Famous Last Words October 2011

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DISCLAIMER: This column is intended for general educational and entertainment purposes and is not legal advice. Every situation is unique. Anyone entering into a contract should have a lawyer who can provide counsel.

Jim Charne, Attorney at Law

October, 2011
Famous Last Words
By Jim Charne, Attorney at Law

Papering Game Development – What is Recommended

Dear Jim:

I’m a hard core gamer working in a non-games-related field.  Been reading the igda web site as I pursue my dream.

Got an idea for an iPad game that I think would be great!

I developed the design in my free time and want to move forward.  Last year I received an inheritance from my grandmother.  I want to use it for this project.

What steps should I take to get started?

-- Next Killer App

Dear Killer:

Game publishing is a high risk high reward field.  Before you jump in, consider the most obvious risk factor:  you’ll be competing in a highly competitive field with very smart, highly creative and ambitious people with more money, more experience, and better connections than you!

Don’t get in this unless you are fully prepared to lose every dime you pour into the project.

And like all entertainment fields, you will not see even a penny of return until you have invested 100% of the cost of development, and finally get your game into distribution.

If you fully accept the above, here are some suggestions.

1.  Find a developer.  For an iPad application, that may be as little as one or two people with knowledge of the platform.

2.  Make sure the developer has sufficient technical and artistic ability to take on the project.  That’s not necessarily so easy to determine.  Ask to see examples of his or her work.  Check references.  There is nothing worse than to get to some late-stage point of development (often months and months -- or even years -- later than promised) and discover your developer does not have the ability to complete the job.  The last 10% of development takes 90% of the effort.  And if it doesn’t work out, one developer’s code is not necessarily transferable to another developer… or even worth transferring if the original developer turns out to be seriously deficient.

So, presuming you follow steps one and two, work out financial details with your developer, agree on a development and payment schedule, and are ready to move forward, the next recommendation is that you hire a games industry lawyer and get a contract in place.

There is a strong temptation (sometimes) to rely on a handshake.  But that’s really starting off the project by making a very bad decision.  Here’s why.

1.  No one doubts your good intentions.  But you’re betting your grandmother’s inheritance on this developer.  If he or she fails to do what he or she says he or she will, without a contract between the two of you, you may have a far more difficult time recovering anything that has been paid.

2.  You’ll be disclosing your design.  You need confidentiality language to protect disclosure of your work to any third party.  You may treat your design as a trade secret.  It is your IP.  Unless there is a written agreement to maintain it in secrecy, any protection of your work as a trade secret is lost, and there may be no restrictions on the developer blabbing all the details on any forum, Facebook, or to his friends.  In our business, “the walls have ears.”

3.  A contract sets on paper the development calendar (and payment schedule).  You’ve hopefully agreed on when the game will be completed, what intermediate milestones will be developed, and when.  Without that in writing, it is easier for the game to slip slip slip – particularly if your developer proves unequal to the task of development.

4.  You’ll want warranties from your developer – for example, that the game is his or her original work, that it does not infringe on anyone else’s rights, and does not borrow from any other game.

5.  You may also want the developer to agree not to work on any other project until yours is completed.  Or, depending on the size of your project, to devote at least 50% of his or her work day to it.

6.  Is the developer to receive royalties or a revenue share?  These details should be in his or her contract.

7.  Last, but maybe the most important, you need a written grant-of-rights stating the game is your property (preferably on a work-made-for-hire basis).  Under United States copyright law, where an independent contractor is providing work, unless there is a written agreement to the contrary, ownership of the work is retained by the contractor!  That means that unless you have a written agreement with a grant-of-rights clause, copyright ownership would be retained by the developer.  At best, you could be found to have a non-exclusive license to his or her work.  That’s hardly what you are paying for!

This only skims the top layer of issues covered in an agreement between you and your developer.

If you’re going to hire a developer to create your game, you’ve got to stop thinking only like a gamer and designer, and start to think like a games publisher.  Conducting all your research in selecting a developer, then correctly “papering” the deal, will put you in a better position to realize your dream, and keep out of trouble if things do not go as planned.       

-----

Jim Charne practices law in Santa Monica, CA (www.charnelaw.com) where he represents developers, designers, composers and other clients in the games industry.  Jim has been a frequent speaker at GDC and Practicing Law Institute games industry programs, is active in IGDA from whom he received a coveted “MVP” Award at GDC 2006, and is a member of the Advisory Board of G.A.N.G.  On October 19, 2011, Jim will chair a one day program in San Francisco, offered by the Practicing Law Institute, titled: “Representing the Games Industry Client 2011.  Jim served as President of the Academy of Interactive Arts and Sciences from 1998 to 2001.

Is there language in your contract that has you scratching your head?  Found something confusing or worse?  Send it to “Famous Last Words” for developer-oriented analysis.

Famous Last Words is intended for general educational and entertainment purposes and is not legal advice.  Every situation and circumstance is unique.  Anyone entering into a software-related contract should have an experienced lawyer who can provide counsel throughout the process.

©2011 Jim Charne.  All rights reserved.