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Legal Issues for Game Developers

Page history last edited by Dan Rosenthal 13 years ago

Legal Issues for Game Developers

 

 

While an in-depth knowledge of the law is not critical for most game developers, there are a few legal principles that all game developers should be at least superficially familiar with. Depending on your position, these may shift in importance -- for instance, contract law will be more important to the executives of a studio, while most hands-on developers will be more concerned with intellectual property. Of course, if you're an independent developer, you may be wearing multiple hats.

 

Before getting into the legal issues, first an important disclaimer:

 

There is no substitute for legal advice provided by a licensed attorney in your jurisdiction; the information provided herein is intended as academic and does not constitute legal counsel, nor the establishment of any privileged communication or work product, nor any fiduciary relationship with the author.

 

That out of the way, let's talk about the issues*. There are three major areas of law that touch the game industry: intellectual property, contracts, and labor law. Of these, contract law and labor law are likely to be outside the realm of most development positions, but we'll talk briefly about them in relation to the big show, intellectual property. Finally, if you read nothing else, read the last section. It talks about when you should and shouldn't use your rights, and how they work in a collaborative industry like ours.

 

* Unless otherwise noted, we'll be referring to U.S. law.

Intellectual Property

 

Intellectual property law, or IP, comes in a few flavors that appear similar but are in fact very different. The relevant ones are:

 

  • Trade Secret
  • Copyright
  • Patent
  • Trademark

 

Now, you might think, "Well, they're all protecting my IP, right? What's the difference?" As it turns out, the differences can be huge -- what is protected, for how long, where the protections come from, etc. We'll talk about each in turn.

 

 

Trade Secret

 

Trade secret is often considered ugly stepchild of IP rights, and yet for the game industry, it may be among the most important. You will deal with trade secrets at every single job you take, every time you sign an NDA. You may even deal with trade secrets in licensing discussions, such as when presenting or considering a new tech partner. So what are trade secrets? Well unlike patents, copyright, and the like which are all based on federal law, the definition of a trade secret can actually vary from jurisdiction to jurisdiction. Most states (possibly all over the next few years) have accepted a model based on the Uniform Trade Secrets Act. The act defines a trade secret as information, formulas, patterns, programs, devices, methods, processes, techniques and compilations, that derive independent value, either actual or potential, from not being generally known to others; and not readily ascertainable by others; and which has reasonable efforts under the circumstances to maintain its secrecy.

 

This is one of those times where you need to really break the law down into its parts to see just what is or is not covered, so let's go line by line. First, the content. It includes quite a large number of things, from formulas (including algorithims in your programs),  to the programs themselves, compilers, techniques (such as shader pipelines), and such. Obviously this touches on nearly every aspect of what you will deal with as a developer, but not everything you touch will be a trade secret, due to the rest of the definition. The next clause says it must derive independent value, either actual or potential, from not being generally known to others. So, valueless information is not trade secret, regardless of whether it is generally known to others. Similarly, any information generally known to others cannot be a trade secret. Think of it this way: it has to both be a secret (i.e. not known) and valuable in trade (derives independent value). Now remember, this value does not have to be realized right now. If your code is under NDA, it doesn't necessarily have actual value at the moment, but it certainly has potential value later. Next, it must not be readily ascertainable by others. So, even if others don't know it yet, if it is something that they could easily find out, it isn't trade secret.  This ties into the last aspect -- that reasonable efforts under the circumstances must be taken to maintain its secrecy.  The keys here are reasonable, and under the circumstances. Let's take an internal business document containing sensitive formulas on market research as an example. Where is the line on how much protection you need to provide? Well, it's obviously unreasonable to expect that it needs to be stored in Ft. Knox, especially if you're a small studio. Even more so, if it is a document that you think you'd be referring to quite a bit, then under the circumstances it could be expected to require less stringent efforts of protection than something like a one-time memo that will likely not ever be referred to again. Similarly, if your studio is in the countryside, you might be able to get away with a less stringent amount of protection than if you were in a busy office building with tons of visitors coming in and out. Again, the circumstances are important, and what is reasonable in one case may not be reasonable in others.

 

So, now that we know what a trade secret is, what does it do? Trade secret is an odd duck here. Basically what it does, is it provides you with a civil private right of action (meaning, the right to sue someone) in the event that your trade secret is misappropriated. Misappropriation is a legal term of art, meaning acquiring the secret through improper means or from someone else who did so, OR disclosing/using the secret without consent you have a duty not to do so.  Notice how big the "or" is? Either situation works. There are four major situations that can cause misappropriation --

  • improper acquisition of the secret, i.e. theft
  • disclosing the secret when you have an obligation not to
  • learning the secret from someone who had an obligation not to disclose it
  • accidentally receiving the secret, learning its status as a trade secret, and then after gaining that knowledge, disclosing that information.

