IP Enforcement for Independent Game Developers
This issue has a lot of angles and typically two or more sides to each story. On the one hand you have the enforcer, or anyone who owns original IP. An example of the stereotypical enforcer includes Microsoft, who put a complete stop to the independent development of a Command and Conquer “HaloGen” mod that employed Halo’s intellectual property, developed by a small studio called Slipstream. MS subsequently went on to have Ensemble develop Halo Wars, which is, you guessed it, a Halo RTS. Another philosophically controversial “enforcer” example is Apple, who has worked continuously to enforce its EULA against the owners of jailbroken iPhones.
At the other side of this debate is the alleged infringer, which could be an indie like Slipstream or, more problematically, the crackers and black hats who hack DRM and pirate games in a manner that damages the entire industry. This is, in fact, one of the biggest problems arising from jailbroken iPhones; it has rapidly become a problem that creates constant strain in the application and casual game markets.
Regardless of your personal philosophy concerning the identity of the enforcer or the infringer, IP enforcement is an important aspect of protecting what you create. It’s as important in commercial works as it is in open source projects even though the ideals behind enforcement may differ. The issue here is control and access, and who has that control and access. Without this article will explain intellectual property enforcement methodology without touching on personal philosophy or the identity of the infringer or enforcer. It is my belief that it is just as important for independent developers to protect their IP as it is for the majors, and as such the tools for enforcement should be available to all.
Getting it in Writing
Contracts such as EULAs, licenses, and employment agreements are the first line of defense in IP enforcement. The more clearly your contracts set out your intellectual property rights and your remedies in the event of infringement or breach, the more likely the people you contract with are to comply. This is particularly true with regard to proprietary technology, trade secrets, and ideas you want to keep confidential.
Identifying Intellectual Property. The first step in protecting your IP is identifying what you consider protected under the shield of the contract. In the case of employment agreements and NDAs you need to be as specific as possible with regard to trade secrets and proprietary technology. With regard to EULAs you need to identify all components of what you want to protect, including content you’ve licensed from third parties. One example of how this can be done* is demonstrated in the World of Warcraft EULA, which identifies IP in two places: it sets out the game, patches, and manuals in the introduction, and expounds on those basics in the “Ownership” section further down.
Identifying Permissible Use of Intellectual Property. The next step in protecting your IP via contract is clearly stating what the licensor/end user/employee CAN do. Explain what is permissible: in the case of your game’s EULA, explain what users can do with your software; in the case of your employee agreements, explain how and when employees may access or use information; in the case of non-disclosures and confidentiality agreements, explain who information may be disclosed to or when confidentiality may be waived.
Identifying Impermissible/Infringing Use of Intellectual Property. Once you’ve explained what people CAN do with your IP, you need to explain what they can’t do. For example, in the case of games, computer programs, and hardware, one major issue of contention is reverse engineering. Under the Copyright Act reverse engineering is generally (but be careful, because this is a devilishly tricky area of the law) permissible if it is done exclusively for the purpose of interoperability. However, you may not want your game or software to work on jailbroken iPhones or other gaming devices that you plan on porting to down the road. This is something that may arguably (although this is by no means settled law) be limited by the EULA. Most major content owners seem to think so. If it’s something you deem necessary to protect your future interests, you should consider including it.
Identify Remedies and Damages. This is where you let the people you’re contracting with know what they risk if they infringe or impermissibly use your IP. You should include all available equitable remedies (remedies not grounded in monetary damages), including injunctions and restraining orders, as well as statutory and actual damages or profits resulting from infringement.
DRM and Keeping Secrets. If you’re using DRM technology, you need to let people know that you’re using it. You also need to explain that the disruption or removal of that DRM will expose them to additional Copyright Act liability if they choose to crack it. In the case of employment agreements, if you’re trying to protect trade secrets you must take steps to keep information secret. This includes DRM, password protection, encryption, and making it clear to employees that disclosing that information to anyone outside of their department is a big No No.
