Video Game Law
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Zachary Strebeck
Video game and board game lawyer representing small and medium-sized game companies throughout the industry.
• runs the Game Lawyer Blog • hosts the Legal Moves podcast • spoken at a number of games industry conventions and events • taught multiple video game law CLE programs
Contact: [email protected] 01 - the games industry
02 - video game law? AGENDA 03 - company formation 04 - intellectual property
05 - game contracts 06 - privacy law
07 - terms of use/EULAs AGENDA 08 - gambling law 09 - esports
“In 2018 the industry was worth just shy of $135 billion. The $134.9 billion market value marks a 10.9% increase over 2017.”
- Newzoo, market analyst firm, as shared with GamesIndustry.biz 60% of Americans play video games every day number of video game players 150 million in the US
worldwide video game players 2.2 billion 1/3 of total global population
average player age 34 (72% are over 18 years old)
Video Game Law?
• Corporations/business law • Securities law • M&A • Intellectual property and Licensing • Contract law • Employment law • Regulatory law • Privacy law • Tax law page 010 Marketing to Game Clients
• Content Marketing • Blogging/Guest Blogging • In-person at Game Conventions • Panels and Q&As • Reddit, other forums • Social Media Marketing
page 011 Learning about the industry
• gamasutra.com • gamesindustry.biz • kickstarterlessons.com • reddit.com/r/gamedev
page 012 Your clients
• What kind of clients do you work with in video games? • What are your client’s goals? • What are they looking for in a lawyer?
page 013
Forming a game studio
• Different business entities • What kind of entity to form? • Where to form the entity? • Limiting liability
page 015 Forming a game studio
• Dividing ownership in a game studio • Even split? • “Dead Equity” issues • Dynamic Equity splits • The importance of Vesting ownership
page 016 Forming a game studio
• Before you draft – make sure everyone’s on the same page • Shared and Secret questionnaires • What is the company’s business model? • How will it be financed? • What are each member’s responsibilities? • How will ownership be divided? • What’s the exit strategy? Is there one?
page 017 Forming a game studio – Red Flags
• Do the founders trust each other? • Do they have a solid business plan? • Is there good communication between founders? • Do they all understand the target market and the costs involved in developing the game? • Do they have different answers to the questionnaire questions? • Are each founders’ expectations realistic?
page 018 Forming a game studio – Financing
• What do they need money for? • Types of financing • Crowdfunding • Publishers • Securities Issues
page 019
Intellectual Property
• What is Intellectual Property? • Types of IP and what they protect: • Patents • Trademarks • Copyright • Trade Secrets
page 021 Intellectual Property - Patents
• Protect ideas, inventions, processes, etc. • Must be 1) useful, 2) non-obvious, and 3) novel • Not really common with game startups, unless they do hardware or some novel software • Usually, there really isn’t any novel technology in video games that’s worthy of patent protection • Alice Decision
page 022 Intellectual Property – Patent Costs • Extremely Simple Patent - $7,000 to $8,250 • “Software Related” - $16,000 and up • Plus drawings, filing fees, etc. • Provisional Patent – much cheaper, gives you 12 months to file your Non-Provisional Patent • Confidentiality agreements and invention assignments
page 023 Intellectual Property - Trademarks • Two-fold protections – consumers and trademark owners • Protects words, slogans, and logos • Word or Design marks, as well as certification marks, service marks, trade dress • Why is it so important?
page 024 Intellectual Property - Trademarks • Benefits of trademark registration • USPTO and state registrations • International registrations
page 025 Intellectual Property - Trademarks • Trademark distinctiveness scale: • Fanciful • Arbitrary • Suggestive • Descriptive • Generic • Is your client’s trademark registrable? • Counseling clients on choosing a trademark
page 026 Intellectual Property - Trademarks • What can you register? • Game name • Company name • Game logo • Company logo • Slogans associated with the game or company
page 027 Intellectual Property - Trademarks • Trademark Clearance Search • USPTO • EU • WIPO Brand Database • Google • Steam • App Stores • Itch.io, Game Jolt • Board Game Geek page 028 Intellectual Property - Trademarks • USPTO registration tips: • Video games are in Class 9 • Role Playing Game books in Class 16 • Board games/toys are in Class 28 • Online services (online games) in Class 41 • Video game development services in Class 42
page 029 Intellectual Property - Trademarks • USPTO registration tips: • How to describe your client’s goods/services • Logo/design mark descriptions • Intent to use applications
page 030 Intellectual Property - Copyright • What does copyright protect? • When do rights begin? • Benefit of registration • UPDATE: Supreme Court requires registration before filing lawsuit
page 031 Intellectual Property - Copyright • Registering a copyright – copyright.gov • What type of application? • Works for hire – who is the author? • Copyright specimens for video game applications
page 032 Intellectual Property - Copyright • Copyright enforcement • Cease and Desist Letters • Digital Millennium Copyright Act • The DMCA Safe Harbor • Takedown notice and counter notice process • Anti-circumvention • Lawsuits
page 033 Intellectual Property – Trade Secrets • Trade secrets are secrets that have some value in the industry • Software techniques, business plans, ideas, etc. • Protected by confidentiality agreements/clauses • Every contract should have one • Two requirements: • An actual secret • Must take reasonable steps to protect the secret
