September 13, 2021 • 45 mins
Host Mary O'Brien talks to Wilson Sonsini partners Aaron Hendelman and Gary Greenstein as they dig into copyrights and trademarks in gaming.
Conversation Highlights:
- Copyright and trademark protections for gaming founders— what are they, and when to establish ownership?
- Adding third-party assets to games and relevant agreements and licensing considerations.
- What does trade dress protect?
- What is "Fair Use?"
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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 Sonsini.
I'm thrilled to have you join me as I interview several of my colleagues and dig into key topics surrounding early stage gaming companies.
The information in this podcast episode is for general information purposes only and may not reflect current law in your jurisdiction.
(00:22):
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.
(00:47):
Today I have with me,
Aaron Hendelman,
a partner in our trademark and advertising group,
and Gary Greenstein a partner in our technology transactions department,
Aaron, Gary,
can you tell me both a little bit about yourself and what made you interested in the gaming space?
Gary,
I'm really interested in what made you into the gaming space. You want to start?
Certainly,
so I got interested in gaming as part of my general work and entertainment.
(01:10):
So I've been working in music and copyright matters for almost 25 years,
essentially since I started practicing as an attorney,
I began representing the Office of the Commissioner of Major League Baseball and then started representing record companies in the record industry.
And then when I came to Wilson Sonsini, I started representing technology companies dealing with rich media.
(01:33):
So, whether that is video,
music,
books,
film, and television,
all of that sort of came together.
And what interests me the most is the intersection of new technologies and copyright law.
And so, with gaming having moved online,
that is sort of a natural evolution of where my interests are as an attorney is to look at what rights are implicated as someone is using an online platform to engage in gaming.
(02:01):
So, you may have platforms such as Caffeine or Twitch where people play and then others,
others are watching them.
You have game developers trying to figure out ways to get the consumer interested and spend time,
you know,
their limited time playing games and engaging with various activities. And, what I enjoy is counseling clients in that area and figuring out the issues related to technology and copyright.
(02:29):
Thanks, Gary.
So this is Aaron Hendelman,
one of the partners in the trademarke and advertising group.
So I've been here at the firm for approaching now 23 years and have have really from the very beginning been interested in as part of the trademark and advertising practice,
all things that are content and creative and,
(02:49):
and really there's been no better space for that than in the gaming space.
My early introduction,
one of the things that got me really excited was a very first client.
The firm was a company called Linden Labs,
Linden Labs was a creator of really one of the first and most innovative virtual spaces,
(03:10):
called Second life,
which is still around and has gotten lots of play.
Um,
and,
and from that I just sort of got hooked in many of the legal side of things.
It wasn't hard.
I grew up as,
as a bit of a gamer.
I'm old enough now to say,
I see it through the eyes of my teenage son who's a gamer as well.
(03:30):
But you know,
for me,
it's always been,
just a real intersection of innovation,
creativity,
um,
and the intellectual property,
legal issues that I love to deal with on a day to day basis.
Um,
you know,
for me seeing it from also companies of varying sizes,
from small,
(03:51):
independent,
independent developers to,
big studios and game companies. I had, when Microsoft originally spun out,
Bungie,
one of its most successful acquisitions initially,
obviously is the maker of,
of the of Halo initially.
And,
and bungee who's had such success with its franchise,
(04:11):
Destiny,
again,
playing in the spectrum of issues and company sizes and games has just made this really fun along the way,
Jumping right in.
Could you both kind of describe the,
on a high level the types of protections that would be available to gaming founders as well as what kind of things would be captured under those protections?
Sure,
(04:32):
Gary.
You started last time,
and I'm happy to answer that to begin.
Why don't I hit on the trademark side:
so,
um,
you know,
when companies or founders or developers hear,
trademarks,
they certainly think of,
or I would think often think of,
um,
you know,
core logos or the like,
(04:52):
but trademark covers a variety of things.
It covers,
uh,
in the game realm,
game names,
studio names,
logos,
designs.
I know, Gary,
you're gonna talk about copyright in a second.
I'll let you,
if you'd like talk about the overlap in terms of logos and and where,
how that works on the copyright side.
(05:13):
Um,
it covers slogans,
can cover character names,
but I think what's probably,
um,
interesting and useful is also understanding where this protection comes from and it'll be a good contrast to copyright in some other areas.
So, trademark is really about source identification.
So, the idea is I'll use a non gaming analogy.
(05:35):
You know,
you pick up or you see a can of Coke on the shelf,
you know,
you know,
who made it,
you can understand the quality that's there,
you know,
exactly what it's gonna taste like.
And the rationale for it,
although we build and companies want to build trademark rights rightly to build brand value,
to build equity in terms of an intangible asset.
(05:57):
The regional motivation behind trademark was really about that source identification.
So,
um,
really almost protecting consumers so that consumers again,
know what they're getting,
um,
I think one of the things that's sort of more interesting in a game realm is when you start thinking about trade dress,
which is a subset of trademark law.
So trade dress really is about protecting the what we call the look and feel.
(06:22):
So, it doesn't protect things that are functional,
but it does protect the creative design elements that can be what your UI looks like.
It can be the coloring of certain things.
It can be you know how those things relate.
but again,
those are all natural areas for games and game developers to both seek I
(06:45):
P
protection and you know,
to the extent we may or may not talk about it.
to the extent that third party developers are mimicking what you're doing or a little too close for comfort,
whether that's intentional on their part or not,
trademark can be an angle to go after those things.
In contrast to trademark.
(07:06):
So this is Gary Greenstein,
in contrast,
trademark what Aaron was just describing,
copyright will protect things such as the characters in the game,
the complete game itself.
So if you think back to traditional games,
you would buy a game in a cartridge or a disk and you stick it into a device and then it plays. The entirety of that work that is reproduced on the tape or on a disk would be a copyrighted work similar to a movie or a television show.
(07:37):
And, what's important about the copyright in the game is that copyright protects the expression of an idea,
but not the idea itself.
So, if you're creating a first person shooter game,
that concept is not going to be protected by copyright,
but the manner in which you create your game.
(07:57):
So, all of the elements that result in that finished product would be protected or can be protected by copyright.
And, importantly,
copyright subsists.
So, it comes into existence when a work is fixed in a tangible medium of expression.
So, when the developers are writing the code and you've got the finished code that represents the game, when that is written,
(08:24):
that's going to be copyrighted.
You may not be able to enforce your rights just because it's fixed in a tangible medium,
but it is copyrighted. Importantly,
the next step you want to take following the fixation of the work is registration of a copyright.
And by registering a copyright with the US Copyright Office,
at least here in the United States,
(08:45):
you have the ability to bring a claim against the third-party who tries to replicate your game separate and apart from the trade dress issues that Aaron addressed.
But if someone tries to take your game and use it in an unauthorized manner within their own game or to put it on a platform and operated for profit,
(09:05):
you can bring a lawsuit if you have registered the game with the Copyright Office and if you register it in a timely manner,
so within three months of publication,
you can also recover what are or recover what are called statutory damages and attorney's fees.
And, that can be very powerful as you seek to protect your intellectual property.
(09:27):
So, as a game creator or studio creating games,
what you want to do is you want to think about,
at what point do you go ahead and register the game?
You're probably not going to be filing a copyright notice every day or every week while the game is in the process of development.
But, when the game is finished and before you're releasing it to the public or shortly after i.
(09:52):
e.
within three months of releasing it to the public,
you would want to register the copyright in that game.
And that could also include other elements that are added to the game.
So, if you hire a songwriter or composer, and Aaron and I worked on an agreement for Bungie where there was a very well-known composer who worked on the game.
(10:14):
there was also a very well known recording artist,
one of the most famous recording artists in the world who created music for a game put out by Bungie.
And you can separately copyright the music that gets added to the game.
And that could be copyrighted by the game publisher or by the author,
which is a copyright term.
(10:35):
The creator of the music that is added to the game.
So, you always want to think about what distinct elements can be separately copyrighted and then the entirety of the work.
So, the end product,
the video game itself, you would want to register.
So, it sounds like there's a different number of ways that you can go about protecting your ideas to make sure that they have the proper protection they need.
(10:59):
And Gary, went into this a little bit in depth in your last answer,
but I want to know a brief overview of how founders would even go about obtaining these protections.