Cracking Skulls
There’s always a possibility that someone will breach your contractual provisions, or your game will be cracked and pirated, or you’ll find an inferior clone that passes itself off as the original. You will be angry and you will want to do everything you can to stop this from happening. First, calm down. Immediately calling a lawyer and filing a complaint or otherwise throwing a fit is expensive and probably bad for your health and peace of mind. Next, evaluate the validity of your claim. Do you have a claim? Is it really infringement? Would you know if it weren’t? For example, if the product is similar or identical to your own but released prior to or very shortly after your own, there’s a strong presumption of independent creation (which isn’t infringement under Copyright Law). You may want to talk to an attorney before going further. Take a deep breath and review the suggestions below, from most cost efficient to least. In some cases you may want to skip the first option, but as you’re an independent developer you may garner more sympathy from other small collectives, pirates, or studios who are (perhaps unwittingly) infringing on your rights.
Contact the people directly. A polite phone call or casual e-mail as a first step can go a long way in preventing future ill will or the need to lawyer up. If the infringer isn’t aware that the material is infringing or if they don’t understand the basics of IP law, they may comply with a friendly request without any further cost to you. This isn’t always the case, but as I said above, you’re an indie. There’s camaraderie among your fellow compatriots and there’s nothing wrong with taking advantage of that good will to protect your IP.
Send a Cease & Desist. If the first approach is unrealistic or ineffective the next option is a more formal C&D. This should typically come from a lawyer, but if you’re still trying to avoid the need to lawyer up you will want to at least include the following:
- An introduction that sets out your name, your product, and where your product can be found;
- A description of the rights you hold in the work, including any music, artwork, engines or code you’ve exclusively licensed;
- A description of their work, and how it is infringing;
- A citation of the laws being infringed, including Copyright law, Copyright Circumvention laws, trademark and unfair competition;
- A list of actions that they must cease and desist;
- A request for damages, if relevant;
- A “respond to by” date;
- Your preferred contact method.
Before you go any further. Have you registered your work/trademark? Under U.S. law you can’t bring an action for copyright infringement against anyone until you’ve filed your application, paid your fee and submitted your deposit. In the case of trademark, monetary damages including profits aren’t available unless your mark is registered and you’ve included the ® symbol or some other notice of registration. The sooner you register the better. Under Copyright law you’re entitled to statutory damages so long as the infringement occurred after you’ve fully completed your application and submitted your fee/deposit, or within three months of the infringement. Since the minimum statutory award is $750 for each infringement registration really shouldn’t be put off. In fact you should make it a policy to register as soon as you complete a project and have something to submit to the copyright office.
Send Takedown Notices. Send takedown notices wherever you find your infringed work. Bear in mind that the DMCA safe harbor only applies to those sites with a registered DMCA agent. If the site or service provider doesn’t have an agent you may want to instead send another C&D explaining why they are also infringers.
File a Complaint. This is certainly the point of no return. If you haven’t lawyered up yet, do so now. If your C&Ds have gone ignored or the infringer has sent a put back up notice in response to your take down, the only way to get that infringing material taken down again is to file a complaint and send a copy of that complaint with a second take down notice. Most websites with DMCA provisions will explain that process in their EULA. You will likely be filing your complaint in federal court and you will want to include every possible cause of action available, including all possible state claims.
At this point the conflict could take a few turns. If this catches the infringer’s attention, you can try to achieve settlement quickly or use some of the mediation or arbitration techniques described previously. It’s typically at this point that enforcement gets pricy and time consuming, but it may be a necessary step to protect your rights.
* Direct copying from any document including EULAs and other contracts without permission from the original drafter or document owner is typically considered copyright infringement. Draft your own or hire an attorney to draft it for you.
The Benefits of Alternative Dispute Resolution
Contracts offer a lot of flexibility when it comes to resolving disputes and disagreements. This is a major benefit to having a contract in the first place—at the outset of an agreement you can limit the costs and burdens of any potential dispute by the simple expedient of forethought. In any union or deal disputes are going to happen. Alternative Dispute Resolution (ADR) allows you to handle these disputes without destroying your business relationships or emptying your wallet. It is therefore to your benefit to make sure ADR is a part of your agreement.
In the U.S. most ADR is regulated by the American Arbitration Association (AAA). This organization sets the guidelines and procedures that parties should follow when attempting to resolve a dispute through ADR. They also offer access to trained mediators and arbitrators who have experience with dispute resolution. There are different kinds of dispute resolution. The three most common are unofficial negotiations, mediation, and arbitration. Occasionally the media will use terms interchangeably. However, it is important to understand that each of these methods is distinct and unique. Below is an explanation of each and how they're used in the dispute resolution process.
