Online collaborations are a frequent occurrence in the independent game development community. However, the legalities surrounding this kind of team building raises a variety of questions. Problems like privacy, jurisdictional issues, and age all make these relationships potentially problematic. I'll cover some of the major issues below.
What to Put in the Contract
You've found a few people online that you want to work with. You want to make a game that each of you can use in your respective portfolios, and maybe you hope to get some kind of profit out of the deal. However, none of you have met in person. How can you make sure that your interests are protected? You sign a contract, of course! The agreement may be a collaboration agreement or a work-for-hire agreement depending on the project.
Apart from standard contract terms (term, identification of project, substantive duties of each party, compensation, etc.) the contract should include:
1. Identification of the Parties: Once you've decided to enter into a legal and potentially for profit agreement, be wary of anyone who wants to maintain anonymity. If anonymity is an issue, include a confidentiality provision in the agreement. However, it is important that the actual name and address of the parties be clearly stated in the agreement. Some Courts may not enforce agreements if pseudonyms or non-entities are used as opposed to real names, so it's important to state the legal names of the parties.
2. Distribution of Rights: Depending on the type of project, the people involved, and the leverage of the individuals, rights distribution can be problematic. Simply put, there is no hard and fast rule to how rights should be distributed. If the project is not for profit, individuals may want to retain their rights to the project—under Copyright Law, each major contributor is automatically a joint author and co-owner in the work, so unless you get an agreement stating otherwise you won't be able to do much with the work without the permission of the other contributors. In a collaboration agreement, this can be handled in a multitude of ways:
a. Assignment: The contributors may assign their rights to a single individual or company in exchange for a royalty, credit, or some other for-value consideration. This may streamline the process of exploiting the work, but it also puts all of the power in the hands of one person or entity. In virtual collaborations, the credibility of that entity or individual may be suspect. If you are assigning your rights in this kind of agreement, it is important to carefully research the people you're working with and to obtain references. If the person is unwilling to provide references or some other means of verification, you should be unwilling to assign your rights.
b. Power of Attorney: Another method of streamlining exploitation is to allow individuals to retain their rights, but to allow one individual or entity to have power of attorney to enter into agreements on behalf of the rest of the contributors with regard to the work. The individual could be the lead contributor or even a third-party trustee. In this kind of agreement, full disclosure should be required—this means that the person acting with power of attorney should be required to open all books to the other contributors to ensure fair and accurate disclosure of all agreements, licensing efforts, revenue and expenditures. The agreement should also state that the individual with power of attorney owes a fiduciary duty to the other contributors.
c. Work-for-Hire: The contract may be nothing more than a work-for-hire agreement. In that case, it is important to be very clear about how you're going to be compensated. You also want to ensure that you receive credit for your contribution and permission to personally exploit the work in your own portfolio. Non-compete clauses are often included in work-for-hire agreements. However, these provisions are problematic in online collaborations due to the lack of geographic boundaries. Geographic limitations to non-compete clauses should be clearly stated, or the clauses should be avoided all together.
3. Jurisdiction, Venue, and Choice of Law: Jurisdiction, Venue and Choice of Law determine where and under what laws the contract is enforceable. If you're the person in charge of the project, you obviously want the jurisdiction and choice of law to be convenient to you—jurisdiction should be your state and country, venue should be the state court closest to you, and choice of law should be the law most favorable to you, provided that the choice doesn't contradict your jurisdiction's choice-of-law rules.
Any time you decide to make things legal and binding via a contract, it's worth the time and investment to have the contract drafted or at the very least reviewed by a competent attorney.
How to Enforce the Contract
Each collaborator must sign the agreement. This can be done in a few ways, and some jurisdictions have specific rules concerning contract enforceability. Be sure that the contract includes a provision stating that photocopies made at time of execution are original agreements, and check your local rules to ensure your chosen method is enforceable.
1. Snail Mail—send a signed copy of the agreement to each party requesting their signature, and include a return, pre-paid envelope. Once you receive their signed copy, make additional copies of the signed copies and return one signed copy to the collaborator for their own files.
2. Fax—send a signed copy of the agreement to each party requesting their signature via fax. Have them fax back the signed copy.
3. Electronic Signatures—This is tricky, as not all jurisdictions recognize electronic signatures as enforceable. An electronic signature may require a unique identifier along with the person's name to ensure the identity of the individual. For instance, a date of birth or the last four digits of a social security number, or any other means that can be used to prove identity, may be necessary.
Once the agreement is signed, the agreement can be enforced under the terms of the Jurisdiction, Venue, and Choice of Law provisions of the Agreement.
1. Age: In the U.S. and in many other countries, contracts against minors (under 18) are unenforceable. This means that if a minor signs a contract and doesn't perform, there isn't much you can do against that individual.
2. Local Rules: IP rights, causes of action, and court rules vary from state to state, country to country. One example is droit morale. Moral Rights, while typically ignored under U.S. law, are an issue in many European nations. If those issues aren't addressed in your contract, a contributor from another country may attempt to assert rights that are not included in the agreement, thereby avoiding the jurisdiction and choice of law provisions of the contract. It is therefore important to understand what causes of action a contributor may try to assert against you in their home territory.
3. Veracity, Reliability, and Credibility: The Internet exposes you to a wide variety of people, many of whom have loose ethical standards with regard to business relationships. It is sometimes difficult to ensure that the people you're working with are reliable, truthful, and credible. Getting references and prior work history is mandatory if this is a venture where your property or money is at stake. Even with the appropriate research, it is important to tread carefully.
4. Language barriers: It is important that you understand what you're agreeing to. Be sure that nothing is being lost in translation. Make sure your agreement is written in clear English (or your native tongue), and try to ensure that everyone is on the same page as far as definitions and general understanding.