So, that's a great question because the founder of a company may not be the software developer and the founder of a company may also not have many employees.
They may be outsourcing the work to third-parties developers in Eastern Europe or in Asia or in Latin or South America.
(11:28):
And, so what you want to do is is the founder of a company that's developing a video game,
you want to make sure that all of the contributors towards that video game or assigning their rights in in whatever intellectual property they create to the company.
And there are two ways the company can go about receiving that intellectual property,
it can be assigned to them,
(11:49):
or it can be created as what's called a work made for hire.
And a work made for hire means that when a person creates a work,
it is owned upon fixation by the party for whom it is created.
So, an employee acting within the scope of their employment, when they're creating a new copyrighted work or copyrightable work,
(12:11):
the company, their employer, will own that work.
Independent contractors can also create a work or contribute as a work made for hire to something like a video game because a video game can qualify as an audiovisual work under the Copyright Act as something that would be eligible for work made for hire treatment.
(12:32):
But, what founders need to think about is getting all of their employees and all of their contractors to sign the appropriate invention assignment agreement.
So, that anything created by those contractors or employees will be owned by the company upon creation. Aaron,
(12:54):
is there any process that follows similar to copyright that you need to consider for trademarks?
Yeah,
another good question there, there is.
And, I would even back up for game developers and creators to say on the trademark side,
Gary talked about the considerations and then the filing,
(13:15):
I want to back up even before you are getting to filing to talk about searching considerations,
clearance.
So in other areas of I
P
Sometimes you know,
it's it's hard to know what else is out there.
Or, maybe even tactically there are reasons why you might want to have your head in the sand to not have quote "knowledge" about what else is out there.
(13:37):
That's rare,
but the opposite is true for trademark.
So, usually when our developer studio clients or frankly any other early stage clients are looking at company names,
new game names,
we want to put them through some sort of clearance to knowingly try to prevent infringement
(13:57):
against a third-party.
So,
you know,
the first thing I always tell clients to do is, obviously Google is an incredibly powerful tool,
do your own early homework.
Um,
I should talk for a second more about the standard.
The standard and trademark infringement is the likelihood of confusion,
which has a lot to do with how close are the names themselves?
How close are the actual products?
(14:19):
There are other factors that go into it,
like the sophistication of customers alike.
But I think for a quick and dirty consideration,
what you as a founder or creator ought to be thinking about is, are there really similarly named things in your space?
So, you can go to the USPTO website.
(14:39):
Um,
it's not hard to navigate to the trademarks area and do some searching there.
And if you see,
you know,
let's say you're maybe an obvious choice,
I referenced Halo before you're thinking about adopting a game name called Halos.
It's probably not a good idea because Microsoft is almost certainly get object and to the extent you had been um,
(15:04):
you know,
in a cave and not aware of the gaming world at all and didn't know about it.
A quick search obviously google or a quick search at the trademark office would turn up those kind of trademarks.
Now you want to search variations,
you don't want to search just the exact titles as well.
The other thing to think about or no is that from U.
S.
perspective in particular,
(15:25):
rights are based not just on filings but based on this marketplace use.
So the norm and ideally for an early-stage company whose about to make the difficult to turn back on decision of here's the game name you're gonna have and you probably need a lawyer to really do this the right way.
Um,
a full blown marketplace search.
(15:47):
You know,
there are companies and vendors that do that,
but usually again it's a deep dive.
well beyond just filings to then make a determination,
does this look like we have freedom to operate under this name.
That process can be true for logos for other things,
but as you can imagine,
particularly important in the game space for court game names.
(16:09):
In terms of filings which Gary talked about on the copyright side,
there are trademark filings,
they're done with the U
S
P
T
O
there are some advantages in the long-term and having those registrations that may include when you file,
by the time your marks register, your rights take back to when you file.
(16:30):
That's particularly useful if you're a game developer and obviously there is some lead time between the time you're adopting a name and coming to market and that kind of registration or application in that stage is your stake in the ground to ensure that you're going to be as well positioned when you launch as you are today.
(16:51):
You know,
one thing I'll sort of note really briefly,
you know,
we're talking about us on the brand side,
um,
the answers are a little bit different outside the U.
S.
Than they are in the U.
S.
And what I mean by that is in most places around the world, rights,
trademark rights that is, are are based on registrations themselves,
(17:11):
not on this marketplace use that are referred to.
So as part of the strategy,
depending on both.
Um,
you know,
the timeline and your intentions,
I mean almost all of our clients,
regardless of developer size on the game front,
obviously our our multinational looking to be multinational.
You want to do a bit of clearance to try to ensure that things look available,
(17:36):
not just in the U.S.,
but outside and you may over time, may not immediately,
but over time be looking into some of those filings outside the U.
S.
Where they can be particularly important,
Aaron,
that's a great point because one of the things that you just touched upon and I want to emphasize or reiterate is that intellectual property protection is territorial in nature.
(17:58):
So, when I was talking about copyright earlier,
the copyright laws in the United States apply within the United States,
they do not apply extra territorially.
So, if you are a game developer and you're developing a game and your game is going to be used or created for online platforms.
You want to think about whether or not you want to undergo the cost and effort of registering the copyright in your game and foreign jurisdictions so that you can enforce your rights in foreign jurisdictions against third-parties that may infringe your rights.
(18:30):
Usually,
early-stage companies do not undertake that effort to register their copyrights and foreign jurisdictions just because the time and expense that is involved.
But, as your game may become more popular,
or if you are a large game publishing company,
you become very successful and you're coming out with another,
a new game or a new release of an existing branded game,
(18:53):
you may want to think about early copyright registration protection in multiple jurisdictions so that you can enforce your rights against people who might infringe or copycat what you've created. Mary, before we go on,
can actually make even one other point if Gary our just gonna keep riffing off each other as he says interesting things that makes me think about things that may be worth noting.
(19:16):
So,
you know,
we're on both on the copyright and trademark side,
talking about registration and talking about the value and talking about how in the event that you need to go after a third-party,
including following a lawsuit,
which in the U.S. on the copyright side,
you'll be required to have that registration before you can do that.
My experience for early-stage companies is obviously litigation is a huge thing.
(19:42):
Rarely would you choose to do that unless you absolutely have to.
It's a very difficult business decision to do that.
And frankly we almost always are trying to, depending on the facts and circumstances um you know,
encourage clients to be very measured about that.
But one of the huge advantages in my experience from,
I just think a real world matter in terms of the value of these registrations is they are powerful in helping resolve things long before you get to the point as an associate company of needing to resort to litigation.
(20:14):
So, there are tools that both will speak on the trademark side.
It enables other people to search and find you.
It enables the trademark office to do some blocking for you.
It enables if you need to get to the place where you have someone like Jeremy uh send a letter to another company um explaining and telling them why they need to make a change.
(20:37):
Um you have a much bigger sword to swing when you have these registrations and although there's a little bit of upfront cost,
it can save a tremendous amount of time and money later on um by engaging with these things.
So I think it's um it's it's good corporate hygiene on the I.
P.
Side.
(20:57):
But um you know when you can avoid those big spends later on that's a big part of what this is about to and to throw the riff or to pick up where Aaron left off.
I think neither one of us is a corporate attorney but one of the important things to think about is that is an early stage company goes out to look for capital.
So you're talking with investors.
(21:18):
One of the things they will consider is have you protected your I.
P.
And what is the possibility of capturing the market based upon your own people?
So if you do go ahead and register your copyrights or trademarks early that can make the company of greater interest to potential investors.
So an important consideration along with being able to protect your intellectual property is what are the implications of that for fundraising?
(21:45):
As much as I might have loved to be a professional musician.
Here stops my own riffing very go ahead.
No this is very helpful.
And it ties into my next question perfectly um Based on your experience and what you both discussed,
when should founders begin about thinking to protect their trademarks or copyrights?
Is there a hierarchy of what you should protect early on versus later in the process.
(22:10):
Parent.
I'll start here.
So going back to something I mentioned earlier I think when you're a founder of a company.
The most important thing is to make sure that you get the assignments from employees and contractors at the very beginning because that will then invest in the company the intellectual property at all stages of development of the game.
(22:32):
And unfortunately,
there are many instances where both Aaron and I have probably worked on diligence for a client and it turns out that founders or early-stage employees did not properly assign their intellectual property to the company.
