September 13, 2021 • 17 mins
In this episode, host Mary O’Brien interviews Wilson Sonsini partner Scott McKinney as he provides a general overview of intellectual property (IP) rights and why it matters for gaming founders.
Conversation Highlights:
As a gamer himself, Scott delves into the various ways to protect a gaming company, including:
- building off a platform engine to open-source software;
- establishing IP ownership and relevant agreements in securing rights; and
- other legal implications and risks founders would run into at a very early stage.
Meet the Host:
Learn More:
The information in this podcast episode is for general information purposes only and may not reflect current law in your jurisdiction. Nothing in this podcast should be taken as legal advice for any individual case or situation, and this information is not intended to create, and receipt or listening does not constitute, an attorney-client relationship. No listener of this episode should act or refrain from acting on the basis of any information included in, or accessible through, this episode without seeking legal or other professional advice from an appropriate licensed professional in the recipient’s state, country or other appropriate jurisdiction.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hi everyone.
Thank you for joining Wilson Sonsini's Electronic Gaming Group podcast.
I'm Mary O'Brien, an associate at Wilson based out of the Palo Alto office.
I'm thrilled to have you join me as I interview several of my colleagues and dig into key topics surrounding early-stage companies with a focus on gaming specific issues.
The information in this podcast episode is for general information purposes only and may not reflect current law in your jurisdiction.
(00:26):
Nothing in this podcast should be taken as legal advice for any individual case or situation and this information is not intended to create and receipt or listening does not constitute an attorney client relationship.
No listener of this episode should act or refrain from acting on the basis of any information included in or accessible through this episode without seeking legal or other professional advice from an appropriately licensed professional in your state country or other appropriate jurisdiction.
(00:52):
Today, I have with me Scott McKinney and Of Counsel at our firm and a professor at Georgetown Law. Scott,
can you tell me a little bit about yourself and what made you interested in the gaming space?
Sure.
So I currently work as a member of our Technology Transactions Group and I help companies of all types figure out how to commercialize and launch new cool products like video games.
(01:19):
So what made me interested in the gaming space?
I think it was probably when my parents bought me an original Nintendo Entertainment System for Christmas when I was five. When I think back on where I am now as a technology attorney,
I really, the path that led me to that was because I studied computer science,
(01:43):
computer engineering when I was younger and in college and I was in coding before making the jump over the law school in the legal career.
And when I really think about it,
what led me to that path,
it was my interest in gaming because when I was five and six in the early 90s,
I was lucky enough to get um,
(02:04):
a early personal computer and started out playing computer text games like Zork,
Legend of the Red Dragon.
And when I was eight or nine I realized I could actually make my own games if I learned how to program.
And so when I was in third or fourth grade,
I taught myself to basic and started learning how to code, all in order to learn how to create my own epic action adventure game.
(02:31):
And since then, my interest in gaming and technology and all the interesting related legal and other issues and developments has sort of grown from there. As someone who's grown up with the gaming industry and knows it from a legal and an industry standpoint,
you can attest
there's going to be a lot of newly formed companies.
What is one of the biggest pieces of advice you can give to these fledging companies with founders who may not have any legal expertise.
(02:56):
So one of the biggest issues I see with gaming companies and really starting companies of all types is that companies come up with a really cool idea,
a really cool game,
they go down the path of creating that that game and once they're close to being ready to commercialize it,
they realize that, oh wait, I may not have have all of the I
(03:20):
P
rights that I need to watch this game because I may have incorporated something that I don't own or may not have the right to use in my game or idea or product or technology.
So if you are a gaming founder or developing a new game from scratch,
you might ask yourself a few questions:
(03:43):
Did I create this game completely on my own?
And if you didn't, then ask yourself,
what am I using? Am I leveraging?
someone else's ideas,
content or characters have I taken parts of code from my friends,
from the internet,
from the database of the job I was working at before I started creating the game or is my game or idea just inspired by something else?