 

You can kind of break those four down into the situations they would most likely occur in. Point 1 is generally corporate espionage, always something to be wary of. Points 2 and 3 involve an insider leak (#2 as the source, and #3 as the recipient of the leak). Point 4 is generally for receiving mis-routed emails containing a disclaimer that those emails possess confidential information. Ever seen those disclaimers? This is why they are SUPER important. As a little anecdote, as a working journalist for a major gaming news outlet, there was a period where I was on a distribution list for a major game PR firm. Problem was, I was receiving some of their internal memos via emails, as the email client auto-complete would be sending them to me instead of the intended recipient with a similar address. Because the sender included that disclaimer at the bottom, they retained some legal remedies in case I decided to do something malicious with that information.

 

Let's talk about those remedies. The problem with trade secrets is that the second that it stops becoming a secret, that right is destroyed, so you really have to be proactive about protecting them. Naturally, this means that the best remedy for trade secrets are injunctions (sometimes known as restraining orders) preventing the use of that information. If the cat's out of the bag an injunction will probably be useless to you, so another remedy are money damages. Even if you can get an injunction, in situations of bad faith (typically blatant theft that gets caught early) you might be able to get both an injunction and punitive damages.

 

There are a few important defenses to trade secret, most stemming from the definition of the term. If the secret holder disclosed the information, that's a valid defense. If the other party developed the information on their own, that can be a valid defense if you can prove it. This can include things like reverse engineering, though you will need to check with local counsel as to your jurisdictions specific defenses.

 

Trade secrets are a double edged sword. Because they're only protected as long as they're secret, this means you can't patent them (as patenting involves a public disclosure). You also can't get them back once they're gone, and as a state law principle, definitions and defenses can vary in jurisdictions. The counter, however, is that they last indefinitely as long as they remain a secret. For example, soft drink formulas often remain a trade secret decades later. And if you are vigilant about enforcing them, you can protect quite a lot of your IP on top of copyright and patent until the time is right to make it public. A valuable trade secret can generate a LOT of money in license sales. Not to mention, some recent laws have criminalized corporate espionage misappropriation, which act as a disincentive for others to try and steal your information.

 

Copyright

 

Copyright is perhaps the first IP right that most people think of, and yet it is often the most misunderstood. Copyright protects original works of authorship fixed in any tangible medium of expression. These specifically include things like literary works, musical scores, pictures (both static and motion picture), and dramatic works. It does NOT protect ideas, processes, concepts, or discoveries, and this is where people often get copyright wrong. Copyright covers the text of your design doc, but it does not cover the ideas the design doc outlines. Copyright does not cover the idea of an orc having green skin; it does cover your artwork drawing that orc, and your notes describing it. The easiest way to remember copyright is that it does not cover the idea, but rather covers the expression of that idea.

 

There are some limits to copyright that you, as a developer, ought to be aware of. For instance, what is copyrightable? We've briefly mentioned above the general scope of copyright, but there are some other restrictions here. First, the work must be an original work of authorship. This is important because it excludes certain things. For instance, a collection of facts such as a phone book does not rise to a minimum spark of originality, according to the Supreme Court. However, the way that those facts are ordered and ranked, and editorial control over what is included and excluded does. For instance, a person developing a trivia game based on factual information cannot copyright the facts in question. They can, however, copyright the way those facts are presented, such as the specific wording of the question, the order in which the questions are presented, any editorial control over the inclusion of the fact and so forth. Similarly, a copyright holder in a collection of public domain data (i.e., data that is freely useable by any person, but the style in which it is presented is copyrighted) cannot use that copyright to prevent people from using the underlying data, only to protect their copyrightable interest (the format/style and order).  So, lets assume our trivia game uses information from a public domain encyclopedia. If someone tries to use the facts themselves in their own game, there's not a lot that we can do about it. However, if they copy our question word for word, or use our fonts, or copy our same list of questions in order, we're in a lot better position to do something about it.

 

The next question is, when is something copyrightable? Copyright is fixed at the moment of creation, in the U.S. This is very important - the moment that an original work of authorship is fixed in a tangible medium of expression, copyright in that work exists. You may have heard of things like registering copyright with the Copyright Office, or mailing copies of your creation to yourself. These are generally not necessary to gain copyright, but they can give you important benefits if you ever have a legal dispute. For instance, registering your work allows you to recover statutory damages in an infringement suit.