And then that becomes a headache and potentially a very costly problem to try to fix as you're working on a sale of the company or you're incurring significant legal fees as you're trying to raise money in a seed round or a series A or B round.
(23:02):
So, you want to think very early on about having formalities in place to make sure that the intellectual property created by employees is vested in the company.
Whether or not the company goes about registering that intellectual property,
I think is a separate analysis about does it make sense to register for the or when does it make sense to register trademarks and copyrights with government agencies so that you can protect it.
(23:33):
So,
I would recommend that founders think in two stages it's getting the intellectual property from,
from the individual people who are creating it and then protecting that intellectual property from third parties who might exploit it, and who you may want to be able to say,
please stop that
and if you don't,
we will consider availing ourselves of all remedies available at law.
(23:57):
So, I think that's probably the most important advice to the founders early on,
is to think in parallel and then evaluate and discuss with council when it may be appropriate to start registering intellectual property.
I love the way that Gary bucketed
that, I'll stick with that and just amplify a little bit and add a little bit specific to trademark.
(24:19):
So,
um,
I think in terms of the trademark side,
I guess I'll say with the idea of making sure that it's all getting in the right place before you even think about,
uh,
what you're doing,
filing or not filing wise.
On the trademark side,
there actually are some traps for the unwary.
(24:39):
I think you do want to talk early.
There are some limited situations, which do come up with both game companies and frankly,
founders in general, where if you're not setting up the trademarks in the right way,
that you run some risk that later on,
including as evident as part of an acquisition,
(25:00):
how it typically manifests itself is in a dispute where a third-party comes in and essentially,
uh,
pokes at how you handled trademarks of the outset.
And it turns out that your trademarks that you thought you were building rights in,
Um,
we're not,
we're not of value.
And I don't mean that in terms of dollar value,
(25:21):
I mean that they were not properly formed.
They were owned by the founder when they should have been owned by the company and it's not as simple on the trademark side,
always as just, let's now clean it up with an assignment.
it's a much bigger issue.
So, I guess that's a long way to say.
I would just encourage you to have that communication with a,
(25:44):
you know,
a trusted lawyer or I
P
person.
early on. In terms of the second bucket that Gary talked about filings,
you know,
early on the trademark side tends to be important rights or based first in time,
whether it's used for filing.
You know what I encourage clients to do,
(26:06):
I typically would say to them, frankly, less is more at the very beginning stages.
You know,
for a game company,
you're gonna prioritize the company name,
you're gonna prioritize the game name.
Are you gonna be prioritizing in terms of filings
you know,
the map names or particular slogans or the like?
(26:29):
Probably less so.
And you know,
we would want to encourage our clients at that stage to take a much more measured approach,
partly because you don't know necessarily at that point what you're going to be exploiting for the most value,
at least on the brand side,
you know,
where may we may or may not have brand extensions,
What are the particular things that the market
(26:49):
Um you know,
or customers or players are really grabbing onto. Some of that stuff becomes more apparent in time and you can sure those things up
as those become more clear,
but you know,
the obvious blocking and tackling important to do it early.
Important to take a practical approach about it.
And that's what we encourage.
(27:10):
That makes perfect sense.
I wanted to actually circle back to something Gary said that both you and Gary worked on. If I'm a game designer who intends to use music or maybe images or other rendered objects from third-parties,
what kind of checks or balances would I need to have in place to make it work?
For example,
you you mentioned that you included music and composers in a game that maybe they didn't produce,
(27:36):
what what would they need to look out for?
So, this can get very complicated because music in particular is is almost a third rail with copyright holders or with game developers,
because it's easy to identify.
There are tools that can help you find music on the internet in various activities and copyright owners will aggressively enforce their rights.
(28:01):
So, if you are a game developer and you you want to use music in your game,
you can go about it in multiple ways.
Number one,
you can identify commercially released music.
So popular music,
you might hear on the radio or on Pandora or Spotify and you want to use that in a game and you can go out and seek a license.
And, what you would need to do is you would need to identify the various copyright owners of that work in order to be able to include it in the game.
(28:29):
And with music,
there are two copyrights,
there is the sound recording and there is the musical work. And the musical work is what's written by the songwriter or composer.
And then the sound recording is an artist's rendition.
So, an easy way to think about it is Lennon and McCartney were the primary songwriters for The Beatles with all due respect to George Harrison and then John, Paul,
(28:50):
George, and Ringo were the recording artist the Beatles.
The musical works written by Lennon
and McCartney can be owned by one music publisher or they could be owned by two different music publishers.
McCartney could be affiliated with one music publishing company and the Estate of John Lennon with another.
So if you want to use that music in the game,
(29:11):
you would have to go to the publishing companies to get their permission to be able to,
what's called synchronize the,
the underlying notes and lyrics,
the musical work in timed relation to visual images. Separately,
If you're using the commercially released sound recording,
you would need to go to the record company to get their permission to also synchronize the sound recording in timed relation to visual images.
(29:35):
You could also,
as an alternative to popular music,
you could go to what's called a production house or a production library company. And those are companies that go out and create music that often sounds similar to popular music.
But what they do is those production companies will own the copyrights in both a musical work and a sound recording, or they will have the right to license both of those works. So that instead of having to go to one record company and multiple music publishers,
(30:04):
as is the case with popular music,
you can go to one entity and get music to incorporate in your game.
The third option is to commission music by,
you know,
if you're a game company and you do not have a lot of money,
you can go to the nearest university and you can put something up and say we're looking for musicians,
(30:26):
we're going to pay you $500 and we're going to own music that you create. And you can have the local musicians provide that music to you
and the gaming company can either receive rights in that via assignment or potentially as a work made for hire or you can commission a famous recording artist or composer to create music for your game. Hans Zimmer,
(30:47):
well-known composer,
one of the most well known composers on the planet has created music for video games
so that's an alternative.
The question then is,
does the company own the works that are created by the person who has been commissioned to create the work or are they licensing it.
Typically the game developer will try to own the music.
(31:08):
There is an issue is to the leverage between the composer or creator of the music and the gaming company and the cost that is being paid.
But one of the little nuances and this is going to go into a little bit of too much detail,
but I just want to highlight it
so people have heard the phrase,
if you commission an artist to create music for your video game,
(31:29):
you may expect that the composer will retain what's called the writer share of performance royalties.
And, what that means is that if your video game is played online on a gaming platform,
so whether it is on YouTube Live or it's on Twitch or Caffeine and royalties are being paid by the platform to performing rights organization who administer public performance rights and musical works,
(31:57):
the composer that you commissioned to create the game may retain the right to get paid their share of performance royalties.
What's called the writer share,
which is 50% of the royalties that are allocated to that work from its exploitation.
So, if if you are a songwriter and your song is included in a game that's being used on an online platform and the platform pays $10 in royalties and that's what ultimately allocated to that game.
(32:28):
The composers,
writers' share would be 50% of that $10 or $5.
So, as a game developer,
you want to think about your options. Using commercially released popular music is often going to be the most expensive. Commissioning a well-known composer will also be expensive.
Production libraries are often a very useful tool for game development,
(32:52):
but it may not be ear candy that's going to stick with with people.
So, if you're using Grand Theft Auto and you want a realistic feel of what it's like to be in a car as you're racing through the streets of Los Angeles in the game,
you may want to have what's the equivalent of popular music on the radio in that virtual car.
If you're creating a game,
(33:13):
we're having popular music doesn't matter,
then you can save money by using non popular music.
So, I'm happy to answer that, Mary, from a brand and a slightly different perspective.
So,
um,
so obviously not about music,
but in terms of use of third-party brands,
how do things appear in your game?
(33:33):
I guess one thing I want to comment on,
um,
although it's outside really the scope of what we're talking about here,
but it's relevant is what we call rights of publicity or people's likenesses.
You know,
lots of times if you want to have Lebron in your NBA game,
needless to say you need Lebron's permission for that.
That's a right of publicity license.
(33:54):
That would be true for individuals in general.
And there's not a very easy way to have fair use,
which I'll talk about in the second of,
individuals' likenesses,
so, are pretty limited. Okay,
in terms of some other areas though,
brands,
obviously one option is like music.
If you're trying to really do something co-branded,
(34:15):
you're trying to do something high profile in game with third-party brands.
