. Patent and Trademark Office (PTO) on patents:

Like I said, a government granted monopoly. The problem with patents is that they are expensive and getting one is a long difficult process. Lawyers have to have a special qualifications and approval from the PTO to register and seek patents. This means these lawyers are costly and, for the most part, outside the realm of affordability for all but the most successful among us.


Trademarks
Trade and service marks, usually both called "trademarks", are words, symbols and other things use to identify the source of a product in commerce. Some little know trademarks are Kodak Yellow and the sound of a Harley. Both are protected. But usually trademarks are names and logos. Again, from the PTO:

Trademarks are associated with a product and are limited to that particular product type in terms of the scope of protection. So, Domino Pizza and Domino sugar ad Domino software all get to trademark the same word because the basic idea around trademark law is to avoid confusion as to origination in the marketplace. Though it reaches a point where a trademark becomes what is classified as a "famous" mark and then the scope of protection expands across product categories. So, forget the idea of naming your game Coca Cola!

The first thing to do if you are interested in getting a trademark is to make sure the term you want to TM is not descriptive. For example you cannot trademark the word "bread" for use with the sale of bread. It is generic and descriptive. But you can certainly TM the word "Bread" for a band (oh yeah someone already did that), or even for a game. You also need to make sure the mark or any close variation is not already in use. There are companies that do comprehensive name searches - the charge for a full trademark search is usually from $400 - $1200 depending on the geographic scope - from national to worldwide. Once you determine that the mark is relatively clean, trademarks are acquired by registering an application with the PTO, and then waiting and waiting, responding if there is a similar mark or if the examiner thinks it is too generic, and then, hopefully, get your TM registered. It takes some time and effort but it is not nearly as expensive as the patent application process mentioned above.


Trade Secrets
Unlike the above types of IP, trade secrets are not protected by Federal law. Instead, they are governed by state laws. Though, fortunately, state laws are very consistent on what a trade secret is and how well it is protected. Basically, trade secrets are information that a company values and keeps secret. It costs money to develop them and they have economic value to the business that owns them. A good example of a trade secret is the secret formula for Coca Cola. Coke has never been patented (remember patents only last for 20 years!). Instead, the formula for Coke is protected as a trade secret. This way the company does not have to register the formula and it will remain confidential as long as they can keep it a secret.

The Uniform Trade Secrets Act, adopted by most states, defines trade secrets as follows:

Typical trade secrets include financial information, customer lists, processes and even (remember, I said this was coming) commercially valuable ideas. The main thing about trade secrets is that they have inherent value and are protected from disclosure. It is common for employers to have employees agree to keep trade secrets confidential and this is also standard fare in Non Disclosure Agreements (NDAs).

*** OK, it's safe...

IP ownership is one of the most common errors rookie studios make. The reason is simple: they start with a bunch of geeks more concerned with making a game that caring about who owns what. You may remember, I started my first article like this...

After our little IP tutorial, what are the main problems you see? Well, most center on a complete lack of copyright ownership by the developer. Remember, the "author" owns his or her property under copyright law. This means that the one who wrote the story owns the story. The one who did the 2d graphics owns the 2d graphics. The programmer owns his code. And the music...the music was stolen off the internet and is owned by god knows what giant music publisher. And the developer owns squat. Trust me on this, it's hard to sell squat! And, oh yeah, the name of you game belongs to someone else who released a game you never heard of with the same name 15 years ago.

Don't think that just because these folks gave you their IP to use and didn't ask for anything at the time that they are willing to see some of the team go forward with the project, even if they lost interest or even just wandered away. It doesn't work that way. Besides, any publisher you deal with will want you to guarantee that you own the IP. Heck, for new studios you will probably have to sell them the IP along with the game. And you can't sell what you don't own.

Fortunately, the solution is not difficult. But it is essential to being able to get where you want to go. Get everyone who contributes to assign his or her copyrights to you, the developer. Once you get funded you can put everyone on salary. You see, when work is done by full time employee it is "work for hire" and owned by the employer, not the employee. But if outside contractors (even if they are paid) are used or folks just contribute what they contribute (for free or without being on the payroll) you simply must get them to assign you their IP rights. Otherwise there may be a nasty lawsuit in your future and one very pissed off publisher promising you that you will never work in this industry again!

You can leave the Trademark and Patent stuff for later. But get the copyrights at the start. Like I said, registering copyrights can be done easily, the forms and instructions for filling them out are available from the Copyright Office online and registering them is simple and cheap. Obtain the copyrights to your assets and get them registered. Just like the form of your company and ownership interests we discussed last time, do it before you try to get your game funded. You will avoid a ton of trouble. And it will show the publisher you are a pro which will only make trying to get you game funded easier.

(C) 2003 Thomas H. Buscaglia. All rights reserved.


Author's Bio

Tom Buscaglia - Lawyer, Game Industry Evangelist, Producer, and Hard-core Gamer. Tom Buscaglia is an attorney practicing technology law in Miami, Florida. In addition to obtaining his Law degree from Georgetown University in 1985, he holds a B.A. degree in Philosophy from S.U.N.Y., Buffalo, with honors in Phenomenology and the Philosophy of Law. Tom is a principal in the law firm T.H. Buscaglia and Associates in Miami, Florida, where he practices law for a living and plays computer games and philosophizes on the side. Tom's firm's web site is www.gameattorney.com.

Tom is dedicated to the computer and video game industry, assisting developers in all aspects of their legal and business needs. Tom was the Keynote Luncheon Speaker at the 2003 Summer Simulation Multiconference in Montreal, Canada, sponsored by the Society for Modeling and Simulation speaking on The Game and Simulation Industries:Convergence or Collision. He wrote the chapter entitled "Effective Developer Contracts" for the recently released book, The Secrets of the Game Business. He is a contributor to numerous International Game Developers Association, Business and Legal Committee, publications including: the Publisher Contract Walkthrough white paper, on Game Documentation and Trade Show Demos and Termination Provisions; the Game Submission Guide on Legal Issues and the soon to be released Intellectual Property white paper on IP Contracts Independent Developers Sign. Tom published a series of online articles on www.GIGnews.com to assist "rookie" game developers on the legal issues they should consider when starting out in the game industry entitled Initial Legal Issues, What are these games made of?legally speaking and Completing your Contract Arsenal. Tom was a presenter at the 2002 Game Developers Conference, in San Jose, California, on the topic of "The Phenomenology of Game Design". Tom has been a guest lecturer at Full Sail in Orlando, Florida, giving a presentation to the Game Programming students on Intellectual Property and what to look for, and look out for, in their first employment agreement.

Tom is the Founder and Executive Director of Games-Florida, a non-profit committed to building the Computer and Video Game development industry in Florida by bringing Florida to the Game Development industry and bringing the Game Development industry to Florida. www.games-florida.org He also sits on the Advisory Board of the Digital Media Alliance of Florida www.dmaflorida.org recently participating in a DMAF Panel Discussion with Florida game industry leaders at Full Sail in Orlando on "The Future of the Game Industry in Florida." Tom has been the Chapter Coordinator for the South Florida Chapter of the IGDA since its inception, and is a moderator for the Business and Legal forums on IGDA web site, www.igda.org.

As FaTe[F8S] Tom is the founder and Supreme Warlord of FaTe's Minions, an online gaming "clan" that has been competing in various online competitions since January, 1998. www.f8s.com As a "hard-core" gamer, Tom plays online on a regular basis and has a gamer's appreciation and understanding of the game industry.