 

How long does copyright last? Well, that depends on who created the work and when it was created. For most works created after 1978, the protections last for the life of the author plus 70 years. Corporate works (i.e. works-for-hire) last 95 years from the date of publication or 120 years from date of creation, whichever is shorter. Works created between the years of 1923 and 1978 are confusing due to some conflicts and revision of the copyright act changing their duration, and you'd do best to consult an attorney to determine their status. Most works predating 1923 can be considered public domain.

 

Now, what rights does copyright give you? Copyright grants 6 exclusive rights to the copyright holder. These are:

 

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
 
Collectively, these are known as the "five powers of copyright"*, the right to reproduce, distribute, create derivative works, public performance, and public display. Copyright owners generally have exclusive rights in these things. This means that a case of copyright infringement can arise when you have a validly copyrighted work, and someone violates one of the five powers of copyright as to that work.

 

*Yes, five. Under ยง106 of the Copyright Act, right (4) and right (6) are both considered the same right of public performance.
 
But sometimes, copyright infringment "isn't" copyright infringement. The doctrine of "fair use" exists to allow what would otherwise be a case of copyright infringement, in limited situations. The important thing to know about fair use is that it is a complicated four-factor test, that gets judged on a case-by-case basis, and depends very heavily on the facts. This makes it hard to know in advance whether a use is fair or not. If you aren't sure, seek legal counsel before doing the fair use. This works both ways -- before deciding to enforce your copyright on something you think might raise a fair use defense, consult counsel! That being said, there are a couple of general things to know about fair use. Attempts to claim fair use for commercial purposes are almost always an uphill battle. Also, just because you're using a small amount of the copyrighted work won't save you, as courts have found amounts of less than 5% to be enough to kill a fair use argument. That being said, it is possible to use significantly more and still be fine. As always, seek counsel's advice on these determinations.
 

Finally, it's important to note that in the United States, the authority for copyright comes from Article I, Section 8 of the Constitution, which in part states "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;" and is further developed in the Copyright Act (Title 17, United States Code).  Under U.S. law, federal courts have jurisdiction over copyright claims.

 

So that's the heads up to copyright. You may be noticing that it's not as strong as you initially thought it was. This is true; copyright has a lot of limitations to counterbalance its incredibly long length. Lets move on to something stronger now.

 

Patent

 

Patents are the opposite to copyright in just about every way possible. They're both authorized by Art. I Sec. 8 of the Constitution, but beyond that they couldn't be more different.

 

Where copyright protected tangible expressions, patent protects the ideas themselves. Where copyright provides a long term with a relatively weak protection, patent provides a very strong protection for a short term. Where copyright occurs automatically and is very cheap to register, patents must be applied for and are typically expensive.  As developers you will be dealing with patent less often than you will be dealing with copyright.

 

Patents grant a right to exclude others from making, using, offering for sale, exporting or importing components to be assembled into an infringing device, or inducing others to infringe on the patented invention.  Typically this protection lasts for 20 years from date of filing. As you can tell, patents are commercially oriented. They're designed to ensure that only the patent holder gets to profit from his invention for that period. To that end, there are four rules for obtaining a patent:

 

  •  be of patentable subject matter eligible for patent protection,
  •  some aspect of it must be novel (new),
  •  be non-obvious
  •  be useful

 

In order to gain protection, you must fill out a properly filled claim outlining what your invention does and how it works. The process of making this claim is extremely complex, and the process is long and expensive. A single mistake can send you right back to the start. It is vital to seek a patent attorney if you are considering filing for a patent. Recent reports are showing that the average patent with no major errors costs over $10,000 to obtain and takes a minimum of 18-24 months. That's assuming everything goes right.  But what happens if someone shows up and says "but wait, I created this first!" That's called presenting "prior art" and it can invalidate the whole process if they can prove it, even if you filed first. Another irritating feature of patents is that they require that you expose your creation to the entire world (or really, anyone who wants to look for it). There are several patent attorneys who deal specifically in the realm of video game patent law, and you'd be well advised to seek one before you publicly display anything that you create.

 

In general, you'll want to remember that most things can only be copyrighted OR patented, as the two are mutually exclusive; however compilation works can contain both. For instance, you may be an MMO designer and hypothetically patent a unique form of network transactions that your game utilizes. The dialog for your game is copyrighted. The game itself may be copyrighted as an entire work. Overall, however, you will be able to have a combination of IP rights including both patent and copyright protecting your creations. That combination is much stronger and cohesive than relying on one or the other.