There's the option to go license from those third parties where it gets,
I think particularly interesting is what we would call as lawyers Fair Use and it is a legal concept.
That's a defense,
that it is very much what it sounds like,
although I should also say up front this is one of those topics
(34:38):
we could have a three day seminar and still barely scratch the surface about all the nuances of Fair Use.
So take this for the brief synopsis that it is.
But you know,
on the trademark side,
Fair Use comes in two forms:
it comes in what we refer to as nominative fair use,
which is also just legal gobbledygook for you know what you're referring to something by name.
(35:02):
If a character in game says, "I'm headed over to Starbucks,"
um you know,
I don't think that as a real world matter is infringement.
That's just a plain english descriptive use,
we're using the brand to describe what it is non fair use.
Um,
in terms of the brand,
um,
does not extend to logos as a general matter.
(35:25):
It would just be the plain english word or presentation.
There's another kind of fair use that's called descriptive.
fair use. Also very descriptive,
I guess pun intended in terms of what it is,
right?
Which is not so much using third-party brands,
but if you're using words and their plain english meaning,
um,
(35:45):
you know,
this is um,
so Gary mention,
Grand Theft Auto actually brought something else,
which we'll talk about a second,
but let's just keep with that example.
So,
you know,
the term grand theft is plain english for what it is.
And if you're a different game in your game,
you're making reference to grand theft without specifically saying Grand Theft Auto for a reference to a game,
(36:11):
um,
that ought to be defensible because that's the plain english meaning of what grand theft is.
So when you are incorporating third-party brands or words you need to think about or can think about,
okay,
am I may be within the realm of those kinds of fair use.
Now,
Fair Use is notoriously difficult,
fact,
specific,
candidly inconsistent in its application.
(36:34):
I'll give you an example of that in,
in a,
in a second.
Um,
so I think you do need to put a lot of thought before uh,
meaningfully embedding third-party brands or content in game because unlike,
you know,
with a website ad promoting something,
if a threat comes in.
Um,
an embedding that from your game content is a lot more difficult than pulling down a website. Now,
(37:00):
Um,
you know,
Grand Theft Auto came to mind as Gary mentioned that there was a sort of a well-known challenging case about that that sort of presents somewhat the concepts we're talking about here in terms of third-party brands.
So people will be familiar with the game.
You're driving and racing through the streets of a fictional city that's based on L.
(37:21):
A.
I think based on L.
A.
There was a lawsuit from a actually I guess an adult entertainment company, I think is a nice euphemism way to put it.
That apparently is well known in L.
A.
I think it went by the name "Playpen" if I'm recalling correctly.
(37:42):
In game, developers who had gone to get inspiration for LA, included something that was an adult entertainment company there called Pigpen in L
A
that seemed to be in kind of a similar situation
located. Lo and behold, the original trademark odor of Playpen sues the game company for trademark infringement,
(38:05):
among other things.
Long story short in that instance,
that was a scenario where the artistic creativity and the test that's involved.
It's a little bit different in that context.
Uh netted out that,
you know what not infringement,
that's, that is not a reference that's not confusingly similar.
You know,
one other example I would give you that kind of I think makes the point pretty well,
(38:31):
at least in one would be.
I know there was a guest,
forget who was the game developer,
there was a godfather related game where,
the guns in game were referred to as Derringers, after the,
I guess he was original bank robber,
the like.
Who, ultimately the rights holder sued,
(38:54):
net net in that case this goes to the nominative fair use context uh,
for those who are less familiar,
I was not fully familiar before,
I remember reading about this game,
but that particular type of gun is known in general,
generically at this point as a Derringer.
And so from a trademark and a nominative fair use,
(39:16):
perspective inclusion and game for that kind of reference is very defensible.
Whereas had it been uh,
you know,
if you,
if you pulled in Smith and Wesson and started branding all over,
it probably turns the other way.
Thank you, Aaron.
So as a closing thought,
I was hoping each of you could give the listeners the biggest piece of advice that would be useful to a fledging gaming company with founders who may not have any legal expertise,
(39:44):
Hire a good lawyer.
I,
and I laugh when I say that,
but there's some truth in it because if you're devoting time resources and other people's money, working with a lawyer,
whether it's a big firm or a solo practitioner,
(40:04):
if they have experience in the world in which you're operating,
so we're talking here about intellectual property protection of trademark and copyright.
You want to think early on about how to protect the investment so that your time and effort is not being wasted.
It's not going to be captured by somebody else and used without authorization.
(40:24):
A bigger company is going to come in and steal your idea and realize you didn't take the appropriate steps.
And, all of a sudden you spent two years working on a game or a project and you have nothing to show for it because of massive Silicon Valley company or a company outside of the United States has taken your idea and run with it.
So, thinking early on, getting good advice,
(40:49):
I would,
I would recommend is the first step. And doing a little bit of homework,
familiarize yourself with the issues that Aaron and I have talked about.
There are lots of resources on the internet.
There are lots of, what we call client alerts, that are writings that we put out to keep our clients and the general public informed about changes in the law,
(41:09):
including copyright and trademark. And just having a general awareness of the space in which you're operating.
So, while you're trying to build a great game that's going to look wonderful and be very interesting and engaging for consumers and to almost get them addicted to playing your game,
you want to take some very easy steps early on that will hopefully reap huge rewards for you when your company is very successful down the road.
(41:37):
Try not to leave those easy issues.
Don't don't create unnecessary foot faults.
I would say by ignoring some of the basics which can return significantly for the benefit of the company.
If you do small things earlier on they can have very significant benefits.
Yeah.
So, the only thing I'll add other than I've learned my lesson to not let Gary go first on these kind of answers because I I you, you are are thinking exactly what I'm thinking in several areas.
(42:05):
But I guess on the first point in terms of getting the right people to help you,
whether it's a lawyer and industry experts like I think that um you know,
I spend plenty of time with early-stage companies can only talking to them about what they don't need to do or arguably shouldn't do given their stage,
given the cost benefit analysis. Versus what are the must do's to block and tackle in the way that Gary is describing that we've talked about.
(42:33):
And I think that so having sort of uh right-fit advice is what I'll call it so that you're doing the things that make sense, but are not wasting money unnecessarily distracted in the like I think that's that's important on the I
P
front for an early-stage game developer,
founder of the like um and candidly I think that I mean having overlapped and played in other areas with other colleagues.
(42:59):
I think that's true for a number of legal issues for companies at this stage.
Um,
I will say this on the brand side, brand specifically,
you've heard the hype earlier.
Early is important,
doesn't mean you have to boil the ocean in terms of everything that needs to be done.
But early is important because rights are are in time.
Um,
(43:20):
I would say this may sound also a little backwards given some of the things we describe,
but from on the,
on the brand side,
you know,
the worst thing is you launch, you
get some popularity.
Um,
you know,
something really bad happens and you have to change the name of the game or have the litigation.
So, actually before you're getting out of the gate,
(43:43):
um,
I would say to you,
it's all about the searching in the,
in the certainty you're building as much certainty as you can that for your core brand asset,
and these games are very brand focused,
that you're feeling good that once you launch,
you're gonna,
you know,
once you're starting to be the success because of your great create great creativity and game development that um,
(44:06):
it's not the name that's gonna ultimately cause you problems.
You will get to the filing,
you will get some of the other things,
but do your homework before you regret it because, as Gary said,
it's not only important for these things to help pay big dividends later,
but, to frankly help prevent big expenses or debits later.
Um,
(44:27):
but,
but anyway,
good,
good luck.
The one,
the one last thing, Mary,
I would say building upon what
Aaron just mentioned about brands.
You don't want to incorporate third-party intellectual property in your game without permission.
That could be very expensive to take out later on in the process.
So, you probably do want to think and approach thoughtfully what elements are being included in your game.
(44:54):
So if you're including music that you don't have permission for, or you're using third-party brands and you're well into development. And then it turns out that the distribution of the game with that third-party intellectual property is likely to get you sued and maybe even enjoined from releasing the game.
That can be a very expensive mistake.
(45:15):
So, separate and apart from protecting your own intellectual property,
is to think about respecting the rights of third-party intellectual property.
Perfect.
Thank you both for your time today,
Wilson Sonsini advises a wide variety of clients in the gaming industry.