(04:11):
Have I not really borrowed something outright,
but I just got a general idea um that I built upon in the form of a really cool new game.
If a founder does leverage a third-party's intellectual property,
how do they secure the proper rights?
That's a great question, Mary,
if the founder does end up leveraging,
third party I
(04:31):
P
rights either intentionally or or unintentionally,
how can you secure them?
So, one way of doing that is entering into a license agreement.
So if it turns out that you're using or you want to use another company or another individuals I
P
(04:52):
Whether in the form of software or even I
P
Such as ideas or characters um or you know themes or music.
The way that you can secure those rights rather than just adding in into your game without without asking is you can approach the company or individual and enter into an agreement where they say we'll give you the rights that you need to use our source code or software or tool,
(05:21):
our idea,
our music,
our character.
And in exchange for that why don't you give us a license fee or some small amount of the revenue that that you know is related to your game or the commercialization of your of your game or your gaming platform.
(05:42):
Now depending on how the game is developed and what the founder has used,
you actually may have already agreed to certain rights or obligations as you're developing the game.
Can you tell me a little bit more about that?
What do you mean by like certain obligations based on the platform?
(06:04):
Right.
So, it's becoming more and more common and more and more of a great idea for for a game developer for for games to be developed on on sort of the shoulders of third-party development engines or or software engines.
So you might ask what what is that?
(06:24):
So that the idea of a,
of an engine is software that's created by someone else,
often a large,
um,
gaming or development company that really offers the building blocks of the game.
So, it allows you to reuse these tools or this environment that's been created and engineered and re-engineered and improved and upgraded over time by a large team of really skilled developers.
(06:57):
Um,
and these gaming engines are great ways to shortcut a lot of the time and effort that, that might otherwise need to be spent to sort of build up the foundation for a game.
Um,
so common examples,
One common example you might,
(07:18):
uh,
many people have heard of the Unity engine.
Um,
so oftentimes when founders and developers are relying on these,
these third-party engines,
you can use them in many cases for free.
Um,
at the beginning,
as long as you're using them,
either not commercially or you're not making a lot of money off of them.
(07:40):
The thing that people often forget is even though you can download and use these amazing engines or development environments for free sometimes,
and oftentimes once you go into a full commercial release,
then the terms of your use of that engine change and you might need to pay or you likely will need to pay a fee for the,
(08:04):
for the benefits you're getting out of that engine.
And so sometimes,
you know,
young founders or developers kind of overlook this fact,
and then once it comes time to commercialize the game,
your whole business model might be premised on not having to pay those fees.
and you need to think about that from the and factor in the fact that if I'm building my entire game based on this third-party building block,
(08:33):
I'm gonna be,
went into that building block and I'm just gonna be aware of and mean that I will have to pay for the rights and benefits and I'm receiving from that engine.
So, what about other software that's available for free on the internet?
Like open source software.
Right,
so open source software is one of my favorite topics.
(08:58):
And for those of you that haven't heard of this,
open source software is something that's widely available and widely used in the programming community across the gaming and other industries.
And the idea is that, if I wanted to create some software and allow others to use it,
I might release it under an open source software license,
(09:20):
and most open source,
open source software licenses essentially say you can use my software and you can you do just about anything you want with it as long as you do X,
Y, and Z.
And that X,
Y, and Z is are the things that people often overlook for a lot of types of open source software.
(09:41):
The X,
Y, and Z just says,
you have to tell people that you distribute my software to that I created some of that software and that's all you need to do.
You just need to give them notice that that in credit for the software that you're using.
Um,
however not open all,
(10:02):
open source software is the same.
And there are another class of open source software licenses referred to as copy left licenses that have other licensing conditions in that X,
Y, and Z.
And some of those conditions could potentially be problematic if you've included open source software under copy left license in your product,
(10:23):
didn't realize it.
and then later on,
right,
when you're about to launch or after you've already launched the product or the game,
you realize you may need to remediate it.
