Interactive entertainment lawyer Jas Purewal gives 10 legal tips for US lawyers involved in EU games publishing

1. Key legal tips for US lawyers about
European games publishing
Jas Purewal
Gamer Tech Law 2013
Seattle, USA

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About Osborne Clarke
About Osborne Clarke:
• Osborne Clarke is an international law firm with over 1000 people working in
14 offices across the European Union, a European lawyer-staffed office in
Silicon Valley and a partner network worldwide.
Our interactive entertainment practice:
• Osborne Clarke is the leading interactive entertainment law firm in Europe.
• We advise the full range of interactive entertainment businesses from small
developers to global publishers, platforms and distributors on matters
including corporate and tax, funding, development, employment, IP and
litigation issues.
• Our clients include publishers and platforms such as Electronic Arts,
Activision, Nintendo, Disney, Gameforge and Facebook and developers
including Wargaming.net, Ninja Theory, CD Projekt, Rebellion and Team 17.

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About Jas
• I'm an interactive entertainment and digital media lawyer at Osborne Clarke
– I advise clients from independent developers to publishers on contracts,
intellectual property, regulation and disputes.
• I advise on EU law from OC’s Silicon Valley office.
• I write and speak regularly on legal issues in interactive entertainment and
digital media, including on my blog: www.gamerlaw.co.uk.
• I like Twitter: @gamerlaw.
• This presentation (and others) is available at:
http://www.slideshare.net/jaspurewal.

4. Intro: a few words about the EU…

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Regional breakdown of the IE industry in
2012/2013
Source: Business Insight

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This isn’t the European Union...

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THIS is the European Union...

8. Top legal tips for publishing a game in
the EU

9. No.1 : be careful using US contracts in
European deals

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Using US contracts in EU deals
• EU states generally recognise US choice of law clauses.
• You still need to know about EU contract law aspects because:
1. EU states have own rules on formation, performance and
enforcement.
2. Many EU states have mandatorily applicable law.
3. In practice, contract enforcement is in enforcee’s territory
anyway.
4. Any party with a European presence will have European
legal concerns beyond the contract itself.

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Using US contracts in EU deals: a (real) case
study
• An EU developer enters a publishing deal with a US publisher
for a casual online game under CA law.
• An EU data privacy regulator investigates the developer AND
publisher over its use of consumer data, including regarding
the published game.
• The developer is fined and has to make changes to its
practices. Developer and publisher litigate against each other.
• Could have been avoided by dealing with EU data privacy in
the contract.

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Using US contracts in EU deals: best practice
1. Is US law and jurisdiction actually the best option for the client?
2. If so, then still consider partial localisation to cover:
i. IP ownership.
ii. Data privacy.
iii. Consumer complaints.
iv. Developer-jurisdiction specific issues (Developer to advise).
v. Other regulation (e.g. marketing, gambling) specifically spelled out.
vi. Clear apportionment of all other liability.
vii. Mutually acceptable dispute resolution.

13. No. 2: Localise your EU distribution
rights

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Localising distribution rights in the EU
1. Distributor rights vary by territory: have territory agreements.
2. Price maintenance: MRP no, SRP/RRP yes.
3. Be clear on whether distributor is actually your distributor, or a
commercial agent.
4. You don’t have to permit EU second hand sales YET, but…
– Oracle v UsedSoft (C-128/11, CJEU 3/07/12)
– Vzbw v (2013)
5. Use Euro-collapse clauses in distribution agreements (?)
6. Tax structuring is very relevant to distribution arrangements…

15. No. 3: know about EU taxation of games
studios

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EU taxation on game studios
• Little harmonisation of EU state tax systems.
• Widely varying levels of corporation and other taxes.
• VAT structuring increasingly common.
• Tax incentives increasingly important.
• BUT national revenue authorities increasingly aggressive about
revenue offshoring and big changes due in 2015…

17. No. 4: obtain US AND EU IP protection

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IP rights in games in US and EU
1. US trade marks don’t protect vs. EU infringement: get EU
trade marks.
2. Software patents significantly harder to obtain in EU (so don’t
bother, normally).
3. Cover moral rights in contract.
4. US style work for hire clause won’t work.
5. Different approaches on personality rights and trade
dress/design rights.

19. No. 5: localise EULA/Terms of Service

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EULAs and Terms of Service
• Pure US EULAs/ToS are substantially ineffective in EU:
– EU consumer law is mandatory: it applies regardless of
choice of law clauses etc.
– EU consumers always entitled to sue in country of residence.
• The perennial localisation question: a single document or
separate versions for US/EU/RoW?
– No correct legal answer or industry consensus
– Balance of legal enforceability vs consumer friction
– Localised content is just as important as localised format

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EULAs and Terms of Service
• Which US terms are effective?
– Legalistic/complex language
– IP ownership
– Licence terms
– Consumer reps + warranties
– Liability exclusions/limitations
– Minimum term exclusions
– Indemnification
– Mandatory arbitration/dispute resolution
– Unilateral/immediate changes
– Termination
X
X
X
X
X
X
X