If you'd like more information about legal issues arising in the gaming space,
please check out our electronic gaming groups newsletter.
(45:37):
If you have any questions,
please don't hesitate to reach out to any member of our electronic gaming group.
Thank you 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 Sonsini.
I'm thrilled to have you join me as I interview several of my colleagues and dig into key topics surrounding early stage gaming companies.
The information in this podcast episode is for general information purposes only and may not reflect current law in your jurisdiction.
(00:22):
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.
(00:47):
Today I have with me,
Aaron Hendelman,
a partner in our trademark and advertising group,
and Gary Greenstein a partner in our technology transactions department,
Aaron, Gary,
can you tell me both a little bit about yourself and what made you interested in the gaming space?
Gary,
I'm really interested in what made you into the gaming space. You want to start?
Certainly,
so I got interested in gaming as part of my general work and entertainment.
(01:10):
So I've been working in music and copyright matters for almost 25 years,
essentially since I started practicing as an attorney,
I began representing the Office of the Commissioner of Major League Baseball and then started representing record companies in the record industry.
And then when I came to Wilson Sonsini, I started representing technology companies dealing with rich media.
(01:33):
So, whether that is video,
music,
books,
film, and television,
all of that sort of came together.
And what interests me the most is the intersection of new technologies and copyright law.
And so, with gaming having moved online,
that is sort of a natural evolution of where my interests are as an attorney is to look at what rights are implicated as someone is using an online platform to engage in gaming.
(02:01):
So, you may have platforms such as Caffeine or Twitch where people play and then others,
others are watching them.
You have game developers trying to figure out ways to get the consumer interested and spend time,
you know,
their limited time playing games and engaging with various activities. And, what I enjoy is counseling clients in that area and figuring out the issues related to technology and copyright.
(02:29):
Thanks, Gary.
So this is Aaron Hendelman,
one of the partners in the trademarke and advertising group.
So I've been here at the firm for approaching now 23 years and have have really from the very beginning been interested in as part of the trademark and advertising practice,
all things that are content and creative and,
(02:49):
and really there's been no better space for that than in the gaming space.
My early introduction,
one of the things that got me really excited was a very first client.
The firm was a company called Linden Labs,
Linden Labs was a creator of really one of the first and most innovative virtual spaces,
(03:10):
called Second life,
which is still around and has gotten lots of play.
Um,
and,
and from that I just sort of got hooked in many of the legal side of things.
It wasn't hard.
I grew up as,
as a bit of a gamer.
I'm old enough now to say,
I see it through the eyes of my teenage son who's a gamer as well.
(03:30):
But you know,
for me,
it's always been,
just a real intersection of innovation,
creativity,
um,
and the intellectual property,
legal issues that I love to deal with on a day to day basis.
Um,
you know,
for me seeing it from also companies of varying sizes,
from small,
(03:51):
independent,
independent developers to,
big studios and game companies. I had, when Microsoft originally spun out,
Bungie,
one of its most successful acquisitions initially,
obviously is the maker of,
of the of Halo initially.
And,
and bungee who's had such success with its franchise,
(04:11):
Destiny,
again,
playing in the spectrum of issues and company sizes and games has just made this really fun along the way,
Jumping right in.
Could you both kind of describe the,
on a high level the types of protections that would be available to gaming founders as well as what kind of things would be captured under those protections?
Sure,
(04:32):
Gary.
You started last time,
and I'm happy to answer that to begin.
Why don't I hit on the trademark side:
so,
um,
you know,
when companies or founders or developers hear,
trademarks,
they certainly think of,
or I would think often think of,
um,
you know,
core logos or the like,
(04:52):
but trademark covers a variety of things.
It covers,
uh,
in the game realm,
game names,
studio names,
logos,
designs.
I know, Gary,
you're gonna talk about copyright in a second.
I'll let you,
if you'd like talk about the overlap in terms of logos and and where,
how that works on the copyright side.
(05:13):
Um,
it covers slogans,
can cover character names,
but I think what's probably,
um,
interesting and useful is also understanding where this protection comes from and it'll be a good contrast to copyright in some other areas.
So, trademark is really about source identification.
So, the idea is I'll use a non gaming analogy.
(05:35):
You know,
you pick up or you see a can of Coke on the shelf,
you know,
you know,
who made it,
you can understand the quality that's there,
you know,
exactly what it's gonna taste like.
And the rationale for it,
although we build and companies want to build trademark rights rightly to build brand value,
to build equity in terms of an intangible asset.
(05:57):
The regional motivation behind trademark was really about that source identification.
So,
um,
really almost protecting consumers so that consumers again,
know what they're getting,
um,
I think one of the things that's sort of more interesting in a game realm is when you start thinking about trade dress,
which is a subset of trademark law.
So trade dress really is about protecting the what we call the look and feel.
(06:22):
So, it doesn't protect things that are functional,
but it does protect the creative design elements that can be what your UI looks like.
It can be the coloring of certain things.
It can be you know how those things relate.
but again,
those are all natural areas for games and game developers to both seek I
(06:45):
P
protection and you know,
to the extent we may or may not talk about it.
to the extent that third party developers are mimicking what you're doing or a little too close for comfort,
whether that's intentional on their part or not,
trademark can be an angle to go after those things.
In contrast to trademark.
(07:06):
So this is Gary Greenstein,
in contrast,
trademark what Aaron was just describing,
copyright will protect things such as the characters in the game,
the complete game itself.
So if you think back to traditional games,
you would buy a game in a cartridge or a disk and you stick it into a device and then it plays. The entirety of that work that is reproduced on the tape or on a disk would be a copyrighted work similar to a movie or a television show.
(07:37):
And, what's important about the copyright in the game is that copyright protects the expression of an idea,
but not the idea itself.
So, if you're creating a first person shooter game,
that concept is not going to be protected by copyright,
but the manner in which you create your game.
(07:57):
So, all of the elements that result in that finished product would be protected or can be protected by copyright.
And, importantly,
copyright subsists.
So, it comes into existence when a work is fixed in a tangible medium of expression.
So, when the developers are writing the code and you've got the finished code that represents the game, when that is written,
(08:24):
that's going to be copyrighted.
You may not be able to enforce your rights just because it's fixed in a tangible medium,
but it is copyrighted. Importantly,
the next step you want to take following the fixation of the work is registration of a copyright.
And by registering a copyright with the US Copyright Office,
at least here in the United States,
(08:45):
you have the ability to bring a claim against the third-party who tries to replicate your game separate and apart from the trade dress issues that Aaron addressed.
But if someone tries to take your game and use it in an unauthorized manner within their own game or to put it on a platform and operated for profit,
(09:05):
you can bring a lawsuit if you have registered the game with the Copyright Office and if you register it in a timely manner,
so within three months of publication,
you can also recover what are or recover what are called statutory damages and attorney's fees.
And, that can be very powerful as you seek to protect your intellectual property.
(09:27):
So, as a game creator or studio creating games,
what you want to do is you want to think about,
at what point do you go ahead and register the game?
You're probably not going to be filing a copyright notice every day or every week while the game is in the process of development.
But, when the game is finished and before you're releasing it to the public or shortly after i.
(09:52):
e.
within three months of releasing it to the public,
you would want to register the copyright in that game.
And that could also include other elements that are added to the game.
So, if you hire a songwriter or composer, and Aaron and I worked on an agreement for Bungie where there was a very well-known composer who worked on the game.
(10:14):
there was also a very well known recording artist,
one of the most famous recording artists in the world who created music for a game put out by Bungie.
And you can separately copyright the music that gets added to the game.
And that could be copyrighted by the game publisher or by the author,
which is a copyright term.
(10:35):
The creator of the music that is added to the game.
So, you always want to think about what distinct elements can be separately copyrighted and then the entirety of the work.
So, the end product,
the video game itself, you would want to register.
So, it sounds like there's a different number of ways that you can go about protecting your ideas to make sure that they have the proper protection they need.
(10:59):
And Gary, went into this a little bit in depth in your last answer,
but I want to know a brief overview of how founders would even go about obtaining these protections.
So, that's a great question because the founder of a company may not be the software developer and the founder of a company may also not have many employees.
They may be outsourcing the work to third-parties developers in Eastern Europe or in Asia or in Latin or South America.
