The Most Important Points in a Video Game Content License Agreement
Licensing agreements can be tricky and engaging an attorney with licensing experience specific to digital media and these emerging industries can help you avoid the pitfalls and obtain the best deal for your company. Here's how:
License ScopeThe most important aspect of a content license agreement deals with the scope of the license or the license grant provision. Your attorney can ensure the contract contains specific language laying out important terms such as:
(1) Whether the license granted or obtained is exclusive or non-exclusive
(2) Time frame or duration for which the content is licensed
(3) Platforms and media on which the content may be used
(4) Limitations or restrictions related to content, including territorial limitations or geo-fencing. This is particularly relevant for video game developers and esports, as sports media clips may have territorial restrictions.
(5) The intended use of the content (commercial or non-commercial, for example).
(6) Whether the content may be sublicensed.
An attorney will also ensure all standard contractual provisions such as termination, assignability, indemnification, governing law, and dispute resolution are spelled out.
Special Licenses for MusicIn order to use music in any visual media, the licensee may be required to sign a music synchronization license granting the right to use copyrighted musical compositions in video games, movies, television shows, commercials, etc. It is an agreement between the owner of the copyrighted music (usually the composer or record label) and the licensee (for example, a video game developer or AR/VR company) that wants to use the music.
A sync license does not include the right to use a master recording in the visual media. Therefore, the licensee will also need a master use license if it wishes to use any protected music in visual media. Whether the licensee wants to use an entire song or just a short sample, it must negotiate with the owner of the rights to the specific music recording (often the performer or label).
Financial TermsNo content license agreement is complete without clearly spelled-out financial terms. The licensor may wish to secure payment as a flat rate or ongoing royalty payments based on the number of times the licensed content is used. In addition, the mode of payment, currency, and schedule should be clearly stipulated in the agreement.
IP OwnershipContent license agreements involve important issues related to ownership. Any technology company operating in the new media space and considering granting IP or content ownership should consult with a video game attorney. For example, if a video game company licenses certain AR elements from a content developer or platform, their lawyer can watch out for clauses in the agreement that vest IP ownership or any final product created using the AR company’s elements with the AR company rather than the licensee. Infringement of copyrighted VR is an evolving area of law and is likely to be the subject of continuing litigation.
Waiver of LiabilityVR gamers have reported a host of troubling effects, including damage to their vision, disorientation, electric shock, and even seizures. In addition, VR scenarios invite participants to move around, presenting a very real risk of injury. Players have suffered from broken bones and torn ligaments from playing. Therefore, AR/VR companies and platforms should consider including a waiver of liability provision in their content license agreements. Third parties, including end-users, should be asked to sign a specific waiver stating that they understand the risk of AR/VR experience and that the companies involved will not be held liable for any injury or risk arising due to the use of any AR/VR related content.
Infringement ClaimsFor companies operating in the AR/VR space, it is important to consider the implications of waiving their claims or asking partners to do so with respect to copyright and trademark infringement and right of publicity. It is possible that a video game developer may inadvertently add unauthorized, copyrighted AR/VR company material or logos into the metaverse. To cover this situation, an AR/VR company should consider adding a clause in the content license agreement stating that it will not be held liable for copyright and/or trademark infringement. In any case, the AR/VR company might be protected by the safe-harbor provisions of the Digital Millennium Copyright Act (DMCA) and by the rules related to contributory infringement under trademark law.
The law related to emerging technologies, particularly AR/VR, video games, and blockchain is evolving rapidly. Legal provisions related to intellectual property issues are dynamic and more nuanced than those governing traditional content license agreements. An AR/VR and video game attorney experienced in these areas can prove invaluable in negotiating content license agreements in the emerging technologies space.