page 034
Types of Game Contracts
• Employee/Contractor Agreements • License Agreements • Publisher Agreements • Confidentiality Agreements/NDAs • Music license/ownership • Voice actors • Terms of Use/EULA • Privacy Policy (not technically a “contract”)
page 036 Types of Game Contracts
• Contracts should be in place for everything that touches your client’s game • Need to make sure your client OWNS all of the intellectual property in the game • Other important terms: • Term of agreement • Ways to get out of agreement if a breach • Confidentiality • Governing law • Etc. page 037 Employment Agreements
• Employees versus contractors • Based in state law – be aware of tests • Example – California “work for hire” agreements under CA labor law • UPDATE: 2018 Dynamex Case clarifies CA “ABC” test for independent contractors • Worker free from control and direction • Worker performs work outside the usual course of employer’s business • Worker engaged in an independent trade of the same kind page 038 Publishing Agreements
• Payments – enough to fund development? • Approval Process • Clear milestones • Process for changing milestones/timeline • Ownership of IP • QA/Support • Key People (“key man” provisions) • Termination provisions
page 039 License Agreements
• Ownership • Term • Scope • Territory • Compensation/Royalties
page 040 Confidentiality Agreements
• Used before entering into a business relationship or to keep things confidential when working together • Be sure that the scope is appropriate • Clients are often concerned about the responsibilities/liabilities that go with these
page 041 Music Agreements
• License versus Ownership • Types of licenses • Soundtrack revenue? • Unions and PROs
page 042
Terms of Use
• Very important when you release a game to the public • What needs to be in there? • Class action waiver/Arbitration • Virtual items licensed, non-transferable, no value • DMCA agent listed • User Generated Content – Acceptable Use Policy • Modding the game • Limitation of liability/No warranties • Set up properly – agreed to before playing • UPDATE: Supreme Court weighs in on Arbitration
clauses page 044
Privacy Law
• Different privacy laws in each country/state • Two main ones to look at: EU (GDPR) and California (new law goes into effect in 2020) • A few aspects: • Internal data security/data usage policies and procedures • Internal data breach and notification policies and procedures • Public-facing privacy policy • User rights page 046 GDPR
• What is the GDPR? • Who does it apply to? • What does it entail? • How do you comply? • Data map – what are you collecting and what are you doing with it? • Internal security procedures • Internal data breach procedures • Data Protection Officer • EU Representative page 047 GDPR
• Individuals’ rights under the GDPR • Right to access • Right to be informed • Right to erasure • Right to data portability • Right to object • Right to not be subject to automated decision making
page 048 GDPR
• Legal bases for data collection and use • Consent • Contract • Legal Obligation • Protect vital interest • Public interest/official authority • Legitimate Interest • Balancing test – individual rights versus processor’s interests • Catch-all, relatively untested page 049 California Law
• California Consumer Privacy Act 2018 - Goes into effect 2020 • Comparison with GDPR • Rights of the user • Right to know what info you have about them • Right to request deletion • Right to request details about sale of info • Right to opt out of sale of info • Right to freedom from discrimination page 050 Children’s Privacy
• COPPA – Children’s Online Privacy Protection Act • Applies when • directed to children under 13 and you or others are collecting PII • knowledge of users under 13 • Third party compliance services • https://www.ftc.gov/tips-advice/business- center/guidance/childrens-online-privacy- protection-rule-six-step-compliance page 051
Lotteries and Gambling
• Consideration + Chance + Prize = illegal lottery • Sweepstakes and contests eliminate one or the other • How does this impact games?
page 053 Virtual Currency
• Using real money to buy in-game virtual items, sometimes randomly generated • Generally, make sure that: • The virtual items are licensed, not sold • The terms are clear that they are not transferable and have no value • The developer is not sponsoring a secondary market • But see Valve versus the State of Washington and Big Fish Casino case • Evolving area of law
page 054 Virtual Currency
• Blockchain-based games – are they in violation of the virtual currency rules?
page 055
Update: Accessibility Law
• 21st Century Communications and Video Accessibility Act (CVAA) – applies to video games as of January 1, 2019 • Previously subject to a waiver • Requires that certain video game features are operable without vision • Includes in-game chat and user interface elements • Also, need to keep compliance records • Build into design of game early on page 057 Esports
• Fast-growing part of the industry • Involves issues similar to physical sports law • Trademarks and other intellectual property issues • Substance abuse • Minors
page 058 Board Game Clients
• What’s different? • Other aspects unique to board game industry: • Manufacturing contracts • Distribution agreements • Product labeling/testing • Trademarks – Class 28 • Copyright specimens • Patentable inventions • Crowdfunding page 059 Questions?
• Email me at [email protected]
page 060 contact info
email online
[email protected] strebecklaw.com gamelawyerblog.com @zstrebeck Legal Moves podcast
page 061 thank you.