paris, shay, eiffel shay, faerie, gazebo, Shay's Spot
...since 1995

Legal considerations in the development of online games

The production of an online game requires a great deal of research in the medium to be used, in setting up an entertainment business and in the protection of creator's rights. A producer and game creator has a great new idea for a game that is well developed and now ready to go into production. To progress to this next stage of development there needs to be research on the current gaming environment around the web. They must look at what games are currently being played on the web, whether there are problems of similarity, that they have access to the desired domain name, and what type of server hosting the game will need. This and other issues need to be dealt with. Other agreements must be made to get the game recognition and accessibility once it is online. As part of such agreements, licensing of the game and its images, characters, technology and devices must be arranged. Decisions should be made on how to react to unauthorised usage of such materials, which regularly occurs on the Internet. Finally, we must be sure all parties involved in the production and distribution process of the game are in legally binding agreements, generally achieved through contractual means. Only through such arrangements can the game creator be sure of a successful and comfortable business operation once the game is up and running. Without them the game could be quickly removed from their control, leaving the creator with little to show for what was, initially at least, rightfully theirs.

Many business and intellectual property rights issues must be considered before the game can go into final production and distribution. As the game is based on unique animated characters, not only is the creator safe from infringement actions by other game producers, but it may be pertinent to trademark the unique characters used in the game. As with any of the more conventional media, there are people who could attempt to take advantage of any recognition the characters may gain on the Internet. Trademark registration is difficult for some forms of Internet representation, such as most standard websites, as they are not considered to be creating identifiable marks in the course of trade. But for a website that is the business, such as a game playing site, there is little problem proving it is part of the course of trade. By submitting trademark applications on parts of the game considered to be distinguishing characteristics that identify this game from others, physical property rights can be created. As a trademark can be almost anything, relevant items for trademark protection include characters, words and sounds from the game. As the game is based on witty dialogue along with the characters, there may be some statements made by the characters, or used as by-lines or as a 'catch cry' for the game that are worth getting trademarked. Such protection of the various elements of your games that are highly recognisable will alleviate the concern of having others attempt to base new game ideas on this game's ideas and reputation. While there is protection under the law without trademark protection, registering trademarks gives greater protection and capacity to claim damages than 'passing off' or 'deceptive and misleading conduct' under Section 52 of the Trade Practices Act. An action under Section 52 of the Trade Practices Act is fairly easy to prove, needing only evidence that people were likely to be misled or deceived and not that they necessarily were, but there is little ground for claiming damages. A 'passing off' claim adds better damages, but the plaintiff must prove intent to mislead by the defendant. Trademark laws give a greater capacity to prove infringement of a trademark, and claim relevant damages based on such.

Another major legal issue is the business itself. To run the game successfully an appropriate organisation should be set up to oversee its operations. As the game is destined for life online, a company must be set up or a business name registered. This is because to obtain a domain address there must be proof you are engaged in a commercial activity relevant to the name you are attempting to own the domain for. This has alleviated a problem from the early days of the World Wide Web called 'cyber squatting', when people registered domain names of large corporations or companies and then requested large sums of money to release the name to them.

A decision must be made as to what type of company is most appropriate for the business operations to be conducted. While the creator of the game may choose to operate as a sole trader with a registered trading name, they bear all risk in this large business venture. And unless they have other people they want to share all responsibility with, a partnership is not really a valid option. Therefore a limited liability company seems to be the best structure for this venture, as it creates an artificial legal entity that protects the creator and anyone else in the company from liability. This also promotes confidence in the professional nature of the business when dealing with other major companies (as may a partnership, but as stated earlier, if it is a one person operation to start with it is simply not an option).

Once a company or trading name has been registered in the name of the online games operations, the next step is to secure the most important part of this online game's 'storefront' - its domain name. As the possession of a domain name is reliant on both the registration of a business and that the domain name is closely aligned to the name (item 3.5 of the Domain Name Allocation Policy "Direct Derivation"), care must be taken in what the company is actually named. Otherwise, securing a registered trading name for the company to be 'trading as' will allow the company name to be different from the domain. If further games were in development, a decision may be made to possess the domain that relates to the company name, and having the first game, and any subsequent games, fall under that domain. Another option is to house all games under a server which is the main company domain name, while also owning relevant game titles domain addresses (which will also require relevant trading names) as 'pointers' back to the main site for the company.

There may also be a situation where the domain the producer of a site wants is owned by someone else. Apart from finding a different name to use, there are a number of ways they can attempt to deal with this problem. If the organisation uses the name legitimately for their website, there is little they can do. If the domain name is not in use but they seem to have legitimate grounds for possessing it, offers could be made to the current owners to release the domain name. Then there is also a course of action available if the group who want to own the domain feel the current owner has no legitimate reason to use that name. Procedure for dealing with this is that the group making the claim give notice in writing to the current domain administrator. They then must enter negotiations to attempt to settle the dispute, but if this fails they must then refer the dispute to a commercial disputes centre and be bound by the ruling of an arbiter. The cost of such action must be paid by the group who brought the complaint. This procedure is likely to discourage frivolous complaints against legitimate domain name holders - or perhaps even reduce 'bullying' by larger corporations.

Further consideration should be made on what kind of policy the creator will take regarding unauthorised use of game images, sounds or other marks by makers of other websites. This has become a difficult area for many companies online, as they walk a thin line between over and under protecting their rights. Some who do little about such infringement may see their identification diffused across the web, while other go so far they begin to disappoint fans of their games, TV shows or movies (such as Fox Television, whose actions against fan-run X-Files websites caused such anger, all companies who take similar action are said to be 'Foxing' websites). There are also issues that relate to similarly named sites, or use of your identifiable terms or name in search engine tags. Such activity occurs quite regularly with relation to links that end up leading to porn or illegal software sites, or other sites that I may not want to inadvertently become associated with - as the user may not realise they have made the typographical error, or may not expect such results to appear in their search. The law is still quite grey in such areas, unfortunately. By laying out company policy early, it will save the game and its image from the effect of unsure actions against such activities.