(11:28):
And, so what you want to do is is the founder of a company that's developing a video game,
you want to make sure that all of the contributors towards that video game or assigning their rights in in whatever intellectual property they create to the company.
And there are two ways the company can go about receiving that intellectual property,
it can be assigned to them,
(11:49):
or it can be created as what's called a work made for hire.
And a work made for hire means that when a person creates a work,
it is owned upon fixation by the party for whom it is created.
So, an employee acting within the scope of their employment, when they're creating a new copyrighted work or copyrightable work,
(12:11):
the company, their employer, will own that work.
Independent contractors can also create a work or contribute as a work made for hire to something like a video game because a video game can qualify as an audiovisual work under the Copyright Act as something that would be eligible for work made for hire treatment.
(12:32):
But, what founders need to think about is getting all of their employees and all of their contractors to sign the appropriate invention assignment agreement.
So, that anything created by those contractors or employees will be owned by the company upon creation. Aaron,
(12:54):
is there any process that follows similar to copyright that you need to consider for trademarks?
Yeah,
another good question there, there is.
And, I would even back up for game developers and creators to say on the trademark side,
Gary talked about the considerations and then the filing,
(13:15):
I want to back up even before you are getting to filing to talk about searching considerations,
clearance.
So in other areas of I
P
Sometimes you know,
it's it's hard to know what else is out there.
Or, maybe even tactically there are reasons why you might want to have your head in the sand to not have quote "knowledge" about what else is out there.
(13:37):
That's rare,
but the opposite is true for trademark.
So, usually when our developer studio clients or frankly any other early stage clients are looking at company names,
new game names,
we want to put them through some sort of clearance to knowingly try to prevent infringement
(13:57):
against a third-party.
So,
you know,
the first thing I always tell clients to do is, obviously Google is an incredibly powerful tool,
do your own early homework.
Um,
I should talk for a second more about the standard.
The standard and trademark infringement is the likelihood of confusion,
which has a lot to do with how close are the names themselves?
How close are the actual products?
(14:19):
There are other factors that go into it,
like the sophistication of customers alike.
But I think for a quick and dirty consideration,
what you as a founder or creator ought to be thinking about is, are there really similarly named things in your space?
So, you can go to the USPTO website.
(14:39):
Um,
it's not hard to navigate to the trademarks area and do some searching there.
And if you see,
you know,
let's say you're maybe an obvious choice,
I referenced Halo before you're thinking about adopting a game name called Halos.
It's probably not a good idea because Microsoft is almost certainly get object and to the extent you had been um,
(15:04):
you know,
in a cave and not aware of the gaming world at all and didn't know about it.
A quick search obviously google or a quick search at the trademark office would turn up those kind of trademarks.
Now you want to search variations,
you don't want to search just the exact titles as well.
The other thing to think about or no is that from U.
S.
perspective in particular,
(15:25):
rights are based not just on filings but based on this marketplace use.
So the norm and ideally for an early-stage company whose about to make the difficult to turn back on decision of here's the game name you're gonna have and you probably need a lawyer to really do this the right way.
Um,
a full blown marketplace search.
(15:47):
You know,
there are companies and vendors that do that,
but usually again it's a deep dive.
well beyond just filings to then make a determination,
does this look like we have freedom to operate under this name.
That process can be true for logos for other things,
but as you can imagine,
particularly important in the game space for court game names.
(16:09):
In terms of filings which Gary talked about on the copyright side,
there are trademark filings,
they're done with the U
S
P
T
O
there are some advantages in the long-term and having those registrations that may include when you file,
by the time your marks register, your rights take back to when you file.
(16:30):
That's particularly useful if you're a game developer and obviously there is some lead time between the time you're adopting a name and coming to market and that kind of registration or application in that stage is your stake in the ground to ensure that you're going to be as well positioned when you launch as you are today.
(16:51):
You know,
one thing I'll sort of note really briefly,
you know,
we're talking about us on the brand side,
um,
the answers are a little bit different outside the U.
S.
Than they are in the U.
S.
And what I mean by that is in most places around the world, rights,
trademark rights that is, are are based on registrations themselves,
(17:11):
not on this marketplace use that are referred to.
So as part of the strategy,
depending on both.
Um,
you know,
the timeline and your intentions,
I mean almost all of our clients,
regardless of developer size on the game front,
obviously our our multinational looking to be multinational.
You want to do a bit of clearance to try to ensure that things look available,
(17:36):
not just in the U.S.,
but outside and you may over time, may not immediately,
but over time be looking into some of those filings outside the U.
S.
Where they can be particularly important,
Aaron,
that's a great point because one of the things that you just touched upon and I want to emphasize or reiterate is that intellectual property protection is territorial in nature.
(17:58):
So, when I was talking about copyright earlier,
the copyright laws in the United States apply within the United States,
they do not apply extra territorially.
So, if you are a game developer and you're developing a game and your game is going to be used or created for online platforms.
You want to think about whether or not you want to undergo the cost and effort of registering the copyright in your game and foreign jurisdictions so that you can enforce your rights in foreign jurisdictions against third-parties that may infringe your rights.
(18:30):
Usually,
early-stage companies do not undertake that effort to register their copyrights and foreign jurisdictions just because the time and expense that is involved.
But, as your game may become more popular,
or if you are a large game publishing company,
you become very successful and you're coming out with another,
a new game or a new release of an existing branded game,
(18:53):
you may want to think about early copyright registration protection in multiple jurisdictions so that you can enforce your rights against people who might infringe or copycat what you've created. Mary, before we go on,
can actually make even one other point if Gary our just gonna keep riffing off each other as he says interesting things that makes me think about things that may be worth noting.
(19:16):
So,
you know,
we're on both on the copyright and trademark side,
talking about registration and talking about the value and talking about how in the event that you need to go after a third-party,
including following a lawsuit,
which in the U.S. on the copyright side,
you'll be required to have that registration before you can do that.
My experience for early-stage companies is obviously litigation is a huge thing.
(19:42):
Rarely would you choose to do that unless you absolutely have to.
It's a very difficult business decision to do that.
And frankly we almost always are trying to, depending on the facts and circumstances um you know,
encourage clients to be very measured about that.
But one of the huge advantages in my experience from,
I just think a real world matter in terms of the value of these registrations is they are powerful in helping resolve things long before you get to the point as an associate company of needing to resort to litigation.
(20:14):
So, there are tools that both will speak on the trademark side.
It enables other people to search and find you.
It enables the trademark office to do some blocking for you.
It enables if you need to get to the place where you have someone like Jeremy uh send a letter to another company um explaining and telling them why they need to make a change.
(20:37):
Um you have a much bigger sword to swing when you have these registrations and although there's a little bit of upfront cost,
it can save a tremendous amount of time and money later on um by engaging with these things.
So I think it's um it's it's good corporate hygiene on the I.
P.
Side.
(20:57):
But um you know when you can avoid those big spends later on that's a big part of what this is about to and to throw the riff or to pick up where Aaron left off.
I think neither one of us is a corporate attorney but one of the important things to think about is that is an early stage company goes out to look for capital.
So you're talking with investors.
(21:18):
One of the things they will consider is have you protected your I.
P.
And what is the possibility of capturing the market based upon your own people?
So if you do go ahead and register your copyrights or trademarks early that can make the company of greater interest to potential investors.
So an important consideration along with being able to protect your intellectual property is what are the implications of that for fundraising?
(21:45):
As much as I might have loved to be a professional musician.
Here stops my own riffing very go ahead.
No this is very helpful.
And it ties into my next question perfectly um Based on your experience and what you both discussed,
when should founders begin about thinking to protect their trademarks or copyrights?
Is there a hierarchy of what you should protect early on versus later in the process.
(22:10):
Parent.
I'll start here.
So going back to something I mentioned earlier I think when you're a founder of a company.
The most important thing is to make sure that you get the assignments from employees and contractors at the very beginning because that will then invest in the company the intellectual property at all stages of development of the game.
(22:32):
And unfortunately,
there are many instances where both Aaron and I have probably worked on diligence for a client and it turns out that founders or early-stage employees did not properly assign their intellectual property to the company.
And then that becomes a headache and potentially a very costly problem to try to fix as you're working on a sale of the company or you're incurring significant legal fees as you're trying to raise money in a seed round or a series A or B round.
