"Famous Last Words"

It's a Big World Out There! (April 2005)

Dear Jim,

As contracts get longer and more complicated, where do you see the greatest potential areas of risk for developers? And what can you do about them?

New MBA looking for a games industry job

Dear MBA:

In other words, you're asking what keeps me awake late at night when visions of game deals are running through my head. OK – it's a fair question. I'll tell you. For purposes of this discussion, we're going to presume you can properly budget and manage your project, and deliver the game on time, on budget, and to the satisfaction of your producer and publisher.

Over the next few months we'll be looking at risk issues to think about.

1. Game publishers may ask developers to broadly represent that their games “… do not contain any indecent, scandalous, defamatory, blasphemous, obscene or unlawful material, and do not infringe upon any right of privacy or publicity or any other intellectual property rights of any third party.”

Since developers have every reason to stand behind their work, broad reps like these may go unchallenged.

I believe, however, there are good reasons to examine these carefully. If a rep is breached, it constitutes default under the contract and can subject the developer to liability for publisher damages.

The games business is worldwide. The code a developer delivers under its dev deal is likely to be sold in all parts of the globe, where different laws and standards can apply.

Unless the developer is an expert on international law, and has developed the game to meet the lowest and blandest common denominator, it can be risky to make the full representations provided above.

For example, your game containing the beautiful ladies (or gents) in not nearly enough clothing may be considered obscene in a more conservative part of the world, and your depiction of deities may be considered blasphemous in certain geographic areas or communities where religious figures hold prominent governmental positions. Lesson learned is that it's a good idea to try and limit all of these requirements to “under US law” or “under the laws of the United States and Western Europe.” The developer should not accept potential liability arising in the far corners of the world.

In a recent discussion with a publisher lawyer who initially refused a developer request to limit the geographical area in which these reps would be effective, I calmly advised him I would instruct my client to clothe all female characters in the game in head-to-toe burkas. He got the point.

It is also a concern that several of these standards are vague. It's a cliché to say in contracts we want clarity. But there is no generally recognized legal meaning for what constitutes “indecent,” or “scandalous” material. No developer should leave itself open to the whim of local interests. These imprecise terms should be deleted. “Obscenity” on the other hand, is a word that has meaning in the law. The United States Supreme Court, in the case of Miller v California, stated the test for obscenity: "whether (a) the average person, applying community standards would find that the work, taken as a whole, appeals to the prurient interest, (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value." If content meets the three part test, it is obscene, not regarded as “speech” under the first amendment, and can be unlawful and regulated. It is certainly reasonable for developer to represent that the game will not be obscene.

I would also be cautious about representing that my game will not “contain unlawful material.” In certain cases, parent groups, religious leaders in some communities, courts, legislatures, and zealous prosecutors have made it their business to take action against some of the more “hard core” games. While a consensus seems to be developing that games are, in fact, artistic expression that is subject to first amendment protection, an action taken against a game in which is claimed that the game contains unlawful content under some local law, could give rise to developer liability, or at least a demand from a publisher for indemnification while it defends the claim.

“Defamatory material” is another way of saying the game does not libel or slander anyone. There are standards under the law for what qualifies as defamation. If you are using real (not “made up”) characters in your game, talk to your lawyer. Under United States law, you will have much greater latitude in how you portray a person if he or she is a “public figure.”

The rights of privacy and publicity are individual rights held by each of us to control the use and exploitation of our own likeness and name. If your game contains real characters, not works of fiction, or contains characters who may be identifiable because of real or perceived similarities to real persons, it is important to make sure these rights are properly licensed. In most circumstances, this is the responsibility of the publisher who may be bringing these assets to the project. If that is the case, the publisher should be making this rep to the developer! It should be deleted from developer's representations.

The last representation developer is asked to make is that the game does not infringe upon “other intellectual property rights of any third party.”

We'll discuss this when we continue next month...