Clearance and Chain of Title

I've touched on several Intellectual Property (IP) issues in previous posts, but it's difficult to translate intellectual property into a meaningful context until you're forced to look at your own and realize why you need things in writing. This is frequently necessary in the games industry—agreements between developers and publishers, publishers and consoles, and publishers and distributors typically contain chain of title clauses and warranties. As part of complete delivery, the publisher or developer may be required to submit a chain of title report (complete with documentation) establishing ownership or valid license over all of the intellectual property in a game.

What is chain of title? It's a legal term of art used to describe the process of determining the origin and current ownership of property. Particularly, the term is used to describe whether the current alleged "rights holder" actually has a right to transfer the IP. Each link in the ownership chain must be clearly established. You can't transfer rights you don't own, so unless there's evidence that you received those rights by some assignment, license, or transfer, there is nothing to show that the transfer is valid.

To understand chain of title, you need to understand a concept that is very basic and yet sometimes easily forgotten—the only person who can give you the right to use a work is the person who owns the rights to that particular use of the work. This includes exclusive and non-exclusive use. Any use of a work without proper transfer or permission constitutes infringement, and exposes you and everyone else who distributes, reproduces, performs or displays the work to liability. This includes publishers, distributors, marketers, developers, and even the television stations that run advertisements for your product. Anyone who may be subject to liability for potential infringement may demand some assurance that the chain of title is "clear" or "unclouded", or otherwise without dispute.

In some cases, this is dealt with by indemnity. The person claiming they own the right assumes liability on behalf of the other party if the other party is sued for infringement. In some cases this is adequate—a publisher may financially be in a better position to provide indemnity to a third party marketing partner. In cases where indemnification is fairly useless (i.e., where infringement actions can create liability for millions of dollars and the developer is only barely solvent—bearing in mind that in most cases, a plaintiff can recover from any and all defendants named in a suit), the publisher or distributor may require delivery of chain of title before delivery is complete.

Below I'll cover some of the rights in a game that can and should be cleared, how they are cleared, and the documentation you should acquire to show proper clearance. Some general considerations to bear in mind:

Getting Clearance: Chain of title requires that each link in the chain of ownership be accounted for. This means that each transfer leading up to the transfer to you should be clearly determined. Furthermore, it's important to note ancillary agreements that are exclusive can create serious problems for you—here's an example. Let's say the original copyright owner of a song grants you a non-exclusive license to use that song in your game. Later, that same copyright owner (who still retains the rights, bear in mind—a license is not a transfer/assignment/change of ownership to the rights) grants an exclusive license to another game developer for use of the song. This clouds the title to your license and can create problems for you if the now exclusive license holder discovers that you're also using the song in your game. So clearance can get tedious, which is why most major companies have legal departments with people dedicated to obtaining clearance.

Documentation: You need to have everything in writing. Oral agreements are worth the paper they're written on when you're trying to show chain of title. No one and I mean no one will accept your word that someone gave you oral permission to use a work. Get it in writing. If you're getting your rights from someone other than the original owner of the intellectual property, you will also need documentation evidencing how that party obtained rights to the work, and so on and so forth as far back as necessary until you reach the owner. That's the chain in chain of title.

Note: This list in not exhaustive. At the end of the day, proper chain of title is determined by the person demanding proof of chain of title. If you do not have one, you absolutely WILL need an attorney or clearance specialist to create your proof of chain of title.

Content

How to Get Clearance

Documentation

Code (source and binary)

The owner of the code is either the company who employed the programmers/code writers, or the writers/programmers themselves. The company owns the code if the programmers/writers are employees or independent contractors subject to a work for hire clause. If you're coming up with the code yourself, you need to make sure you register your copyrights to the code. If you're licensing the code from someone else, or if you're using third parties, make sure there's an assignment, transfer, or license permitting you to use and distribute the code. Some publishers/distributors may require proprietary ownership/exclusive rights to use of the code.

Assignment/transfer/license of copyright to the code (literary work). The transfer/license should include the right to distribute, reproduce, and create derivative works of the code.