(23:02):
So, you want to think very early on about having formalities in place to make sure that the intellectual property created by employees is vested in the company.
Whether or not the company goes about registering that intellectual property,
I think is a separate analysis about does it make sense to register for the or when does it make sense to register trademarks and copyrights with government agencies so that you can protect it.
(23:33):
So,
I would recommend that founders think in two stages it's getting the intellectual property from,
from the individual people who are creating it and then protecting that intellectual property from third parties who might exploit it, and who you may want to be able to say,
please stop that
and if you don't,
we will consider availing ourselves of all remedies available at law.
(23:57):
So, I think that's probably the most important advice to the founders early on,
is to think in parallel and then evaluate and discuss with council when it may be appropriate to start registering intellectual property.
I love the way that Gary bucketed
that, I'll stick with that and just amplify a little bit and add a little bit specific to trademark.
(24:19):
So,
um,
I think in terms of the trademark side,
I guess I'll say with the idea of making sure that it's all getting in the right place before you even think about,
uh,
what you're doing,
filing or not filing wise.
On the trademark side,
there actually are some traps for the unwary.
(24:39):
I think you do want to talk early.
There are some limited situations, which do come up with both game companies and frankly,
founders in general, where if you're not setting up the trademarks in the right way,
that you run some risk that later on,
including as evident as part of an acquisition,
(25:00):
how it typically manifests itself is in a dispute where a third-party comes in and essentially,
uh,
pokes at how you handled trademarks of the outset.
And it turns out that your trademarks that you thought you were building rights in,
Um,
we're not,
we're not of value.
And I don't mean that in terms of dollar value,
(25:21):
I mean that they were not properly formed.
They were owned by the founder when they should have been owned by the company and it's not as simple on the trademark side,
always as just, let's now clean it up with an assignment.
it's a much bigger issue.
So, I guess that's a long way to say.
I would just encourage you to have that communication with a,
(25:44):
you know,
a trusted lawyer or I
P
person.
early on. In terms of the second bucket that Gary talked about filings,
you know,
early on the trademark side tends to be important rights or based first in time,
whether it's used for filing.
You know what I encourage clients to do,
(26:06):
I typically would say to them, frankly, less is more at the very beginning stages.
You know,
for a game company,
you're gonna prioritize the company name,
you're gonna prioritize the game name.
Are you gonna be prioritizing in terms of filings
you know,
the map names or particular slogans or the like?
(26:29):
Probably less so.
And you know,
we would want to encourage our clients at that stage to take a much more measured approach,
partly because you don't know necessarily at that point what you're going to be exploiting for the most value,
at least on the brand side,
you know,
where may we may or may not have brand extensions,
What are the particular things that the market
(26:49):
Um you know,
or customers or players are really grabbing onto. Some of that stuff becomes more apparent in time and you can sure those things up
as those become more clear,
but you know,
the obvious blocking and tackling important to do it early.
Important to take a practical approach about it.
And that's what we encourage.
(27:10):
That makes perfect sense.
I wanted to actually circle back to something Gary said that both you and Gary worked on. If I'm a game designer who intends to use music or maybe images or other rendered objects from third-parties,
what kind of checks or balances would I need to have in place to make it work?
For example,
you you mentioned that you included music and composers in a game that maybe they didn't produce,
(27:36):
what what would they need to look out for?
So, this can get very complicated because music in particular is is almost a third rail with copyright holders or with game developers,
because it's easy to identify.
There are tools that can help you find music on the internet in various activities and copyright owners will aggressively enforce their rights.
(28:01):
So, if you are a game developer and you you want to use music in your game,
you can go about it in multiple ways.
Number one,
you can identify commercially released music.
So popular music,
you might hear on the radio or on Pandora or Spotify and you want to use that in a game and you can go out and seek a license.
And, what you would need to do is you would need to identify the various copyright owners of that work in order to be able to include it in the game.
(28:29):
And with music,
there are two copyrights,
there is the sound recording and there is the musical work. And the musical work is what's written by the songwriter or composer.
And then the sound recording is an artist's rendition.
So, an easy way to think about it is Lennon and McCartney were the primary songwriters for The Beatles with all due respect to George Harrison and then John, Paul,
(28:50):
George, and Ringo were the recording artist the Beatles.
The musical works written by Lennon
and McCartney can be owned by one music publisher or they could be owned by two different music publishers.
McCartney could be affiliated with one music publishing company and the Estate of John Lennon with another.
So if you want to use that music in the game,
(29:11):
you would have to go to the publishing companies to get their permission to be able to,
what's called synchronize the,
the underlying notes and lyrics,
the musical work in timed relation to visual images. Separately,
If you're using the commercially released sound recording,
you would need to go to the record company to get their permission to also synchronize the sound recording in timed relation to visual images.
(29:35):
You could also,
as an alternative to popular music,
you could go to what's called a production house or a production library company. And those are companies that go out and create music that often sounds similar to popular music.
But what they do is those production companies will own the copyrights in both a musical work and a sound recording, or they will have the right to license both of those works. So that instead of having to go to one record company and multiple music publishers,
(30:04):
as is the case with popular music,
you can go to one entity and get music to incorporate in your game.
The third option is to commission music by,
you know,
if you're a game company and you do not have a lot of money,
you can go to the nearest university and you can put something up and say we're looking for musicians,
(30:26):
we're going to pay you $500 and we're going to own music that you create. And you can have the local musicians provide that music to you
and the gaming company can either receive rights in that via assignment or potentially as a work made for hire or you can commission a famous recording artist or composer to create music for your game. Hans Zimmer,
(30:47):
well-known composer,
one of the most well known composers on the planet has created music for video games
so that's an alternative.
The question then is,
does the company own the works that are created by the person who has been commissioned to create the work or are they licensing it.
Typically the game developer will try to own the music.
(31:08):
There is an issue is to the leverage between the composer or creator of the music and the gaming company and the cost that is being paid.
But one of the little nuances and this is going to go into a little bit of too much detail,
but I just want to highlight it
so people have heard the phrase,
if you commission an artist to create music for your video game,
(31:29):
you may expect that the composer will retain what's called the writer share of performance royalties.
And, what that means is that if your video game is played online on a gaming platform,
so whether it is on YouTube Live or it's on Twitch or Caffeine and royalties are being paid by the platform to performing rights organization who administer public performance rights and musical works,
(31:57):
the composer that you commissioned to create the game may retain the right to get paid their share of performance royalties.
What's called the writer share,
which is 50% of the royalties that are allocated to that work from its exploitation.
So, if if you are a songwriter and your song is included in a game that's being used on an online platform and the platform pays $10 in royalties and that's what ultimately allocated to that game.
(32:28):
The composers,
writers' share would be 50% of that $10 or $5.
So, as a game developer,
you want to think about your options. Using commercially released popular music is often going to be the most expensive. Commissioning a well-known composer will also be expensive.
Production libraries are often a very useful tool for game development,
(32:52):
but it may not be ear candy that's going to stick with with people.
So, if you're using Grand Theft Auto and you want a realistic feel of what it's like to be in a car as you're racing through the streets of Los Angeles in the game,
you may want to have what's the equivalent of popular music on the radio in that virtual car.
If you're creating a game,
(33:13):
we're having popular music doesn't matter,
then you can save money by using non popular music.
So, I'm happy to answer that, Mary, from a brand and a slightly different perspective.
So,
um,
so obviously not about music,
but in terms of use of third-party brands,
how do things appear in your game?
(33:33):
I guess one thing I want to comment on,
um,
although it's outside really the scope of what we're talking about here,
but it's relevant is what we call rights of publicity or people's likenesses.
You know,
lots of times if you want to have Lebron in your NBA game,
needless to say you need Lebron's permission for that.
That's a right of publicity license.
(33:54):
That would be true for individuals in general.
And there's not a very easy way to have fair use,
which I'll talk about in the second of,
individuals' likenesses,
so, are pretty limited. Okay,
in terms of some other areas though,
brands,
obviously one option is like music.
If you're trying to really do something co-branded,
(34:15):
you're trying to do something high profile in game with third-party brands.
There's the option to go license from those third parties where it gets,
I think particularly interesting is what we would call as lawyers Fair Use and it is a legal concept.