Informal Negotiations
Informal negotiations are self-explanatory—the parties agree to negotiate a settlement informally and between themselves. There are no set guidelines or procedures. When the parties agree to first enter informal negotiations to settle a dispute they are basically agreeing to "talk it out." The parties or the parties' representatives will communicate their concerns about a potential dispute or breach and will attempt to reach a compromise. During this process a lot of information and admissions or denials of wrongdoing may come out, so it is important that both parties understand the need for confidentiality (a matter discussed at length here). Every letter or e-mail should contain a statement about confidentiality and both parties should make an effort to respect that confidentiality.
More importantly unofficial negotiations should be made in good faith. For unofficial negotiations to achieve anything the parties need to genuinely want to resolve the dispute professionally and responsibly, if not amicably. If the parties enter unofficial negotiations with the intent of overwhelming or attacking one another very little is going to be accomplished through this method; if anything it will cause more ill-will and harm than good.
Mediation
If informal negotiations have reached a stalemate mediation may be appropriate. Generally when parties enter mediation they want to resolve the dispute in a manner that permits them to continue working together. The dispute usually hasn't become totally adversarial and the stalemate is a result of an inability to find a fair compromise. If you submit to mediation through the AAA you will be assigned a neutral mediator (usually selected by the parties) who will work with you and the other party to find a fair compromise. However, unlike arbitration or litigation the mediator has no authority to bind the parties to any settlement. In mediation the decision to settle still rests with you. The mediator provides a neutral perspective and usually has experience in resolving similar disputes, so they know what may work best for both parties.
There is some process, preparation and procedure in mediation:
1) the parties must first mutually agree to submit the dispute to mediation with the AAA;
2) mediation is initiated when any party to the dispute makes a request for mediation with the AAA. Whoever makes the request is required to notify all other parties to the dispute. Furthermore, parties may have legal representation if they so choose;
3) The mediation selection process can be somewhat involved. The parties can go online and review the available mediator list, which includes mediator profiles. Hopefully, both parties will agree to the same mediator. If they can't agree each party eliminates unacceptable candidates from the list, then each submits a list of the mediators they would accept in order of preference. Based on the lists of acceptable mediators the AAA will attempt to find a match acceptable to both parties, and the mediator will be invited to assist in the dispute;
4) The mediator performs a conflicts check to make sure he/she can meet the requirement of neutrality. It should be noted that if the mediator is an attorney, he or she also has a duty to disclose that they are not representing either party in the dispute as counsel;
5) The mediator then meets at a prearranged time with the parties to reach a settlement. If a settlement is reached, the parties sign a settlement agreement. If the parties are unable to resolve the dispute they move on to the next phase of dispute resolution.
As with informal negotiation it is important to mediate in good faith. It is also important to be respectful to the mediator and the other party despite opposing viewpoints. Maintaining civility is the purpose of ADR—you waste the mediator's and the other party's time when you use mediation sessions as an opportunity to blame, berate or argue.
Binding Arbitration
Binding arbitration is the last resort before litigation, and is most often used as an alternative to litigation. Binding arbitration may be used at the point where the dispute has become adversarial and can no longer be resolved amicably, although that is by no means always the case. In arbitration the parties submit the dispute to one or more (usually up to three) impartial arbiters who resolve the dispute by rendering a final binding judgment (referred to as the Award) that binds both parties. While this sounds a bit like litigation it differs in many ways. The proceedings are more informal and the discovery and admissible evidence rules are substantially more lax. Motion practice is usually ignored. Most importantly, the parties can customize their own rules and procedures for the arbitration. This includes the method of choosing the arbiter, so it's important to think this through when drafting your agreements. Fortunately, although an award granted through binding arbitration is enforceable in court, arbitration is by no means as painful or tedious as the litigation process.
Arbitration does follow some rules. For instance, one party cannot force the other party to arbitrate without a prior agreement. The disputed contract must contain an arbitration clause that refers to the specific AAA rules, and it must state that the parties agree that the award will be enforceable in any competent jurisdiction. Furthermore, you have to follow the appropriate guidelines for your dispute—not all AAA guidelines are the same, and the AAA has different guidelines for different kinds of disputes. If the dispute is commercial, you need to follow the commercial guidelines.