And one of those conditions, in some types of open source software licenses says,
if you include the software in this, in my game and you distribute the game to the public,
(10:47):
then, as a condition of your using my open source software,
you need to make all the source code for the game available.
And you can imagine that that could be problematic if,
for example,
a founder didn't want to release the source code of its game to the public or or maybe you're mostly okay with that idea.
But releasing the source code to the public could um,
(11:09):
open your game up to things like security vulnerabilities and all sorts about other issues.
So, the way to get around this or or or head this off at the pass is just to be aware of the open source software that you're using from the beginning,
track that use of open source software and just be diligent in how you and your gaming development team uses open source software so that you're not surprised later on in the process.
(11:38):
Right before you launch that.
Oh wait,
I didn't realize we're using open source in a way,
we're not supposed to; now,
I've got to spend a lot of time to fix it.
So it sounds like making sure you're keeping track of the software and the platform is a crucial element to understanding and being successful as a gaming founder.
Um,
what about,
so most gaming founders may work at other companies in similar atmospheres.
(12:02):
Could you tell me any issues for a founder who may be worked on their game or some code while being employed at another company?
A lot of times when you come up with that really cool game idea,
a really cool idea for a new company.
Um,
you may be working a different job,
right?
You might be developer as a coder or doing something completely different and um,
(12:25):
you may not quit your job before you fully develop your your idea or even before you start working on your really cool game.
And the way this can present an issue is that with most companies in the U.S. and,
and really around the world.
Um,
the way your employment agreement will work,
(12:47):
or the way the default law rules will work is that anything you create in the course of your employment will often be owned by the employer.
And, sometimes the employment agreement can go beyond just that and can say anything that you develop using a company computer or done on company time, or even done while you're employed at the company period is automatically owned by the company.
(13:15):
And so you can imagine if you're spending your lunch break developing a really cool game or your, you take your work laptop home and you're coding on your work laptop because you also uh code on your work laptop for work.
And but you're creating a game and it has nothing to do with your job.
Sometimes your employment agreement will say too bad,
(13:36):
the company that you work for then owns that game or owns that idea owns that code that you've spent so much time working on.
So, the thing you need to be aware of as a founder is that the terms of your employment agreement really do matter,
So before you spend a lot of time developing that really cool game on your,
(13:59):
on your lunch break or or you know,
before you reuse code that you're using in the in your day to day day job,
also in in the really cool game that you're developing on the side,
just be aware that you may be inadvertently giving ownership of whatever you're doing over to the company and once you go off and start and found your new gaming company or bring your really cool game idea to it already established gaming company that can raise major issues once people hire attorneys or start poking around and asking questions and realize actually it turns out that your former employer owns that game or is that really cool idea and not you.
(14:45):
So, it sounds like we really need to square away employment issues.
Make sure we're not leveraging third party I
P
And there's a lot of things that founders without these legal experiences may not know.
Could you tell us maybe other issues that you've run across in the gaming space?
Sure.
Another issue that we run into in the gaming space is that once you found a company particularly with with video game companies it's often the case that a founder is really on the ground doing a lot of the actual development of the game because anyone that's founding a new gaming company, in many cases this is doing came up with the idea by themselves um or or with their other founders.
(15:33):
And so they may you may be on the ground coding or coming up with new characters or story design and spending lots and lots of time developing this really valuable property.
The thing that people often forget to do though is to enter into an agreement between yourself and your other hand between your the other founders and the company illegal entity itself that says that entity either owns all that I.
(16:06):
P.
And software that you've been working on or has all the rights that needs to use it. And how this can be an issue you might say well I'm the founder.
why do I need to have a formal legal document?
The sad reality is a lot of times founders leave fights happen,
(16:26):
things come up and if if that ever does happen for your company, you want to make sure that you aren't inadvertently giving away you know a third of your game or a third of your game isn't leaving when one of the three founders walks out the door.
So it's important to square that away early on so that you don't have a cloud over the ownership of the I
(16:49):
P
that's been you know integrated into a game prior to either beginning or really getting down the road of the development of your gaming company and your game itself.