Processes/Engine

The owner of the rights to the processes/engine used in a game is the engine developer (i.e., Unreal) or, if the engine is developed in-house, the game developer. If you're licensing the engine directly from the engine developer, you can usually obtain a standardized license through the original owner.

Assignment/transfer/license of the copyright
in the code used for the engine, and license for the use of the patented processes in and to the engine.

Artwork

The owner of the rights to the artwork is either the company who employed the artists/designers or the artists/designers themselves. If the artists/designers are employees or independent contractors subject to a work for hire agreement, the company owns the rights. See also Code

Assignment/transfer/license of copyright to the code (audiovisual and/or pictorial, graphical works). The transfer/license should include the right to distribute, reproduce, and create derivative works of, and display the artwork.

Choreography

This isn't something that usually comes to mind, but choreography can be a big part of a game's creation. Martial arts games and even games that have specific dances (see WoW) all require rights to use the movements and choreographed moves in the game. The choreographer, or person who created with the particular series of movements, is the original owner of the rights to the choreographed work. Note: The choreographer isn't always the person who first used the work. Just because Britney Spears was the first to use a particular choreographed piece doesn't mean that she owns the rights to the choreography.

Assignment/transfer/license of copyright to the choreography (choreographic work). The transfer/license should include the right to distribute, reproduce, create derivative works of, display, and perform the choreography.

Script

Modern games have scripts. This includes any dialog, camera positioning, and story that is documented in the original script, storyline, or treatment of the game. The person who wrote the script, storyline or treatment owns the rights, unless they created it subject to a work for hire or employment agreement. The rights to a script/story may have also been purchased by a company or buyer.

Assignment/transfer/license of copyright to the story/script (literary work). The transfer/license should include the right to distribute, reproduce, and create derivative works of the script/story.

Music

You need two kinds of rights for music: synchronization and master use. Synchronization (Sync licensing) deals with the musical composition. The right to the musical composition is typically held by the publisher, and sometimes a percentage of the right is retained by the original songwriter. You can check with the particular performing rights organization (ASCAP, BMI) to determine ownership for a sync license. You also need the right to use the specific sound recording. This is called the Master Use license. You get this from the record label that recorded and released the music.

Assignment/transfer/license of copyright to the musical composition. The transfer/license should include the right to distribute, reproduce, create derivative works of, and publically perform the musical composition. Assignment/transfer/license of copyright to the sound recording. The transfer/license should include the right to distribute, reproduce, create derivative works of, publically perform, and digitally transmit the sound recording. Note that music licenses may contain durations, so make sure those durations don't conflict with your other agreements.

Trademarks

Any time you use the name of a product or service in a game, you need to make sure that you have the right to use that trademark from the trademark owner—namely, the company that uses the mark. If you have a coca-cola can in your game, you should probably make sure you have permission to use the trademark displayed on the can. If you have a storefront in your game, you better make sure you have permission from the store's proprietor to use their name. Some companies are VERY sensitive about having their trademarks associated with the mature games industry. Tread carefully here. If possible, be creative. Come up with fake names, but make SURE they are actually fake.

License of the trademark or service mark of a product or company. The license should include the right to use and the context of the use.

Name and Likeness

If you use the name and likeness of any famous or reasonably known public figure, you should obtain permission or license to use that person's name and/or likeness in the work. This includes any actors, regardless of current fame or status, who contribute voice work or modeling for your game.

License to use the name and likeness in the context of the game, and in any marketing, product, or derivative work of the game. This can get fairly specific, depending on the talent. Generally a catch-all "use of name and likeness for any purpose in connection with Game in any medium now known or hereafter devised," is desirable.

Clips

A "clip" is any portion of an audiovisual/video/musical work of limited duration that you may want to use in your game product. This can range anywhere from brief news broadcasts to movie clips to short snippets of audio (this list isn't exhaustive, obviously). The owner is typically the rights holder to the entire work. Particularly in film/video/news broadcasts, you'll want to make sure that the rights holder also has the name and likeness rights for anyone in the clip, as well as any other rights (musical, artwork, etc.) contained in the clip.

A clip license containing a warranty that the licensor has the right to license all IP/name and likeness in connection with the clip is usually sufficient.