While by and large informal, arbitration procedure is more formal than mediation. The parties must attend both a preliminary hearing and a final hearing. Arbiters may require that necessary documents and evidence be submitted to the arbiter and to one another. It is usually recommended that the parties seek representation, and once again arbiters are bound by conditions of neutrality and no conflicts of interest may exist. If the arbiters are attorneys or judges they must disclose that they are legal professionals but do not represent any party in the dispute.
Alternative Dispute Resolution is a useful practice and one that many businesses swear by. It also demonstrates that litigation is almost always avoidable if the parties are willing enough—and you should always be willing enough.
Understanding “Without Prejudice” in terms of confidentiality
The dispute between Edge Games/Tim Langdell and Mobigames has devolved into a bit of a media disaster, but it has brought about several issues worth discussing. In light of Edge Games recent publication of settlement communications, perhaps the most glaring issue at the moment is confidentiality. In several of those communications, Edge Games (ironically) points out that because the communications were submitted under the heading "Without Prejudice", they should not be disclosed to third parties.
"We reserve all or rights in this matter, and note this communication is sent under banner of 'without prejudice' which means it cannot be used in any legal proceeding and should not be revealed to any third party, the press, or etc"—July 28, 2009 communication from Edge Corp. to David Papazian
In one communication Langdell suggests that sharing the communication with the media is in violation of U.S. Law.
"You quoted on a public forum from a communication that was sent to you under a "without prejudice" header which is not in accord with US law (and it was on a US website). Please be aware you are not permitted to quote from such correspondence that is written as part of settlement resolution, as all this correspondence between us has been."—June 3, 2009 communication from Tim Langdell to David Papazian.
The irony in all this being that Dr. Langdell and his company subsequently disclosed ALL communication under the heading "Without Prejudice" to third parties through its "Edge Studio" website. However, this raises the question of whether the phrase "Without Prejudice" offers any kind of protection, what kind of protection it provides, and whether other statements or contractual provisions would better serve the problem of confidentiality in settlement disputes.
The heading-phrase "Without Prejudice" in a communication between two opposing parties has a relatively specific application, which has its roots in English Common Law. This application is, under current federal and state evidence law, somewhat redundant. "Without Prejudice" implies that anything contained in the communication is intended for settlement purposes only and cannot be used against either party as evidence or precedence in the event of litigation. The purpose of this statement is to facilitate candor between the parties because it is in the interest of public policy to facilitate the settlement of disputes without court action. The words are intended to free parties from the concern that the admissions and statements made by them in the course of settlement will later be used against them in court. See Am. Eagle Outfitters, Inc. v. Lyle & Scott Ltd., 2008 U.S. Dist. LEXIS 96375 (W.D. Pa. Nov. 26, 2008)
In today's usage the phrase does little more than suggest that the communication is, in fact, intended for settlement. As a legal term of art it provides minimal protection under the predominant weight of US law due to Federal Rules of Evidence 408 and its mirror rule in almost every state's evidence laws. These rules automatically render compromise and settlement communications inadmissible. Under Rule 408, "conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority," are not admissible evidence.
Furthermore, using the phrase "Without Prejudice" when it is clear that the communications have gone beyond the point of possible settlement makes the use of the phrase ineffective. If a court could imply that the use is an empty one and the communication does not reflect conduct intended for settlement or compromise purposes, the court will ignore it and any admissions or statements contained therein may be used against either party.
However, use of "Without Prejudice" in a communication doesn't render the communication confidential or imply it as such. Generally speaking, settlement communications are only confidential by law if they relate to a court-ordered settlement conference or mediation conference and local rules render communications during and relating to those conferences confidential. In those cases, using "Without Prejudice for purposes of Settlement" may be useful to show that the communication is made in connection with a mediation conference or a court-ordered settlement conference. However, communications made prior to an official proceeding may not be subject to the same protections.
In communications such as those between Mobigames and Langdell made prior to mediation or court-settlement, confidentiality hinges on an agreement between the parties to keep that information confidential. This may be accomplished via a confidentiality/non-disclosure statement at the end of each communication prohibiting the distribution, disclosure, and copying of communications relating to possible settlement. Better yet, leave such communications to your attorneys. An attorney isn't allowed to disclose communications arising from representation, nor may they make disclosures to the media or public that may prejudice a case. Furthermore, it would probably reduce the chances of those communications getting as personal and antagonistic as the ones between Mobigames and Langdell.