Awesome.
Well thank you for your time today,
Scott. Wilson Sonsini advises a wide variety of clients in this gaming industry.
If you'd like more information or if you have any questions about legal issues arising in the gaming space,
(17:14):
please don't hesitate to reach out to any member of our Electronic Gaming Group.
Thanks for tuning in everyone.
Hi everyone.
Thank you for joining Wilson Sonsini's Electronic Gaming Group podcast.
I'm Mary O'Brien, an associate at Wilson based out of the Palo Alto office.
I'm thrilled to have you join me as I interview several of my colleagues and dig into key topics surrounding early-stage companies with a focus on gaming specific issues.
The information in this podcast episode is for general information purposes only and may not reflect current law in your jurisdiction.
(00:26):
Nothing in this podcast should be taken as legal advice for any individual case or situation and this information is not intended to create and receipt or listening does not constitute an attorney client relationship.
No listener of this episode should act or refrain from acting on the basis of any information included in or accessible through this episode without seeking legal or other professional advice from an appropriately licensed professional in your state country or other appropriate jurisdiction.
(00:52):
Today, I have with me Scott McKinney and Of Counsel at our firm and a professor at Georgetown Law. Scott,
can you tell me a little bit about yourself and what made you interested in the gaming space?
Sure.
So I currently work as a member of our Technology Transactions Group and I help companies of all types figure out how to commercialize and launch new cool products like video games.
(01:19):
So what made me interested in the gaming space?
I think it was probably when my parents bought me an original Nintendo Entertainment System for Christmas when I was five. When I think back on where I am now as a technology attorney,
I really, the path that led me to that was because I studied computer science,
(01:43):
computer engineering when I was younger and in college and I was in coding before making the jump over the law school in the legal career.
And when I really think about it,
what led me to that path,
it was my interest in gaming because when I was five and six in the early 90s,
I was lucky enough to get um,
(02:04):
a early personal computer and started out playing computer text games like Zork,
Legend of the Red Dragon.
And when I was eight or nine I realized I could actually make my own games if I learned how to program.
And so when I was in third or fourth grade,
I taught myself to basic and started learning how to code, all in order to learn how to create my own epic action adventure game.
(02:31):
And since then, my interest in gaming and technology and all the interesting related legal and other issues and developments has sort of grown from there. As someone who's grown up with the gaming industry and knows it from a legal and an industry standpoint,
you can attest
there's going to be a lot of newly formed companies.
What is one of the biggest pieces of advice you can give to these fledging companies with founders who may not have any legal expertise.
(02:56):
So one of the biggest issues I see with gaming companies and really starting companies of all types is that companies come up with a really cool idea,
a really cool game,
they go down the path of creating that that game and once they're close to being ready to commercialize it,
they realize that, oh wait, I may not have have all of the I
(03:20):
P
rights that I need to watch this game because I may have incorporated something that I don't own or may not have the right to use in my game or idea or product or technology.
So if you are a gaming founder or developing a new game from scratch,
you might ask yourself a few questions:
(03:43):
Did I create this game completely on my own?
And if you didn't, then ask yourself,
what am I using? Am I leveraging?
someone else's ideas,
content or characters have I taken parts of code from my friends,
from the internet,
from the database of the job I was working at before I started creating the game or is my game or idea just inspired by something else?
(04:11):
Have I not really borrowed something outright,
but I just got a general idea um that I built upon in the form of a really cool new game.
If a founder does leverage a third-party's intellectual property,
how do they secure the proper rights?
That's a great question, Mary,
if the founder does end up leveraging,
third party I
(04:31):
P
rights either intentionally or or unintentionally,
how can you secure them?
So, one way of doing that is entering into a license agreement.
So if it turns out that you're using or you want to use another company or another individuals I
P
(04:52):
Whether in the form of software or even I
P
Such as ideas or characters um or you know themes or music.
