Does your Game need a ‘Fan-Content Policy?’

For most businesses, infringement of copyright is going to result in lost profits. But what about businesses where infringement of their IP could lead to more engagement and sales?

The video game industry has this issue. Developers and publishers want to benefit from the free marketing that comes with their users creating and sharing content of their Game, but they don’t necessarily want to permit users to do whatever they want with their intellectual property.

Meanwhile, streamers, video producers, let’s players, modders and other forms of video game content creators are having an increasingly difficult time navigating the complexities of copyright law in understanding what they are and are not allowed to do with Game developers IP when making their own content.

The Copyright Acts in both the US and Canada have not been updated to address this issue, thus creating a legal grey zone that results in game creators themselves having to address how users can use their IP in their own content policies.

What is a Fan-Content Policy?

We are seeing the growing use of Game companies implementing ‘Fan-Content Policies’ alongside their more standardized Terms of Service and Privacy Policy documentation. Fan-Content Policy terms could be a whole separate document or be implemented into the more standardized terms to form part of those larger policies.

Seemingly more Game companies are opting to have separate Fan-Content Policies so they can be displayed clearly and concisely to players. Common everyday language is also best to use in Content Policies to convey the information contained in a simple and easy to understand way with limited legalese.

Ultimately, Fan-Content Policies seek to address this legal grey area as best one can outside the context of statutory copyright protections, often detailing how a user can use the Game’s IP to create their own content, and the other rules and requirements surrounding its use.

Common Terms in Fan-Content Policies

Some terms that are often included in Fan-Content Policies include:

• General Rules: what you can and cannot do with the Game and its IP while creating your own content.
• Authorized Uses: detailing what uses are permitted or excluded. Like the General Rules, but this language is often much more legal and akin to a license grant. Often Commercial Uses are not accepted (but monetization via advertisements so long as videos follow the policy may be carved out and approved).
• Mods: whether modifications to the Game are permitted, and if so, how they are permitted and under what contexts (for example, overwhelmingly often they state Mods can never be commercialized or sold).
• Other Agreements: how the Fan-Content Policy works in tandem with other agreements the user is bound to, such as Terms of Service, Privacy Policies and End-User License Agreements.
• Company Property: how the User can use Company property outside just the Game, such as trademark or tradenames.
• Credit: how a User must credit the Game, Developer and/or Publisher in the making of their Game content
• Jurisdiction: what country’s laws govern the policy. Could be the jurisdiction of the user or another specified country.
• DMCA Takedowns: how the policy addresses takedowns on third-party platforms via DMCA.
• Enforcement of Rights: arguably the most influential provision, that states that despite the rules and regulations of the policy, the IP holders ultimately reserve the right to take legal action for misuse of IP as determined by the IP owner in its absolute discretion.

At the End of the Day, Enforcement of Rights Still Remains

In a way, the Enforcement of Rights provision could be the only provision of significant weight in the whole policy, as it signifies and clarifies that these Fan-Content Policies essentially operate in a copyright law legal vacuum and the decision to either withdraw or enforce certain rights as it relates to the intellectual property will always remain with the IP owner. Despite the rules and permission detailed within the policy, the IP owner still has all the power in the relationship regardless of whether content creators were following the rules of the policy or not.

Whatever proposed licensed granted by any policy as it relates to the use of the Game is always going to be (and should be) non-exclusive and revokable by the developer/publisher at any time. Selective enforcement of intellectual property can occur at any time, as is permitted by relevant copyright statutory provisions.

In summary, Fan-Content Policies seek to inform users on how they are permitted to use the Game and surrounding intellectual property for their own content creation. A well-drafted Content Policy seeks to foster a symbiotic relationship between game creators and content creators to create a healthy and more transparent community relationship.

However, developers and content creators alike should still remember that the rights owner still has ultimate power to revoke any permissions granted in a Content Policy unless otherwise stated.

For more information on Fan-Content Policies, or to get your own drafted, feel free to reach out to Voyer Law.

Video Game Studio Intellectual Property Strategy

Recently we’ve seen an uptick in interest among video game studios looking to protect their intellectual property, with a focus on protecting characters and game/studio names.

Here is a list of priorities that should be considered when determining or developing a video game studio’s intellectual property strategy (in common order of priority).

1. Trademark protection for the game name and/or logo

With a successful game comes the risk that a competitor may produce a similar game and brand it with similar game title and/or logo.  Obtaining trademark protection of a game title and/or logo ensures your right to stop competitors from using the goodwill and reputation associated with your game title and/or logo.

2. Copyright protection for game characters

Obtaining copyright registrations is best suited for protecting the main character or characters of a game and can be used to stop unauthorized or unlicensed use of the character(s) on things such as t-shirts, plush animals, bobble head toys, clothing, hats, cups and mugs, etc.

3. Trademark protection for a studio name and/or logo

Finally, the studio should protect the goodwill and reputation associated with a studio name and/or logo through trademark registrations.

While a studio may not have financial resources to pursue all of the above at the start of development, it’s critical for the studio to at least develop an intellectual property portfolio strategy and plan to execute over time as resources permit.

