"Famous Last Words"

Contracts À-La-Mod (November 2002)

Dear Jim,

We're currently fine tuning elements of our contract and also thinking ahead to the End User License Agreement (EULA). Like many games today, we're allowing for a high degree of modability. As great as mods are for extending the appeal and life of a game (and building a strong community), we find that the contractual aspects are pretty sticky. Who "owns" the mods? What rights do the user/modders have? What conflicts can arise between the developer and publisher, and then either and the modders? Copyright issues? What about liability if a modder uses someone else's IP? Etc, etc.

What kind factors should we account for in the development contract? And, what needs to be dealt with in the EULA? What are the industry norms on this?

Thanks!

The Mod Squad

Dear Mod Squad:

Best piece of advice I can offer is to find a lawyer who knows the industry and can work with you on these important and complex issues.

All we can provide here is some general advice and guidelines.

I always start at the beginning; the most basic tenant of copyright law:

“Copyright vests in the creator of a work from the moment it is fixed in a tangible form of expression.”

This means that your user/modder owns the original code he or she provides to you.

You can work through that by requiring the user/modder sign, or otherwise affirmatively agree in writing that in consideration of you accepting the upload of the mod, the user/modder agrees that it is considered to be a “work-made-for-hire". Under the copyright law, for any work to be regarded as a “work-made-for-hire”, there has to be a writing. Is a click-through agreement sufficient to meet this requirement? Ask your lawyer!

“Work-made-for-hire” is a term of art. Under the copyright law, if a work qualifies as a “work-made-for-hire”, the employer for hire (you in this case) is treated as the owner and author for copyright purposes.

In my user/modder agreement, I’d also look to include broad representations that the user/modder has the full right and power to provide the mod and to enter into the agreement, that the work is completely original, uses no third party code, does not infringe any tangible or intangible rights of any third person, including intellectual property rights, rights of privacy and publicity, contains no viruses, trojan horses, or other disabling or disruptive code, and is not obscene, blasphemous, or seditious.

I’d certainly require commented source code with each submission, and as a matter of policy, extensively test each mod off-line before I put it into the system.

Finally, I would be sure I had an errors and omissions insurance policy in place to protect me in the event (or perhaps more accurately, when) a claim is made arising out of a user/modder submission. While you do have the representations from the user/modder, he or she is not likely to have the resources to defend and hold you harmless (in fact, he or she may turn out be a minor, or located in some distant, unreachable part of the globe, so the agreement may not be enforceable anyway), and it will serve mainly to give your insurer someone to go after once they settle your claim.

As a final reminder, I would also be sure my end user license agreement is clear that there is no warranty of continuous operation of the game, and that the exclusive remedy for subscribers in the event the system is down is a partial refund of the monthly subscription fee (to be pro-rated in your own good judgment)!

Basically, this has been a ten cent answer to a thousand dollar question – so I want to end it with the same advice I gave at the top. Find a good lawyer, and work together to set up the protection you need. While nothing is totally fool-proof, you can craft a good solid wall and moat to protect against, but not foreclose, claims and possible liability.

I’m looking forward to your game!