Legal Issues

COSC 405Spring 2013

Bridget M. Blodgett

Intellectual Property

• The intent of IP law is to reward and motivate creators to contribute their ideas/products/etc to the world through sale

• There are three main forms in the US:– Copyright– Patents– Trademark

• While these are federally protected there are also many state level laws that may alter interpretations of the federal regulations

Copyright in Games

• Copyright protects creative and original works such as music, software code, or visual displays

• Copyright is automatically granted upon the creation of a fixed work in these areas, although you can apply for “official” copyright through the US Patent office

• For individuals, copyright lasts for the life of the author plus 70 years– For companies it is 95 years after first publication or 120

years after creation, which ever is less**

More Copyright

• Ideas, names, general concepts aren’t protected by copyright• What are the rights in copyright?

– Right to reproduce– Right to distribute– Right to publicly perform– Right to publicly display– Right to create derivative works– Right to digitally transmit

• The value comes from the ability to sell, transfer, or license any or all of these rights on an exclusive or non-exclusive basis

Companies and Copyright

• If you are employed by a company and make a creative work under their employ the company (not you) are granted copyright– If you are a contractor the contract must explicitly

acknowledge that their contribution is a work-for-hire

• Under the law companies have a duty to pursue copyright infringement

Copyright Infringement

• There are generally two types of infringement:– Willful infringement: knowing that it is

wrong/illegal and infringing anyway– Other infringement: the infringer believes that

they were not infringing or that they were acting under fair use

• If two works are identical but the creators did not have knowledge of the other’s work they both have independent copyrights

Vagaries of Copyright

• Since video games are complex pieces of software they fall under copyright in several ways:– As an audio/visual presentation– As source code, which is allowed to be duplicated

for the purpose of reverse engineering**• There are two types of infringement:

contributory (Napster) and vicarious (Megaupload*)

Fair Use

• There are some protections to the public called fair use which are determined through:– The purpose and character of the use, including

whether such use is of a commercial nature or educational purposes

– The nature of the copyrighted work– Amount and substantiality of the portion used in

relation to work as a whole– Effect upon the market for the origianl

Redress for Infringement

• In order to bring a copyright lawsuit you must register your copyright with the Library of Congress’s Copyright Office

• There are two type of remedies:– Equitable (non-monetary) to get the infringer to

stop– Legal (statutory and civil damages)

• Statutory damages punish the infringer when actual damages are difficult to prove

• Compensatory damages compensate for financial loss

Trademarks

• Trademark was meant to protect things like brand names, colors, and slogans from use by competitors– It is meant to keep others from confusing your

consumers and creating a loss for you• Federal law only protects interstate commerce,

while each state has its own trademark laws for operation within the state

• Only names/phrases that are distinct, unique, or memorable can be trademarked

Trademarks in Games

• Game company names are often trademarked since they are used in marketing campaigns– As are titles of games if there is potential for a

franchise• Trademark does not need to be registered but it

is very strongly urged– As long as a brand or name is used in commerce it is

considered trademarked– Trademark owners face the requirement to pursue

infringement or risk losing their trademark

Trademark Dilution

• When a brand is used in a way that accurately identifies the source of a product but perception of the product is diluted there could be grounds for a legal case– Use of a product or brand to refer to all items in a

class is an example of dilution e.g. band-aids or q-tips• Disparagement is a type of dilution that is meant

to put a product in a bad light– Copying a detergent brand with an inferior product

Patents

• Patents grant a monopoly over a method, process, device, or invention for a specific period of time– Does not necessarily grant the right to manufacture

and distribute that product– Prevents others from manufacturing and distribution

• Patents are limited to the country in which they are registered– If you want patents for something in several countries

you must apply for them in each

Patent Process

• A valid patent does not exist until the US PTO has issued a patent

• To get a patent issued you must an application with:– Written specifications that set out patent claims and a description

of the subject matter– Any drawing that may assist in the patent process– Filing fees– Declaration by the applicant stating that s/he believes they are the

first and original inventor of the product– Title of the invention– Abstract of the disclosure

• The total process may take as long as two years

Patent Types

• There are three types of patents:– Utility – new and useful process, machine,

manufacture, or composition of matter or major improvements to any of those existing• Must be novel(new), non-obvious, useful

– Design – ornamental design of articles of manufacture such as distinctive patterns of packaging

– Plant – literally for GMOs and GM Plants• Patents are for 20 years from the submission of

the application

Patents in Gaming

• They cannot protect a particular game but can be used to protect:– Game engines– Unique processes– Game types

• Utility patent must be extremely specific in order to pass the PTO approval process **– Some parts of the patent may also be covered

under copyright law

Patent Infringement

• Since the patent application process is time consuming and expensive usually only bigger companies in the development of software/hardware are seen in the courts

• Infringement occurs when a product/process falls within the patent owner’s claims– Or when the doctrine of equivalents is in play

Trade Secrets

• Trade secrets are a type of IP that is only valuable because they are not known by others

• The company must have a solid grasp of what the secret is and take measures to protect that secret– These measures may be physical or contractual in

nature and include things like NDAs

Transactional Law

• Contracts are common in the game industry• They have several basic components:– Capacity – not a minor, mental ability– Mutual Assent – offer and an acceptance (conditions

are often seen as a counter-offer)– Legal Purpose – doesn’t work for illegal stuff– Bargained-for Consideration – both parties are getting

something out of this– (sometimes) Signed Writing – must be signed and

written to be enforceable under the State of Frauds

What to Look For

• Not all lawyers are skilled in drafting contracts• Transactional lawyers look for two things: Where is the

leverage? Where is the money?• Leverage is usually who has more power to negotiate

(usually the party with the money) or who risks more if the transaction fails

• Type of breach: material or non-material– The non-breaching party may end the contract and sue in a

material case– A non-material or minor breach does not terminate the

contract but does allow for damages

What to Look For

• Try to understand every provision and why it is there or argue why it should be removed if not needed

• Know exactly what your rights, risks, and obligations are in the contract, including any boilerplate

Publisher/Developer Contract

• Publishers will almost always have more leverage than a developer

• Since they pay a substantial amount of money and assume a large amount of risk they often ask for some degree of control over the development

• Important sections include: Milestones, Rights Ownership, Work-Made-For-Hire, Contingent Compensation, Advance, Representations and Warrenties, Indemnification

Employment Agreements

• In most instances you will be working for someone else for the first few years of your career

• Since the games industry does not have an union most employment agreements are written by the employer

• Your contract c/should include: Recitals/Introduction, Duties, Term, NDA, Work-for-Hire, Compensation, Contingent Compensation, Credits, Covenants, Stocks/Revenue Shares/Pensions, Termination, At-will, Disability (allows for no-fault termination), Dispute Resolution (Arbitration)

Industry Level & Future Issues

• Right to First Sale• Government Oversight– Federal or State Review Committees

• Separation of manufacturing hardware and software/patent ownership