 

Patents are governed by federal law, and are granted by the USPTO -- the US Patent and Trademark Office. We'll talk about their other half below.

 

Trademark

 

Trademark is different than copyright and patent law, which both stem from the Constitution.  Unlike patents, you don't have to register a trademark (sometimes called a service mark) to gain the protections. But unlike copyright, trademarks aren't created immediately upon use. Trademarks seek to protect the commercial source of a product, or its branding. So when you think of inventions for patent, or expressions for copyright, think of brands and sources for trademark.

 

Because of this difference (which stems from trademark's origins in unfair competition law), trademarks do not expire like other forms of IP. They're also easier to acquire and deal with than patents at least, and in some ways easier than copyright. In order to be eligible for protection, a mark need only be a device, brand, label, name, signature, word, letter, number, shape of goods, packaging, combination of colors, or any combination of the above which is capable of distinguishing the origin of goods and services. It must be graphically representable, and it must apply to the goods and services registered. A great example of trademarks can be found on the cover of any AAA game title. The title of the game, the name of the publisher and developers, the names of the products like Bink video and RAD tools, even the shape of the box, all of it can be trademarked. And, just to go back over what we talked about above, the art on the box is copyrighted, the text of the manual is copyrighted, the game itself is copyrighted, the engine may contain patented inventions, and so on and so forth. Starting to see the power of IP rights?

 

In order to gain a trademark, you first have to use it in commerce. This is important because if you try to register a trademark that isn't in use, it ain't gonna happen. Trademarks also only apply to in relation to the products or services for which they are registered. So for instance Microsoft could enforce its trademark on Halo against other computer games. It couldn't, however, enforce it against vacuum cleaner manufacturer Oreck's "Halo" vacuum. They both use the same mark, but registered for different purposes.

 

It's also important to know the distinctiveness of your mark, especially before you start coming up with a name for your studio or game. Some marks are very strong because of the brand image they create in the consumer's mind. For instance, Sony. The word Sony, on its own, doesn't mean anything. Certainly not "video game consoles and computers". So the fact that it instantly creates that image in your mind is evidence of the strength of that brand. This is what is called a "fanciful" mark, which is the strongest and consists of entirely invented words (i.e., they have no meaning outside of their brand and would not exist without that brand). Just slightly below them are "arbitrary" marks, which are existing words used in a meaningless context. For instance, Apple Computer would be an arbitrary use of the mark Apple (which, while pre-existing, has no relation to computers).  Both fanciful and arbitrary marks are immediately registrable.

 

The next step down the scale is a "suggestive" mark. Suggestive marks indicate something about the nature or quality of a good, but do not actually describe it; they require the consumer to make a mental leap to the actual perception of the characteristic. For instance, Mustang for a car -- it's evoking images of being fast, but does not actually describe that this is a car. Suggestive marks are entitled to protection as well. The next level are "descriptive" trademarks. There is a large legal gap between suggestive and descriptive marks, similar as they are. A descriptive mark describes the goods and services that are registered. For instance, a razor called "Close Shave".  Descriptive marks are NOT protectable, unless they can be shown to have a distinctive character in the marketplace. Because the line between suggestive and descriptive is so thin (that mental leap the consumer must make), a large amount of trademark litigation is in this area. Do yourself a favor, and find a stronger mark.

 

The final step on the scale is "generic" marks. These aren't actually trademarks at all, because they have no protection. They include calling an object by it's actual name. For instance, calling pepper "pepper".  Since there is no way to determine the brand or source from a generic mark, they provide no protection. Any marks that lose their distinctiveness in the market are also genericized marks.

 

The moral of the story is, pick a strong mark, always. Fanciful or arbitrary if you can. You will not be happy if you spend months or years developing a product and suddenly find you can't protect that brand. Trademark issues should always be in your mind when you are naming things in your game.

 

Now, with trademarks there are two kinds of infringement. There is direct trademark infringement, or "confusion", and "dilution". Confusion (which 99% of the time is what people are referring to when they simply say trademark infringement) stems from a using a mark which is confusingly similar or even identical to another's trademark, when the marks are for similar products. In contrast, trademark dilution is for products in unconnected, noncompeting markets, where the use of the unconnected trademark would dilute the famous mark's uniqueness. To illustrate the difference, Sony's marks would be infringed by confusion if Microsoft created a product called "Playstation 4".  Sony's marks would be diluted if Reebok made a running shoe called "The Playstation".  The actual tests to determine whether confusion or dilution occur can get complex, and once again, you ought to seek legal counsel, but unlike copyright it is a bit easier to get a good grasp on whether you are at risk. Simply ask yourself "Is the name I want to use for my mark in commerce going to confuse consumers as to the origin of the brand?" Or, from the side of the plaintiff, "Are consumers being confused by the competition as to the source of this product?" If the answer is yes, you ought to seek counsel.

