Licensing someone else's IP? Don't make these 2 huge mistakes!
Game lawyer Zachary Strebeck looks at two crucial mistakes to avoid when licensing another company's intellectual property. These include issues with the "chain of title" that should be addressed before they cause big trouble for a developer.
I have been asked a few times to comment on the HeroQuest Kickstarter debacle. While a post on that is in the works, I thought that I could offer some information for those who are licensing IP from another person or company.
Chain of Title:
When I worked with a movie studio, I was able to assist in what lawyers call “Chain of Title” assessment. Basically, you look at all of the agreements involving a particular piece of intellectual property and trace the path from the first agreement to the last. While you look at many aspects of the various contracts, there are two major things to look for when doing this examination. Failure to do this properly could be a HUGE headache if someone ends up suing over the rights.
Have the proper rights been transferred?
In many situations, an artist creates a character for a company. That company then licenses the rights to make a game based on that character to a developer in order for the developer to make a game based on the IP. To cover themselves, the developer had better make sure that all of the contracts are in place and contain the appropriate clauses.
This includes checking the deals to make sure that the appropriate rights have been transferred or licensed. If it’s a license, the scope of the license should be wide enough that the company was allowed to sublicense those rights.
Additionally, the terms (meaning the time that the rights have been assigned for) in the various agreements need to be checked to make sure that the clock hasn’t run out on the rights. Essentially, you’re building a timeline of the rights. When there is only one step between creation and assignment, this is usually simple. However, in more complicated deals, either involving multiple characters, real persons’ life stories or other rights, things can get difficult. It’s almost always best to leave this to the pros.
What kind of relief is available in lawsuits?
In the law, there are two kinds of remedies: legal and equitable. Legal remedies are monetary damages. This is where you get paid an amount of money that is roughly equivalent to how much you were harmed. In a contract dispute, it’s usually the “benefit of the bargain” that you expected when signing.
The other type of remedies, equitable, include non-monetary solutions. One of these is known as an injunction. An injunction is an order from a court telling a party to either stop doing or continue to do something.
In cases where there is a dispute over rights, an injunction could halt the release of a product and disrupt your entire business for an unforeseen amount of time. In many agreements, there is a clause that limits relief to money damages. This prevents an injunction and allows the product to at least be released, with any monetary payment to be dealt with later.
If you need assistance with a licensing deal or any other game dev contract work, a free consultationwith an attorney may help.
I’ve got a favor to ask, now…
I am in the planning stages of an awesome course for indie game developers, covering the legal issues they deal with and featuring multiple forms and agreements. I have a survey up here to get more information, so if you have a few minutes, please help out by filling it out. Any feedback is appreciated!