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EULAs and Terms of Service: real life
example 1
Mandatory arbitration provision:
“YOU AND [we] AGREE TO RESOLVE ALL DISPUTES AND CLAIMS BETWEEN US
IN INDIVIDUAL BINDING ARBITRATION. THAT INCLUDES, BUT IS NOT LIMITED
TO, ANY CLAIMS ARISING OUT OF OR RELATING TO: (i) ANY ASPECT OF THE
RELATIONSHIP BETWEEN US; (ii) THIS AGREEMENT; OR (iii) YOUR USE OF [the
product] , YOUR ACCOUNT OR THE SOFTWARE. IT APPLIES REGARDLESS OF
WHETHER SUCH CLAIMS ARE BASED IN CONTRACT, TORT, STATUTE, FRAUD,
UNFAIR COMPETITION, MISREPRESENTATION OR ANY OTHER LEGAL THEORY.”
X Not enforceable in EU. E.g. UK consumer guidance: “Terms are liable
to challenge if they tend to prevent consumers taking disputes to court, or
require them to go to remote or inappropriate courts.”

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EULAs and Terms of Service: real life
example 2
Limitation of warranties and liability:
“TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, YOU EXPRESSLY
AGREE THAT THE USE OF [our] SERVICES, [our] SOFTWARE, AND THE INTERNET
IS AT YOUR SOLE RISK. [Our] SERVICES, [our] SOFTWARE, [our] PRODUCTS AND
THIRD-PARTY SERVICES AND PRODUCTS ARE PROVIDED ON AN "AS IS" AND
"AS AVAILABLE" BASIS FOR YOUR USE, WITHOUT WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, UNLESS SUCH WARRANTIES ARE LEGALLY
INCAPABLE OF EXCLUSION. ”
X
Not enforceable in EU; Unfair Contract Terms Directive: “A contractual
term which has not been individually negotiated shall be regarded as unfair
if, contrary to the requirement of good faith, it causes a significant imbalance
in the parties' rights and obligations arising under the contract, to the
detriment of the consumer”.

24. No. 6: localise your data privacy
approach

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Localising for EU data privacy
• EU has the most stringent, sophisticated data privacy system in
the world.
• Regulation covers: collection, exploitation, storage and
retention of data.
• Tidal change coming in 2014-2015.
• Pure US data privacy approach is insufficient (even post-
COPPA changes) – EU counsel input recommended.

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Localising for EU data privacy
• Basic tips:
1. Localise privacy policy.
2. Make privacy policy user-accessible.
3. Ensure US-EU Safe Harbor in place (if applicable).
4. Ensure local EU data privacy registrations in place (if
applicable).
5. EU data privacy clauses in contracts.
6. Analysis of how EU data will be used by parties.

27. No. 7: navigate EU age rating rules

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Navigating EU age rating rules
• ESRB ratings don’t apply in EU.
• PEGI widely (but not universally) applied
across EU for PC/console.
• Some countries have their own rules for
PC/console, especially Germany.
• Mobile remains industry self-regulated
(just like in USA) - for the moment…
• Growing regulatory focus on child
protection in free to play rules: UK’s OFT
investigation (2013)

29. No. 8: navigate child protection rules

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EU child protection rules
• Evolving rules on targeting/marketing to children in games:
– Existing legislation (e.g. Unfair Commercial Practices Directive)
– UK: OFT investigation into free to play games and children
– Germany: regulatory investigation of Gameforge
– Various regulatory guidance on marketing to children
• No legal guidance, or industry consensus, on application.
• Best practice: if the game is predominantly targeted at children,
or if children are a substantial part of its audience, then ensure
(with EU counsel input) that game content and mechanics
comply with latest EU position.

31. No. 9: gambling law is (slightly) more
relaxed in EU

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EU gambling law and games businesses
• No blanket prohibition on online gambling across EU, but
varying rules apply.
• Patchwork quilt of EU regulation: legal in some places (e.g.
UK), illegal in many others (e.g. Germany).
• Test for gambling is usually different to US test.
• Regulators becoming interested in application of EU gambling
law to games businesses.
• Increasing need to analyse game mechanics from an EU
perspective.

33. No. 10: wrapping up other EU regulation

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Other issues
A whole range of other EU state specific rules exist, e.g.:
• Product liability
• Financing/securities legislation
• Fraud/money laundering rules
• Insolvency/bankruptcy
• Employment practices
• Dispute resolution
Best practice: identify key risks upfront and deal with them expressly – don’t
rely on US governing law/jurisdiction clauses or generic clauses.

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Wrap-up
1. Be careful using US contracts in EU deals.
2. Localise your EU distribution rights.
3. Understand EU taxation of games studios.
4. Obtain US AND EU IP protections.
5. Localise EULAs/Terms of Service.
6. Localise your data privacy approach.
7. Navigate age rating rules…
8. …and child protection rules.
9. Be aware of EU gambling rules.
10. Deal with EU regulation with specifics.

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Thanks!
Jas Purewal
Lawyer
Silicon Valley Office
T (+1) 650 714 8903
Jas.Purewal@osborneclarke.com
Twitter: @gamerlaw
www.osborneclarke.com
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