The way that you can secure those rights rather than just adding in into your game without without asking is you can approach the company or individual and enter into an agreement where they say we'll give you the rights that you need to use our source code or software or tool,
(05:21):
our idea,
our music,
our character.
And in exchange for that why don't you give us a license fee or some small amount of the revenue that that you know is related to your game or the commercialization of your of your game or your gaming platform.
(05:42):
Now depending on how the game is developed and what the founder has used,
you actually may have already agreed to certain rights or obligations as you're developing the game.
Can you tell me a little bit more about that?
What do you mean by like certain obligations based on the platform?
(06:04):
Right.
So, it's becoming more and more common and more and more of a great idea for for a game developer for for games to be developed on on sort of the shoulders of third-party development engines or or software engines.
So you might ask what what is that?
(06:24):
So that the idea of a,
of an engine is software that's created by someone else,
often a large,
um,
gaming or development company that really offers the building blocks of the game.
So, it allows you to reuse these tools or this environment that's been created and engineered and re-engineered and improved and upgraded over time by a large team of really skilled developers.
(06:57):
Um,
and these gaming engines are great ways to shortcut a lot of the time and effort that, that might otherwise need to be spent to sort of build up the foundation for a game.
Um,
so common examples,
One common example you might,
(07:18):
uh,
many people have heard of the Unity engine.
Um,
so oftentimes when founders and developers are relying on these,
these third-party engines,
you can use them in many cases for free.
Um,
at the beginning,
as long as you're using them,
either not commercially or you're not making a lot of money off of them.
(07:40):
The thing that people often forget is even though you can download and use these amazing engines or development environments for free sometimes,
and oftentimes once you go into a full commercial release,
then the terms of your use of that engine change and you might need to pay or you likely will need to pay a fee for the,
(08:04):
for the benefits you're getting out of that engine.
And so sometimes,
you know,
young founders or developers kind of overlook this fact,
and then once it comes time to commercialize the game,
your whole business model might be premised on not having to pay those fees.
and you need to think about that from the and factor in the fact that if I'm building my entire game based on this third-party building block,
(08:33):
I'm gonna be,
went into that building block and I'm just gonna be aware of and mean that I will have to pay for the rights and benefits and I'm receiving from that engine.
So, what about other software that's available for free on the internet?
Like open source software.
Right,
so open source software is one of my favorite topics.
(08:58):
And for those of you that haven't heard of this,
open source software is something that's widely available and widely used in the programming community across the gaming and other industries.
And the idea is that, if I wanted to create some software and allow others to use it,
I might release it under an open source software license,
(09:20):
and most open source,
open source software licenses essentially say you can use my software and you can you do just about anything you want with it as long as you do X,
Y, and Z.
And that X,
Y, and Z is are the things that people often overlook for a lot of types of open source software.
(09:41):
The X,
Y, and Z just says,
you have to tell people that you distribute my software to that I created some of that software and that's all you need to do.
You just need to give them notice that that in credit for the software that you're using.
Um,
however not open all,
(10:02):
open source software is the same.
And there are another class of open source software licenses referred to as copy left licenses that have other licensing conditions in that X,
Y, and Z.
And some of those conditions could potentially be problematic if you've included open source software under copy left license in your product,
(10:23):
didn't realize it.
and then later on,
right,
when you're about to launch or after you've already launched the product or the game,
you realize you may need to remediate it.
And one of those conditions, in some types of open source software licenses says,
if you include the software in this, in my game and you distribute the game to the public,
(10:47):
then, as a condition of your using my open source software,
you need to make all the source code for the game available.
And you can imagine that that could be problematic if,
for example,
a founder didn't want to release the source code of its game to the public or or maybe you're mostly okay with that idea.
But releasing the source code to the public could um,
(11:09):
open your game up to things like security vulnerabilities and all sorts about other issues.
So, the way to get around this or or or head this off at the pass is just to be aware of the open source software that you're using from the beginning,
track that use of open source software and just be diligent in how you and your gaming development team uses open source software so that you're not surprised later on in the process.
