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>Tip: IP Indemnification

>As patent and other intellectual property lawsuits continue to litter the video game landscape, it makes a mind wander to one of everyone’s favorite clauses in developer and publisher agreements: indemnification (which we have discussed before). This is one of those clauses that gets buried at the end of the agreement, often on the hope that it never gets discussed. And, certainly neither party ever hopes to have to invoke the indemnity clause. The problem arises that, while the clause generally does not see the light of day, should the clause ever become necessary — the dollars and stakes are bigger than ever anticipated.A publisher will generally try to seek a broad indemnity from a developer, so that, if a patent owner sues the publisher alleging that the developer’s game infringes the patent (or other intellectual property), the publisher will be protected. The indemnity clause will be used to shield… Continue Reading

>Software licenses, assignability, and mergers

>A new case was handed down out of the Sixth Circuit last week that dealt with software licensing. In this case, a company had licensed some software, and the license agreement contained some of the standard non-assignment language: that the license was non-transferable and that the licensee could not transfer its rights without the approval of the licensor. The licensee underwent some corporate reorganization — it was merged into a new entity. The key thing here is that the merger was *not* with a third party entity or as part of buying assets. This case stemmed simply from a parent company consolidating a set of wholly-owned subsidiaries. However, even though, pre- and post-merger, the software sat on the same computer, doing the same thing, at the same location, the surviving entity was in violation of the software license as a result of the merger.So, two tips for all of the… Continue Reading

>Tip: Shutting Things Down… But Not For Good

>Are you thinking about phasing out a studio? Are you shelving a project? Sometimes that has to happen, but one thing to be careful of is how you handle the company/project name. If you announce to the world “Studio XYZ is ending development and shutting down”, do you really want someone else in the marketplace to form a new studio with the name “XYZ”?If you want to try and prevent a competitor from adopting your former project’s or studio’s name, you need to find a way to keep using that name in connection with your business. Consider keeping a description of it on your web site or other marketing materials. Avoid a broad, all-encompassing press release describing your intention to “abandon” a project. There’s a bit more detail to process to keep the name alive, but the key component is that you need to find some way to keep using… Continue Reading

>Tip: Video Game Copyright Registration

>Most folks in the industry know about filing copyrights to protect their source code. One area of concern that I see, though, is a lack of awareness of the some of the Copyright Office requirements buried in the Copyright Office regulations. When filing a copyright registration for a book, it is generally pretty easy to decide when to register (when the book is finished) and what to register (the book). However, software (and games, in particular) is a much more fluid situation. When is a game truly ever finished? And, if we don’t know when the game is finished, what exactly do you decide to register with the Copyright Office? More importantly……the Copyright Office requires that “each separately published version of a computer program that contains new, copyrightable authorship must be registered separately, with a new appliation and fee.” (Circular 61) So, now the question becomes, how are defining a… Continue Reading

>Tip: Work Made for Hire vs. Get the Assignment

>One of the more common missteps involving intellectual property is the concept of a work made for hire. This concept is defined in the U.S. Copyright Act and there is a lot of case law over the years regarding it. Many people believe that “if Company A paid for Person B to develop The Thing, then Company A owns The Thing”… like all things lawyer, the answer is “maybe.” If Person B was an employee of Company A and it was part of Person’s B to develop The Thing, then The thing is a work made for hire. There is a second concept for work made for hire……that is spelled out in the statute, but it requires many other extra hoops for The Thing to qualify as a work made for hire. However, as you can see, not every instance qualifies as a work made for hire. And, if The… Continue Reading

>Killer Hardware Can Trigger Killer Lawsuits

>All three leading console makers previewed new motion-sensing controller technology this week at E3. With the success of the Wiimote, the industry may have realized that killer controller hardware can sell consoles just as well as killer game titles. Whenever a large company launches a significant new product like a game controller, there are numerous intellectual property “clearance” issues that play out behind the scenes. Not only does the company have to worry about protecting its new hardware design from infringers, but it simultaneously has to worry about infringing everyone else’s intellectual property.Today at E3, Sony unveiled a motion-sensing system with a controller that can translate player movement as a sword, a bat, a gun, etc., while Nintendo announced a few technological tweaks to the Wiimote. Sony’s and Nintendo’s unveilings came just a day after Microsoft announced that it developed a system that allows game control through tracking of players’… Continue Reading

>Tip: Contract Indemnification

>Indemnification provisions are pretty common in software development agreements. The key with an indemnity is determining the appropriate trigger events. For example, should a only third party claim trigger the indemnity is should any loss by the other party? Perhaps only certain kinds of losses will be covered by the indemnity? Another point to consider is whether the indemnity obligation should be capped by the limitation of liability in the agreement. Consider whether the indemnity should be separated from the limitation, or that a separate cap should apply.Lastly (for this post), if the indemnifying party has an obligation to defend the other party, be sure to consider the full practical effect of that obligation. Sure, it may be all well and good that the cost of paying lawyers to defend the lawsuit has been shifted to the other party — but, do you really want that other party to be… Continue Reading

>Tip: Buying Video Game Assets Out of Bankruptcy

>Like many industries, the video game industry has seen a rise in Chapter 11 bankruptcy filings. Large corporate bankruptcy cases can be complicated and intimidating affairs, but for the savvy investor (or the savvy competitor), they can present tremendous opportunities. Traditionally, companies filed Chapter 11 to restructure their debt and emerge from bankruptcy as a more efficient going concern. It is becoming more common, however, for companies to file bankruptcy and quickly sell some or all of their assets and liquidate the remainder. These transactions are commonly referred to a “363 sales” (named after the applicable Bankruptcy Code section). Such sales can involve any asset of a bankrupt company, including intellectual property rights, and a prospective buyer has an opportunity to acquire a desired asset at a discounted price. However, because of the particularities of the bankruptcy proceeedings, there are some choppy waters that a prospective buyer needs to successfully… Continue Reading

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