Law of Gaming Panel at Triangle Game Conference

At the Triangle Game Conference last Wednesday, Alexander Macris, CEO and president of Themis Group and a graduate of Harvard Law School, moderated a panel discussion titled “The Law of Gaming: Legal Protection, Perils, Pitfalls for Game Developers.” 

Panelists included Steve Chang (“the IP lawyer”), Zack Bishop (“the corporate lawyer”), and Jeff Young (“the trial lawyer”).  All are involved in game-related practice. 

I am not going to describe the five types of intellectual property protection, partly because I’m not a lawyer, partly because any serious game developer should already be familiar with them.  Instead I’ll briefly report the answers to several of Macris’ questions. 

Define important current legal issues in games:

IP lawyer: The scope of what you're allowed to patent on is changing.  Business method patents used to be very broad, now the patent office is being much more cautious.

Corporate lawyer: Use of open source software (OSS) in games and the licensing consequences.  Can all your proprietary code become subject to an open source license because one of your coders puts a bit of OSS into your game?

Trial lawyer: There is so much discussion via Internet (email, forums, etc.) that there are many more rocks to turn over to find that "smoking gun" bit of information that could make or break a lawsuit.  You can spend hundreds of thousands of dollars or more collecting electronic material.  Hence lawsuits become more expensive to pursue.

The most dangerous legal pitfall you've seen a company fall into:

Trial lawyer--lack of clarity in the contract and agreement between studio and publisher.

Corporate lawyer--Not thinking far enough ahead in case a game is a huge hit.  For example, you may not think your game will ever be turned into a movie, and you’re very likely right, but occasionally it happens.  If the developer has not been careful, conceivably they would have no rights to the movie and its profits.   Another example, what if your game is published by a small or foreign publisher, and then one of the largest companies wants to buy the right to publish?  How much of the money involved in the transfer will the developer receive?

IP lawyer--not giving yourself enough credit for the IP you developed (such as tool software).  Or, say you have a philosophical objection to patenting software, recognize that you may cost yourself a lot of money by being unable to exploit a patent.

I’ve decided to use middleware to help me produce my game.  Is this practical?:

Corporate lawyer--Yes with care.  Is there a royalty for the software, or a flat fee?  You could be paying millions in royalties in extreme cases.  Think ahead.

One thing to know about the law of games:

IP lawyer--know what rights are available to you, so you can decide rationally what to do rather than stumble into something.

Corporate lawyer--protect your IP at all costs and expect success, look forward to big payout, make sure others can't get in the way.  For example, a contract may include a "change of control provision," that you can't change who controls your company without breaching the contract.  If EA buys you for $100 million, you breach that contract.  Keep an eye on the fine print.

Trial lawyer--Hire people to make sure you get tight agreements to begin with so as to avoid litigation.

Some specific points came out during audience questions:

Trial lawyer–in an MMO people were conducting a funeral for someone who really died (the player, not the character); someone disrupted the funeral; they were sued for "intentional infliction of emotional distress."

NC Soft (City of Heroes) was sued for copyright violation by Marvel because people used the character generator to make the Hulk and other Marvel characters.  Marvel lost the suit because they couldn’t prove NC Soft encouraged this; nor did it help that a Marvel lawyer had made one of the characters!

Who owns user generated content--be sure your agreement is clear.

Non-compete clauses (e.g. you can’t work on (such-and-such genre) games for a year after leaving out company) are very state-specific.

Trial lawyer--Every day, people with vague patents demand money from companies for alleged violation; often the company will pay the money rather than go through the time and expense of litigation.  That’s the way it is.

IP lawyer--Typical cost for a utility patent application is 3-5 years, $10,000 to file, another $10,000 later.  Design patents are much less.

They think EULAs (the contracts you must agree to when installing software) are becoming more enforceable in the courts over the past 10-15 years.

Trial lawyer--When will a video game company be sued for having “caused violence” in someone.  This has already happened to Judas Priest and Ozzy Osborne for their music.