"Famous Last Words"

All That ... and the Kitchen Sink, Too (September 2007)

Dear Jim:

We've been hired to provide music for a game.

But the contract seems to cover way more than music.

What's up with that?

Composers for Hire

Dear Composers:

Nearly every development or services agreement has a grant of rights clause.

This is the language in which the individual creator of the work gives over ownership to the person or company that has engaged him or her to do the job.

The key question in considering any grant of rights should be, “ownership of WHAT?”

Developers should always have a clear understanding of what, at the end of the day, will belong to the publisher. This, like all issues in a dev agreement, is a subject for negotiation.

Standard publisher first contract draft language may have a broad grant of rights that goes way beyond the deliverables and game provided in the milestone schedule.

Here is an example of a very publisher-friendly grant of rights:

“Developer agrees that all items delivered by Developer to Publisher and all fruits of Developer's work for Publisher conceived, made or developed by the Developer, whether alone or together with others, in connection with the services provided by Developer hereunder, including but not limited to all (i) inventions, concepts, discoveries, developments, improvements and innovations, whether or not patentable or reduced to practice, (ii) copyrightable works, such as designs, artwork, video images and sound, digitized or other computer files containing data, databases, software (source, object and executable code) and documentation, shall be the exclusive property of Publisher. All of the rights and things described in the foregoing sentence, and all intellectual property, trade secrets or other proprietary rights relating thereto (such as copyrights; copyright registrations, renewals, and applications; patents; patent applications; substitutions for, and divisions, continuations, extensions, continuations in part, renewals, reissues, and reexaminations of, patents and patent applications) shall be defined, collectively, as the ‘Work Product,' and includes, without limitation , the deliverables set forth on the Milestone Schedule. All Work Product, as between Developer and Publisher, will be owned and controlled exclusively by Publisher.” (Emphasis added)

Developers should be concerned when presented with such a broad demand for rights.

What should a Publisher own at the end of the day?

The first place to look is the milestone schedule.

Each dev agreement contains a milestone schedule complete with deliverables, and list of associated payments. The core of the development deal is an exchange of services to develop a game, or elements of a game, for which developer receives defined compensation.

Broad grant of rights clauses go way beyond the milestones to greatly expand what is being acquired by the publisher.

I believe that Developers should be additionally compensated for transfer of any rights beyond those in the game software and milestone deliverables.

As a negotiating tactic, I liken this to the strategy many follow when buying a new car. Rather than negotiating a discount from the sticker price, many people start from the dealer invoice price and negotiate the mark-up. The result is generally a better deal for the car buyer.

Apply this strategy by revising the grant of rights clause to cover only milestone deliverables. It is hard to see why the publisher needs more – the milestone grant covers the game; the object of the deal.

If your publisher won't agree, negotiate up from there; ask the publisher to justify each addition beyond milestone deliverables. Take into consideration that every right that goes to the publisher takes away property that would otherwise be retained by you as developer. And draw a hard and fast line when you get to your core tools, technologies, engines, and other useful general-purpose code routines. These are the tools of your trade.

The risk that I see for developers who sign a broad grant of rights is that any improvement, invention or discovery that is conceived during development could be claimed by the publisher.

In its most extreme, if a developer applies principals of physics or science in programming, this application inspires ideas that lead to discovering the secret of cold fusion as an unlimited energy source, and the underlying idea evolved from work on a game for a publisher who insisted on the language above, because the inspiration was the “fruits of Developer's work for Publisher,” not only could Publisher claim it as its own, patent it, and enjoy the resulting financial windfall, but Developer would receive no further compensation other than the fee associated with the game development!