1. Legal aspects of videogames
IP rights and international contracts
FLEGA afternoon café | Brussels | 10 December 2014
François Coppens & Johan Vandendriessche
www.crosslaw.be
f.coppens@crosslaw.be | j.vandendriessche@crosslaw.be
2. Overview
Part one: IP aspects of videogames
• Copyright in a nutshell
• Videogames under copyright laws
• Why and how to transfer copyright
Part two: tips and tricks for international contracts
• (Software) license agreement
• Software development agreement
• Specific provisions
2
4. Copyright: one regime to rule them all
International source: Berne convention 1886
• + TRIPS 1994, WIPO treaties 1996, EU directives
Copyright protects « literary and artistic works »
• “every production in the literary, scientific and artistic
domain”
• Music, literature, paintings, photography, cinema, scientific
articles, 3D shapes, etc.
• + Software (EU directive 1991)
• + Structure of databases (EU directive 1996)
4
6. Copyright in a nutshell (1)
Exclusive (economic) rights on some acts of exploitation
• Reproduction (incl. temporary reproduction)
• Communication to the public
• Adaptation and translation
• (First) distribution of physical copies
• Lending and renting
Temporary rights
• 70 years after the death of the author
Rights subject to exceptions and limitations
• Parody and caricature
• Education and research
• Private copy and communication in the family circle
• Etc.
6
7. Copyright in a nutshell (2)
Moral rights
• Attribution / paternity
• Right to the integrity of the work
• “divulgation” - right of first disclosure
Moral rights are personal to the author and inalienable
• But their exercise can be waived or restricted by contract
Protection of Technical Protection Measures against
circumvention
7
8. What copyright does not protect
Programming languages (CJEU, SAS Institute)
Ideas, concepts and functionalities
• Idea vs. form is a core distinction in copyright law
8
9. Categories of works in copyright law: similar
but different
Different categories
• Works in general
• Literary works
• Software
• Databases
• Audiovisual or audio works
• Works of graphic or visual arts
• Portraits
Legal regime slightly different
9
10. What is a videogame ?
Software + images + music + video + …
• “videogames constitute complex matter comprising not
only a computer program but also graphic and sound
elements, which, although encrypted in computer
language, have a unique creative value which cannot be
reduced to that encryption” (CJEU, Nintendo)
Recent study over 24 coutries: no certainties about the
exact status of videogames under copyright law
• In most countries: distributive approach
• In a few countries: unitary nature (with nuances)
Belgium: usually protected both as software and
audiovisual work
10
11. Uncertain legal status of videogames: what
is the impact ? (1)
Private copy
• Videogame as a software: limited to one backup copy.
• Videogame as an other work: private copy authorized
within the family circle.
• Videogame as a complex work: ?
Lending by public libraries
• Videogame as a software: (probably) not authorized.
• Videogame as an audiovisual work: authorized
• Videogame as an uncategorized work: not authorized.
• Videogame as a complex work: ?
11
12. Uncertain legal status of videogames: what
is the impact ? (2)
Ownership of copyright
• Videogame as a software: automatic assignment of rights
to the employer.
• Videogame as an audiovisual work: automatic assignment
of rights to the producer (rights necessary for the
audiovisual exploitation).
• Videogame as an uncategorized work: no automatic
assignment; written contracts needed.
• Videogame as a complex work: distributive application of
the different regimes.
=> Contracts needed to secure and clarify ownership
12
13. Copyright transfer or licence
3 possibilities
• Automatic transfer or presumption of transfer (software,
audiovisual works, databases)
• Standard regime: very formal (written contract and detailed
provisions required – objective: protecting the authors)
• Softened regime : less formalities
• Works created by employees (not directors,
freelancers, etc.) in the course of their employment
• Commissioned works if the commissioner is active in
the non-cultural sector or in the advertisement
13
14. Tax aspects : an incentive to formalize IP
transfers and license
Specific tax regime for copyright revenue since 2008
• Only for tax on personal income (not corporate tax)
• Very interesting rates (7,5% - 15%)
• Social security levies : employees (yes) >< self-employed
(no)
Only revenues obtained from transfer or license of copyright
• not all revenues linked to the exploitation of copyrighted
products
Tax administration requires :
• Written contracts
• Split between remuneration for the work done and
remuneration for the transfer of IP rights
• Valuation of IP rights
Possibility to obtain a ruling
14
16. Software developers: which agreement?
FLEGA
• all Flemish individuals and companies active in or
connected to the Flemish games industry
Which contracts?
