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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
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
Part one 
IP ASPECTS OF VIDEOGAMES 
3
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
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 
5
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
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
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
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
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
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
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
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
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
Part two 
INTERNATIONAL CONTRACTS: 
TIPS AND TRICKS 
15
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
(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
(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
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
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
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
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
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
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
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
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
Thank you for your attention ! 
27 
Questions ? Comments? Need our help? 
Let’s keep in touch! 
f.coppens@crosslaw.be 
www.crosslaw.be

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Legal 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 2
  • 3. Part one IP ASPECTS OF VIDEOGAMES 3
  • 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
  • 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 5
  • 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
  • 15. Part two INTERNATIONAL CONTRACTS: TIPS AND TRICKS 15
  • 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