(11:38):
Right before you launch that.
Oh wait,
I didn't realize we're using open source in a way,
we're not supposed to; now,
I've got to spend a lot of time to fix it.
So it sounds like making sure you're keeping track of the software and the platform is a crucial element to understanding and being successful as a gaming founder.
Um,
what about,
so most gaming founders may work at other companies in similar atmospheres.
(12:02):
Could you tell me any issues for a founder who may be worked on their game or some code while being employed at another company?
A lot of times when you come up with that really cool game idea,
a really cool idea for a new company.
Um,
you may be working a different job,
right?
You might be developer as a coder or doing something completely different and um,
(12:25):
you may not quit your job before you fully develop your your idea or even before you start working on your really cool game.
And the way this can present an issue is that with most companies in the U.S. and,
and really around the world.
Um,
the way your employment agreement will work,
(12:47):
or the way the default law rules will work is that anything you create in the course of your employment will often be owned by the employer.
And, sometimes the employment agreement can go beyond just that and can say anything that you develop using a company computer or done on company time, or even done while you're employed at the company period is automatically owned by the company.
(13:15):
And so you can imagine if you're spending your lunch break developing a really cool game or your, you take your work laptop home and you're coding on your work laptop because you also uh code on your work laptop for work.
And but you're creating a game and it has nothing to do with your job.
Sometimes your employment agreement will say too bad,
(13:36):
the company that you work for then owns that game or owns that idea owns that code that you've spent so much time working on.
So, the thing you need to be aware of as a founder is that the terms of your employment agreement really do matter,
So before you spend a lot of time developing that really cool game on your,
(13:59):
on your lunch break or or you know,
before you reuse code that you're using in the in your day to day day job,
also in in the really cool game that you're developing on the side,
just be aware that you may be inadvertently giving ownership of whatever you're doing over to the company and once you go off and start and found your new gaming company or bring your really cool game idea to it already established gaming company that can raise major issues once people hire attorneys or start poking around and asking questions and realize actually it turns out that your former employer owns that game or is that really cool idea and not you.
(14:45):
So, it sounds like we really need to square away employment issues.
Make sure we're not leveraging third party I
P
And there's a lot of things that founders without these legal experiences may not know.
Could you tell us maybe other issues that you've run across in the gaming space?
Sure.
Another issue that we run into in the gaming space is that once you found a company particularly with with video game companies it's often the case that a founder is really on the ground doing a lot of the actual development of the game because anyone that's founding a new gaming company, in many cases this is doing came up with the idea by themselves um or or with their other founders.
(15:33):
And so they may you may be on the ground coding or coming up with new characters or story design and spending lots and lots of time developing this really valuable property.
The thing that people often forget to do though is to enter into an agreement between yourself and your other hand between your the other founders and the company illegal entity itself that says that entity either owns all that I.
(16:06):
P.
And software that you've been working on or has all the rights that needs to use it. And how this can be an issue you might say well I'm the founder.
why do I need to have a formal legal document?
The sad reality is a lot of times founders leave fights happen,
(16:26):
things come up and if if that ever does happen for your company, you want to make sure that you aren't inadvertently giving away you know a third of your game or a third of your game isn't leaving when one of the three founders walks out the door.
So it's important to square that away early on so that you don't have a cloud over the ownership of the I
(16:49):
P
that's been you know integrated into a game prior to either beginning or really getting down the road of the development of your gaming company and your game itself.
Awesome.
Well thank you for your time today,
Scott. Wilson Sonsini advises a wide variety of clients in this gaming industry.
If you'd like more information or if you have any questions about legal issues arising in the gaming space,
(17:14):
please don't hesitate to reach out to any member of our Electronic Gaming Group.
Thanks for tuning in everyone.
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Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
Ridiculous History
History is beautiful, brutal and, often, ridiculous. Join Ben Bowlin and Noel Brown as they dive into some of the weirdest stories from across the span of human civilization in Ridiculous History, a podcast by iHeartRadio.