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Legal Issues for Rookie Development Studios Part I: Initial Legal Issues

In the beginning...

So, you and a group of your talented friends have come up with an idea for the best computer game ever. You have the concept, you have the talent, and you're ready to rock. You begin with a really great story line; amazing 2D renderings from a local artist friend of yours; and, you use your substantial talents to transform these 2D renderings into some of the most awesome 3D characters and creatures that anyone has ever seen. A friend of your brother is a hotshot programmer and he has done all the programming you need to make your game go. You even put some really rocking music that you downloaded off the net into the program. So, now your demo is all ready to be presented to publishers to land that development deal you have all worked for, right?


The above scenario my not be very far from the truth in many start-up development teams. But it is full of problems that could make it impossible to get the game to the public. (This article deals with the first two issues below. The rest will be addressed in future installments).

The following questions come to mind (Remember - This is a Lawyer's mind. So, don't try this at home!):

What legal entity will the publisher deal with?

Who on the team gets what if the team succeeds?

Who owns the assets in the game?

Are there any problems with the assets that would prevent the game from being taken to market?

But, of course, you say, "I don't want to deal with all that legal mumbo jumbo crap, we can figure it out later. Let's just get this demo together so we can make our killer game." Famous last words! To a publisher (or a lawyer or businessman) how you address these basic questions at the beginning of your project reflects on whether this team is "together" enough to come through with the finished product. Why? Because, a lack of realistic planning in the formation of your own team may reflect a lack of foresight in general which could result in problems later on in the developer/publisher relationship. The failure to have dealt with the more mundane legal issues of forming a company, deciding shares first and securing Intellectual Property rights to the game assets may be just a lack of business experience. But to business heads like publishers there will be little sympathy.

Publishing is a hard business. And publishers are hard-core businessmen. That means that publishers don't even know how to spell sympathy! To them this will just be considered a lack of understanding and proper planning on your part. In short, they will think you are either dumb or lazy, maybe both. At best, a publisher may merely use this lack of planning to overpower a rookie developer with BS like the old "standard in the industry" provisions in the contract negotiations. At worst, they may trash the project completely because of a lack of belief in the team's ability to meet milestones or because the ownership of the assets is uncertain. Being naive is not cute or endearing. It is just naive!

So, here are some basics that will give you an idea of the things you should take care of on the front end so they don't become a hassle initially, or much worse, later in the process. The first is the formation of a legal entity -- your company!

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The Series
  Initial Legal Issues
  Just what are these games made of...legally speaking?
  Completing Your Contract Arsenal - NDAs, Employee and Consultant Agreements