"Famous Last Words"

Moonlighting Rights (November 2006)

Dear Jim,

Three colleagues and I wish to form a company and develop our own small game - which we eventually plan to sell. Three of us work at game studios. We have grown weary of the political nonsense we have endured over the years. We have 24 years combined experience in the games industry and previous experience in software and hardware fields. However, we all have families and homes, so for the foreseeable future we wish to remain at our current jobs while developing this game. We have all the motivation and ability to make our own game, but we have a few specific concerns:

1. What are our rights to any material we produce outside of our current jobs?
2. Is it necessary to tell our current employers?
3. If so, how should we proceed? Do we need to draw up some kind of document that briefly describes what we plan to make - and if the employer doesn't have a problem with it - then the employer and employee both sign it?
4. Is there an attorney in our area you can recommend to help us?

Sincerely,

Dear No Name:

Taking steps to break away from your employers and establish your own studio takes courage, ambition, and belief in yourselves and the future.

Many of the top independent studios are led by talent who started on-staff; but realized they would never achieve their career goals unless they could break away and pursue an independent course.

Establishing a new studio takes time, planning, and always a little luck! Your questions show you appreciate some of the issues that must be faced.

Let's examine the questions you have raised:

1. Your rights to your material are controlled by the employment agreement you signed when you joined your present employer, and by state law in your jurisdiction.

General principles of common law (which may be applicable, in some shades, to your situation), give your employer ownership of all work product created by you during work hours using company facilities, equipment, and information, that relates to the business of the company, and that is created within the scope of your employment.

Each of these elements must be examined. For example, anything developed during work hours, or developed using company facilities or equipment, is most likely the property of company.

Anything that relates to the business of the company may be company property. However, this analysis could be more complicated than it appears at first glance.

In the question, you told us the new company planned to develop “our own small game.” If your present employers are involved in MMOGs, large PC or console titles, or any other game segment other than “small games,” it may be that your plans do not relate to the business of the company.

Employers may also claim to control work product developed by you that is within the “scope of your employment.” However, if your job description says you are a texture artist, and you will be doing character animation at home after hours, you may be acting outside the scope of your employment. If you are a programmer who will become a designer and lead on your small game project, you may also be outside the scope of your employment.

Your employee agreement may have something to say about moonlighting. A company's primary concern is that its employees have the mental bandwidth to do their jobs, and that they do not withhold ideas or abilities that could be given to the company.

Employee agreements that go so far as to prohibit all moonlighting, or assign rights to all inventions and ideas to the company no matter when or how developed, may be unenforceable as too broad. It will take a local employment attorney with knowledge of local law to know whether your employee agreement falls into that category. In all such analysis, it is good to remember that “Lincoln freed the slaves.” Overly broad agreements may not be enforceable. Generally, in California, extreme restrictions such as these are too broad and will not be enforced.

2. I do not believe it is necessary to tell your current employer about your independent project or plans. The work you do on your own time is your own business. So long as you are not utilizing company resources, company confidential information, or working on your projects on company time, your own personal life is not the business of the company.

In order to avoid, or at least be prepared for, conflict in the future, it may be a good idea to start a journal documenting the times, locations, and materials you use in undertaking your own independent development.

It may also be a good practice to keep a design journal with dated entries so you can show your game ideas and implementation plans are not connected to work at your job.

3. While there is no benefit I can see to an employer – employee document (unless your employer is willing to consent to very broad moonlighting rights – which is doubtful), I do recommend a collaboration agreement between you and your co-venturers.

Such a document sets forth the responsibilities and contributions of each person, and forces each of you to agree upon the rights and interests each will have in the new company and the new game.

The collaboration agreement will force each participant to make a concrete commitment to doing his or her part to get the game made. It provides a standard against which the performance of each participant can be measured. And each person must meet the expectations of the group, or else the unity that exists at this time could become fractured.

A collaboration agreement is also necessary to set forth how the copyright in the new game will be treated. Under copyright law, copyright vests in the creator of a work from the moment it is fixed in a tangible form of expression. That means each of you controls his or her contributions to the multi-media work.

Unless there is some sort of agreement pooling the copyright interests and controlling by whom and how they may be exploited, each party will acquire an undivided right to exploit the entire work.

I'd suggest that each of you agree that it will take a majority vote to assign or license the copyright, that the copyright in the game be assigned to any new company or entity that may emerge from this collaboration (if one is formed), and that if any of your co-venturers decides to end his or her involvement in the project, that he or she will assign his or her rights to the game to the remaining venturers.

4. I can't really recommend a lawyer in your area who is skilled in all these areas. But I can recommend a way to find one! If you are not already a member of IGDA, join today. Plan to attend chapter meetings and ask around for recommendations. Game developers are always willing to give a good recommendation when they are satisfied with services received. A local chapter meeting will give access to local developers who may be using local counsel.