• Licence agreements (incoming and outgoing)
• Commercial licence agreements
• Open source licence agreements
• Service agreements (e.g. software development,
consultancy, …)
• Distribution agreements
• Various forms and rules
16
17. (Software) Licence agreements
Scope of the licence
• Scope (what is licensed in or out?)
• Specifically for software: object code and/or source
code
• Personal / non-personal
• Exclusive / non-exclusive
• Transferable / non-transferable
• Free / fixed fee / royalty based / …
• Territory
• Purposes of the licence (internal use only?)
• Number of (concurrent) users / link with hardware and/or
software / linked to a site?
17
18. (Software) Licence agreements
Duration and termination
Consequences of termination
Warranties and indemnities
Indemnity in relation to third-party intellectual property
rights?
Financial conditions
Audit rights
18
19. Software development agreement
Deliverables
• Roles & Responsibilities: who delivers what? (RACI?)
• Specification (technical standards?)
Timing
• Nature of the obligation (time is of the essence?)
• Penalties
Provisional / final acceptance
Intellectual property rights and/or licence rights
19
20. Software development agreement
Warranties
• Warranty period
• Conformity with the specifications
• Absence of harmful code
Liability and insurance
Transfer of (or access to) source code
• No problem in case of transfer of ownership
• Licence to use is, normally, restricted to object code
• Escrow can be useful
• Trigger events
• Costs
20
21. B2B or B2C, that is the question …
Contractual freedom
• Content
• Execution
• Contracting parties
Limitations
• Public order provisions
• Mandatory law (e.g. consumer law)
Establish the capacity of your contracting party
• B2B or B2C
• Assess the consequences
21
22. Applicable law
International contract: which law applies?
• General principle: choice of the parties
• Absence of choice: international treaties, EU
regulations or Belgian law shall decide
• Limitations apply in case of consumer contracts
• Protection of the consumer
Some legal provisions are subject to the ‘country of
origin principle’
• Data protection law
Applicable law may substantially impact the contents of
your agreement
22
23. Jurisdiction
International contract: which jurisdiction has
competence?
• General principle: choice of the parties
• Absence of choice: international treaties, EU
regulations or Belgian law shall decide
• Limitations apply in case of consumer contracts
• Protection of the consumer
Choice of jurisdiction may have a significant cost impact
• Language
• Local counsel
23
24. IP warranties and indemnification
Specific warranty for breach of third parties’ intellectual
property rights
• Territorial limitation?
• Limitation in scope (specific intellectual property rights)
Duties of the indemnified party
• Provide notice
• Cooperate in the legal proceedings
• Refrain from acting in a manner that prejudices the legal
proceedings
24
25. IP warranties and indemnification
Duties of the indemnifying party
• Assume control of the legal proceedings
• Indemnify against all losses and expenses
• Remedy the infringement
• Obtain right to use
• Replace the infringing item
• Take back the infringing item, subject to refund
Exclusions
Sole remedy?
25
26. Liability
General principle: contractual liability = unlimited
• Limitations of liability are usual
Limitation of liability: generally permissible, but influenced by
applicable law
• No limitation of liability for fraud or willful misconduct
• Gross negligence: depends on contract and applicable law
• Limitations that devoid a contract of its purpose
• Limitations excluded by mandatory law
Possibilities
• Amount of damages
• Nature of the negligence
• Nature of the damage
26
27. Thank you for your attention !
27
Questions ? Comments? Need our help?
Let’s keep in touch!
f.coppens@crosslaw.be
www.crosslaw.be