Another legal issue that must be considered before continuing into final development is just how much of the technical production process will be done by the creator of the online game. Is the creator programming the game personally? What about the sound to be used and the animated art that forms a major part of the games image? If these works are to be created by other people employed or contracted to do the work for the game, there are further issues of intellectual property and copyright. It may be that the contracted programmer holds copyright in the final product of the game in its operational form (or parts of the code used to make it work), and that some of the artists or sound designers hold copyright in those parts of the game. If this is the case then when contractual agreements are entered into with such people these copyright issues need to be dealt with, whether through complete purchase of those rights (assignment) or through 'non-exclusive licence' to use the code or images or sounds.

As with any business arrangement, there are many deals that must be made with other organisations to ensure successful business for all concerned parties. While the creator could deal with all the issues relating to running a server for the game to run from, it is much more efficient to outsource such activities. So they will need to find a company that will look after the hosting details for the game. Online games generally need to be run from their own server due to the large bandwidth and processing needs of multiple users interacting in real time. There are quite a number of companies that provide such services, so a suitable deal should be found with some research. Such companies may also be interested in creating a deal of some sort where profits could be shared from the game, rather than a simple server hire arrangement. Similarly, they may reduce such a hire rate in exchange for advertising space on the game's website.

This brings us to another agreement that needs to be made with either one or many companies. Advertising is where profit is generated on the Internet at the moment. While it is now a secure option to charge users for playing the game, the climate of usage at the moment makes this a poor choice. Very few users are interested in paying for the online gaming experience, due to factors such as connection speeds that are simply too slow to support sound, animation, and interaction with other players, and accidental disconnection that can ruin a game for the player. If they have to pay they expect a much more stable game than it is generally possible to offer on the current Internet (the under construction Internet2 will deal with this problem by increasing capacity for speed and stability). So rather than charging the end user for playing, advertisers can be charged for the privilege of getting to target the playing audience. There are advertising firms that will sell the space available for site producers, which would save them the trouble of tracking down appropriate advertisers myself. Decisions must be made on what level of integration that advertising will have in the game, which will influence the rates that can be charged. Advertising integration currently ranges from simple banner advertising that can be found on most large websites, to 'commercial break' style advertisements in some of the slickest games such as You Don't Know Jack! Netshow. Through discussions with the advertising agency and the development team, the best style for the game can be found.

Another completely different option is for an all encompassing agreement where the creator can license the entire game to someone. There are a number of major game sites on the Internet now that provide a variety of games for users. Such companies have many different types of games and attract users who know they will find a variety of games they might want to play within the one site. In turn, this attracts high quality advertisers who are more willing to work with a site that has a proven track record of player traffic. Such a licensing deal means that they will deal with all issues of hosting, promotion and advertisers, paying you a regular fee in exchange for their usage of the game. Such deals should be entered carefully as they may desire some of the creative control over the game, removing it from the creator to redesign the game for their desired audience. The trade off here is level of work the creator must put into the continued running of the game for a possible greater return, or an easier process where they get paid for the right to use the game as they see fit. As long as the creator does not sell them the complete rights, just licenses the game to them, they can still hold some creative control as well as control of merchandising and converting the game to other formats, such as CD-ROM or even television (You Don't Know Jack! Is one multimedia game that is going to be produced as a television gameshow in the future).

As with any business arrangement, all deals made in the set up of this online game are legally binding - with or without a written contract. As long as there has been offer and acceptance, consideration and intention to be legally bound, the contract is binding. But to make sure that all parties are happy with the details of the contract and that what they stand to gain will be secure, written contracts should be drawn up.

In the online setting, the deals that have been made could be quite complex. The medium is such that technology moves quickly, as does the growth of the online community. Equipment may quickly need upgrading to meet new technology and access requirements, the game will likely go into development for future versions, advertising rates may need fast adjustment as the games popularity grows. Time moves quickly on the Internet, so agreements need to be flexible enough to accommodate the fast changing environment they relate to. Other issues to be considered in the development of contracts relating to this online game are issues of trouble shooting. Who is responsible if the server(s) breaks down? Should someone be required to pay compensation if the down time runs beyond a specified period of time? Where does liability for any damages lie in such circumstances? For everyone to be satisfied the problem scenarios must be considered and decisions made about responsibility. This is certainly something to be done with legal assistance, as there is a great deal of intricacy to be dealt with. Keeping the above issues in mind, contracts will likely work to short term, renewable time periods that give all parties the opportunity to move on from this project and their commitments to it. There will likely be guarantees and warranties that relate to technical issues and allocation of responsibility. Clarity within the contracts is one of the most important steps toward successful business relationships.

It is clear that there is a very large amount of work to be done to be sure of a successful venture into launching an online game. The issues of copyright, trademark, business structure and policy creation, and detailed contractual agreements must be considered. Some decisions will be easier than others, but no decision should be taken lightly. If they take the process lightly and carelessly, they may watch their hard work and all deserved profits taken from them by a poor agreement or arrangement. As with any large venture, legal assistance is an important key to successful business operation. With commitment and vigilance, the creator of this game could have an online game empire on their hands.


Please don't sue me!! References are on file on other computer!
I will add when I can retrieve them. Sorry!