California Consumer Privacy Act comes into Force Jan. 1, 2020

The California Consumer Privacy Act (the “CCPA”) is a new law intended to enhance privacy rights and consumer protections for California residents, which comes into force on January 1, 2020. 

In the lead-up to the CCPA coming into force, this blog post covers three common questions we receive: (1) do I need to comply? (2) when do I need to comply? and (3) what happens if I do not comply?

1.         Do I need to comply? Probably, but not directly.  Most companies that operate from Canada or in states other than California, will not directly have to comply with the CCPA as the territorial scope of the law is fairly limited, especially when compared with the EU’s General Data Protection Regulations (the “GDPR”).  To fall under the territorial scope of the CCPA, you have to be a for-profit business doing business in the State of Californiaand have one of three factors apply: 

(a) gross revenue of over $25,000,000 USD; 

(b) handle the personal information of more than 50,000 consumers, households or devices (it is unclear in the Act, at this stage, whether this is a California or world-wide number); or 

(c) derive more than 50% of annual revenue from the selling of consumers’ personal information.  

While the CCPA may not apply directly to many companies, as we saw with the GDPR rollout in 2018, the CCPA will likely indirectly apply as major tech companies like Google and Apple will have to comply with this law and as such, they will likely require, as part of their own compliance requirements, that companies they do business with that collect personal information also comply.  The extent of this indirect compliance is currently unclear and may only apply to certain provisions of the CCPA.

2.         When do I need to comply?  The effective date of the CCPA (the date at which the CCPA becomes law), is January 1, 2020, and while enforcement by the California Attorney General’s office may not begin until supporting regulations are finalized (deadline for regulations is June 1, 2020), we recommend that companies that need to comply directly begin compliance work immediately and aim to be fully compliant by January 1.  Companies that only need to comply indirectly may have some time to wait and see how the CCPA will affect contracts and terms with CCPA compliant companies but it won’t hurt to be compliant by early 2020. 

3.         What happens if I do not comply?  Beware of the cost!  There are several penalty clauses in the CCPA, including $2,500 for each non-intentional violation and $7,500 for each intentional violation.  If you have over 50,000 users, these penalties can easily amount to over $125,000,000.  For companies that will have to comply indirectly through contracts or user agreements, beware of indemnification clauses and other liability amendments that may push these penalties onto your company.

For many companies, the CCPA may not directly apply. However, it’s important to monitor CCPA factors, relative to your company’s business, to ensure that you do not miss compliance should a factor be met in the future – this is especially important in rapidly growing startups where it’s easy for a compliance obligation to be missed. Even if the CCPA factors are not met, there may be an obligation to comply as large tech companies will likely be complying and force compliance on everyone else they do business with.

The Two Questions I ask new Startups and Studios

Each week I meet with prospective clients that are excited to be launching a new startup or video game studio.  Regardless of the differences between these clients, I inevitably end up asking two important questions at the start of every meeting:

1.  Have you incorporated?

Many clients incorporate without legal counsel, which I have no problem with.  However, by incorporating without a lawyer, prospective clients are often left with a few problems that I am attempting to unearth and that I know will need to be remedied:

A. The company’s paperwork is incomplete.  While a company exists once the filings are made with the state/province/federal government (if a federal, Canadian company), there are a number of resolutions, registers, receipts and other documentation that a company requires in order to have a complete minute book.  The preparation of the foregoing is the bulk of a lawyer’s work incorporating a company and will need to be prepared, especially if the company aims to raise capital as this documentation will be requested as part of standard due diligence.

B.  Too few shares were issued.  If you incorporated a company with 1, 10 or 100 shares, too few shares were issued and should be split or additional shares issued.  This avoids fractional shareholding in the future (imagine offering someone .25% and 10 shares are issued to date) and also makes equity offers to prospective employees more appealing (10,000 shares appear more attractive than 1 share, even if the same percentage ownership results).

C.  Too many share classes created or the wrong share classes created.  I always ask clients their reasons for a particular share class as both client and lawyer should understand the reasons behind the company’s structure.  Since most startups are incorporated with a single, common, share class, I push prospective clients to explain and even justify other classes.  Additionally, if a preferred share class exists, what are the rights and restrictions associated with this class?  Inevitably, no preferred rights and restrictions were specified,requiring the creation of these rights or restrictions or, more likely, deleting the preferred share class.

2.  Have you Transferred IP to the Company?

Clients mistakenly assume that the company they incorporate automatically owns the intellectual property they create.  While someone may be a shareholder (even the sole shareholder) or a director, this does not automatically transfer ownership of intellectual property created by such person(s) to the company.  Indeed, without a contractor, employment or assignment agreement in place, each founder remains the owner of the intellectual property they create.  As a result, the company may not own a core asset and cannot be in a position to license that asset to third parties.  Additionally, by asking this question I am often told about contractors who created intellectual property for a founder or the company without an agreement in place, which will also need to be corrected.

Based on these two questions, I am often able to obtain a full picture of a company and its history and put in place the key documents required to address any issues unearthed.   If you are embarking on a new venture be sure to keep these two questions in mind – doing so may prevent future legal headaches (and fees).  Or, you could read my suggestions on corporate structure and IP assignments here and here.