That's a defense,
that it is very much what it sounds like,
although I should also say up front this is one of those topics
(34:38):
we could have a three day seminar and still barely scratch the surface about all the nuances of Fair Use.
So take this for the brief synopsis that it is.
But you know,
on the trademark side,
Fair Use comes in two forms:
it comes in what we refer to as nominative fair use,
which is also just legal gobbledygook for you know what you're referring to something by name.
(35:02):
If a character in game says, "I'm headed over to Starbucks,"
um you know,
I don't think that as a real world matter is infringement.
That's just a plain english descriptive use,
we're using the brand to describe what it is non fair use.
Um,
in terms of the brand,
um,
does not extend to logos as a general matter.
(35:25):
It would just be the plain english word or presentation.
There's another kind of fair use that's called descriptive.
fair use. Also very descriptive,
I guess pun intended in terms of what it is,
right?
Which is not so much using third-party brands,
but if you're using words and their plain english meaning,
um,
(35:45):
you know,
this is um,
so Gary mention,
Grand Theft Auto actually brought something else,
which we'll talk about a second,
but let's just keep with that example.
So,
you know,
the term grand theft is plain english for what it is.
And if you're a different game in your game,
you're making reference to grand theft without specifically saying Grand Theft Auto for a reference to a game,
(36:11):
um,
that ought to be defensible because that's the plain english meaning of what grand theft is.
So when you are incorporating third-party brands or words you need to think about or can think about,
okay,
am I may be within the realm of those kinds of fair use.
Now,
Fair Use is notoriously difficult,
fact,
specific,
candidly inconsistent in its application.
(36:34):
I'll give you an example of that in,
in a,
in a second.
Um,
so I think you do need to put a lot of thought before uh,
meaningfully embedding third-party brands or content in game because unlike,
you know,
with a website ad promoting something,
if a threat comes in.
Um,
an embedding that from your game content is a lot more difficult than pulling down a website. Now,
(37:00):
Um,
you know,
Grand Theft Auto came to mind as Gary mentioned that there was a sort of a well-known challenging case about that that sort of presents somewhat the concepts we're talking about here in terms of third-party brands.
So people will be familiar with the game.
You're driving and racing through the streets of a fictional city that's based on L.
(37:21):
A.
I think based on L.
A.
There was a lawsuit from a actually I guess an adult entertainment company, I think is a nice euphemism way to put it.
That apparently is well known in L.
A.
I think it went by the name "Playpen" if I'm recalling correctly.
(37:42):
In game, developers who had gone to get inspiration for LA, included something that was an adult entertainment company there called Pigpen in L
A
that seemed to be in kind of a similar situation
located. Lo and behold, the original trademark odor of Playpen sues the game company for trademark infringement,
(38:05):
among other things.
Long story short in that instance,
that was a scenario where the artistic creativity and the test that's involved.
It's a little bit different in that context.
Uh netted out that,
you know what not infringement,
that's, that is not a reference that's not confusingly similar.
You know,
one other example I would give you that kind of I think makes the point pretty well,
(38:31):
at least in one would be.
I know there was a guest,
forget who was the game developer,
there was a godfather related game where,
the guns in game were referred to as Derringers, after the,
I guess he was original bank robber,
the like.
Who, ultimately the rights holder sued,
(38:54):
net net in that case this goes to the nominative fair use context uh,
for those who are less familiar,
I was not fully familiar before,
I remember reading about this game,
but that particular type of gun is known in general,
generically at this point as a Derringer.
And so from a trademark and a nominative fair use,
(39:16):
perspective inclusion and game for that kind of reference is very defensible.
Whereas had it been uh,
you know,
if you,
if you pulled in Smith and Wesson and started branding all over,
it probably turns the other way.
Thank you, Aaron.
So as a closing thought,
I was hoping each of you could give the listeners the biggest piece of advice that would be useful to a fledging gaming company with founders who may not have any legal expertise,
(39:44):
Hire a good lawyer.
I,
and I laugh when I say that,
but there's some truth in it because if you're devoting time resources and other people's money, working with a lawyer,
whether it's a big firm or a solo practitioner,
(40:04):
if they have experience in the world in which you're operating,
so we're talking here about intellectual property protection of trademark and copyright.
You want to think early on about how to protect the investment so that your time and effort is not being wasted.
It's not going to be captured by somebody else and used without authorization.
(40:24):
A bigger company is going to come in and steal your idea and realize you didn't take the appropriate steps.
And, all of a sudden you spent two years working on a game or a project and you have nothing to show for it because of massive Silicon Valley company or a company outside of the United States has taken your idea and run with it.
So, thinking early on, getting good advice,
(40:49):
I would,
I would recommend is the first step. And doing a little bit of homework,
familiarize yourself with the issues that Aaron and I have talked about.
There are lots of resources on the internet.
There are lots of, what we call client alerts, that are writings that we put out to keep our clients and the general public informed about changes in the law,
(41:09):
including copyright and trademark. And just having a general awareness of the space in which you're operating.
So, while you're trying to build a great game that's going to look wonderful and be very interesting and engaging for consumers and to almost get them addicted to playing your game,
you want to take some very easy steps early on that will hopefully reap huge rewards for you when your company is very successful down the road.
(41:37):
Try not to leave those easy issues.
Don't don't create unnecessary foot faults.
I would say by ignoring some of the basics which can return significantly for the benefit of the company.
If you do small things earlier on they can have very significant benefits.
Yeah.
So, the only thing I'll add other than I've learned my lesson to not let Gary go first on these kind of answers because I I you, you are are thinking exactly what I'm thinking in several areas.
(42:05):
But I guess on the first point in terms of getting the right people to help you,
whether it's a lawyer and industry experts like I think that um you know,
I spend plenty of time with early-stage companies can only talking to them about what they don't need to do or arguably shouldn't do given their stage,
given the cost benefit analysis. Versus what are the must do's to block and tackle in the way that Gary is describing that we've talked about.
(42:33):
And I think that so having sort of uh right-fit advice is what I'll call it so that you're doing the things that make sense, but are not wasting money unnecessarily distracted in the like I think that's that's important on the I
P
front for an early-stage game developer,
founder of the like um and candidly I think that I mean having overlapped and played in other areas with other colleagues.
(42:59):
I think that's true for a number of legal issues for companies at this stage.
Um,
I will say this on the brand side, brand specifically,
you've heard the hype earlier.
Early is important,
doesn't mean you have to boil the ocean in terms of everything that needs to be done.
But early is important because rights are are in time.
Um,
(43:20):
I would say this may sound also a little backwards given some of the things we describe,
but from on the,
on the brand side,
you know,
the worst thing is you launch, you
get some popularity.
Um,
you know,
something really bad happens and you have to change the name of the game or have the litigation.
So, actually before you're getting out of the gate,
(43:43):
um,
I would say to you,
it's all about the searching in the,
in the certainty you're building as much certainty as you can that for your core brand asset,
and these games are very brand focused,
that you're feeling good that once you launch,
you're gonna,
you know,
once you're starting to be the success because of your great create great creativity and game development that um,
(44:06):
it's not the name that's gonna ultimately cause you problems.
You will get to the filing,
you will get some of the other things,
but do your homework before you regret it because, as Gary said,
it's not only important for these things to help pay big dividends later,
but, to frankly help prevent big expenses or debits later.
Um,
(44:27):
but,
but anyway,
good,
good luck.
The one,
the one last thing, Mary,
I would say building upon what
Aaron just mentioned about brands.
You don't want to incorporate third-party intellectual property in your game without permission.
That could be very expensive to take out later on in the process.
So, you probably do want to think and approach thoughtfully what elements are being included in your game.
(44:54):
So if you're including music that you don't have permission for, or you're using third-party brands and you're well into development. And then it turns out that the distribution of the game with that third-party intellectual property is likely to get you sued and maybe even enjoined from releasing the game.
That can be a very expensive mistake.
(45:15):
So, separate and apart from protecting your own intellectual property,
is to think about respecting the rights of third-party intellectual property.
Perfect.
Thank you both for your time today,
Wilson Sonsini advises a wide variety of clients in the gaming industry.
If you'd like more information about legal issues arising in the gaming space,
please check out our electronic gaming groups newsletter.
(45:37):
If you have any questions,
please don't hesitate to reach out to any member of our electronic gaming group.
Thank you for tuning in everyone.
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