Presentation given by Johan Vandendriessche and François Coppens at Flega café on 10 12 2014, about IP and contract aspects of videogames.

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
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3. Part one
IP ASPECTS OF VIDEOGAMES
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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)
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5. Conditions for copyright protection
 Original
• = the expression of the intellectual creation of their author
(CJEU, Infopaq)
• = an intellectual creation of the author reflecting his personality
and expressing his free and creative choices (CJEU, Painer)
• = the author's own intellectual creation (Software directive)
• >< novelty, artistic value, quantity of effort, size or length of the
work
 + existing in some physical form
• Not a mere idea or concept
 …and nothing else
• No registration
• No required mentions (©) – but mention of copyright can be
useful nevertheless
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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.
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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
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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
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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
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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
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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: ?
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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
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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
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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
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15. Part two
INTERNATIONAL CONTRACTS:
TIPS AND TRICKS
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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
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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?
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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
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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
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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
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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
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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
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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
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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
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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?
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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
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27. Thank you for your attention !
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Questions ? Comments? Need our help?
Let’s keep in touch!
f.coppens@crosslaw.be
www.crosslaw.be