 

There are two fair use exceptions to trademark infringement, and thankfully they are very easy to consider in comparison to copyright. First is what is called "nominative fair use." This simply means that you can use a trademark to identify another object by name. For instance, in order to identify an Xbox 360, I can use the trademark Xbox 360. There's no risk of confusing consumers in the market place that Microsoft owns that product, because I'm actually identifying that product. As an example, look at Microsoft's recent commercials showing families shopping for a low-priced Windows laptop. In most commercials, the actors say something along the lines of "What about this Macbook?"  The word Macbook is a registered trademark for Apple, but it is nominative fair use for Microsoft to use that mark because they are identifying the Apple product by name. Remember nominative stems from the root for "name", and naming someone else's mark to identify it is generally OK.

 

The other fair use is "descriptive fair use" or "attributive fair use".  This kind of fair use applies when you are accurately describing an attribute of your own product, using a descriptive term that is someone else's trademark. The famous example here is that Maytag's trademark phrase "Whisper-Quiet" cannot prevent other companies from describing the fact that their products are indeed whisper quiet. When combined together, these kinds of fair use make up our system of comparative advertising, and ironically, work to help spread word of your brand.

 

 

The Intersection of Labor and Contract Law

 

I mentioned earlier that we'd briefly discuss the intersection of labor and contract law. Now that we've reviewed the aspects of IP, we can look at these other areas. As I mentioned before, copyright is fixed at the time of creation, right?  What happens when your employees do what they're paid to do, and create something? You don't have the copyright on it, they do. So it is very important when hiring a new employee to have them sign a contract that includes an assignment of IP rights. There are a number of ways to do this, and depending on whether your people are employees or independent contractors, you may want to have them stipulate in the contract that their works are "works-for-hire" in the corporation. There are lots of possibilities, and you'll DEFINITELY want to seek assistance from counsel to draft this. You will also want to make your employees sign an NDA, or non-disclosure-agreement, if for nothing else than to give you at least the option of enforcing trade secret protections. The specifics of NDAs, assignments, and pretty much everything else in labor and contract law are well beyond the scope of this article, but just know that they operate in this overlap between labor law, contract law, and IP. As always, seek advice from a knowledgeable attorney before making critical decisions.

 

THE MOST IMPORTANT SECTION IN THIS LESSON!

 

The most important thing to know about IP rights is how they interact with your co-workers and competitors in the industry, especially in instances of collaborative development like on this site. First, don't be afraid to share your ideas. Remember, ideas are not copyrightable, they're not trademarkable, not trade secretable, and both difficult and prohibitively expensive to patent. You can't protect them anyway, and you shouldn't try -- instead you should try to come up with new ones, and start working on the good ones.  Don't freak out when you see things like Game Jams, or this course and think "Ian says I should post my work to the discussion forum, but I came up with a Great Idea(tm) and I don't want other people to steal it." Ideas are commonplace in games, and the value of your idea is nothing compared to the value of the implementation of that idea, your expertise and hard work in developing it into something that's going to make you real money. But most importantly, our industry is very lateral, very tight-knit, very collaborative. You'll find people sharing their ideas at GDC, doing collaborative projects between studios, or using inspiration from one game's mechanics to improve another. Don't fight it. That's the way things work, and by embracing that open atmosphere, you'll be far better off. Remember, Congress was given the constitutional right to protect IP for the specific mission of "promot[ing] the progress of science and useful arts,"not to hold them back.

 

About The Author:

Dan Rosenthal is Executive Director of GamesLaw.net, which provides legal analysis for the game industry. He is also Content Editor at Stratics Media, and a former writer/editor for Gamespy, Strategy Player Magazine, and UGO. He will be returning for the second time as a speaker and moderator at PAX in September to discuss legal issues in gaming.

 

Comments (2)

mike.reddy@... said

at 8:15 am on Jul 1, 2009

Hell, if someone takes an idea of mine and makes a game, I'd be happy. I have far too many to ever make myself. Probably most are terrible, but you don't know until you make it, or get feedback.

Mike Haverty (SiddGames) said

at 12:44 pm on Jul 1, 2009

Thanks for the comprehensive overview.

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