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jcfinch

IP agreement help

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Forum members, I run a small independent company called Polar Bear Development Studios. We are just beginning to advertise for a Lead Programmer, and as a game engine is such a massive undertaking I am struggling with the creation of a fair and well-worded IP agreement. I have done quite a bit of research on the subject, and have done copyright agreements for our artists, but need some help on this one. My requirements are: 1)Polar Bear must have control over who sees the engine code in order to prevent our code being copied in the event that we go public. 2)The programmer must be protected, in that if Polar Bear decides to go public in the future and use the existing game engine to create a fully commercial and publishable game, that the programmer will either be offered a position on the project, or will be compensated if they are not brought on. It would be unfair for others to profit off of their engine while they get nothing. To this end I am unsure of how to allocate rights and ownership, as well as the definition of "compensation" if we wish to go public. Thanks in advance for any help you can offer. Jesse Crafts-Finch Polar Bear Development Studios Project Lead jcfinch@bu.edu 858-487-6560

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you always want the company to end up wholly "owning" the products. you have everyone sign a contract that says they forfeit the rights to any works they produce for the company. most companies even go so far as to say that "any work you do while employed by this company whether at work or at home, also belongs to the company". i think the latter is relatively evil unless it's worded such that it only includes "similar" types of work. i.e. it makes sense that if you're a professional game developer and you are working on a hobby game that the code for that game will probably be derivitive in some way from the companies code base and could thus plausibly be "owned" by them.

anyway, that's the basic understanding of employment. you are getting compensated to give up the rights to what you produce.

-me

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However, because the only comphensation that is given is experience, many serious programmers are going to want assurance that Polar Bear will not turn around and sell their hard work for a profit (when they had contributed it as part of a collaborative project).

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When setting up a team/company/project you can do most things yourself. You could pay the experts to make your life easier but in almost all cases you could do it yourself. The one exception is contracts.

I have to say that DIY contracts are a really bad idea. This is doubly so when they are IP related contracts. I have seen people lose tens of thousands of dollars (and the code) because they didn't pay $500 to have a contract done by a lawyer.

The reason for this is that in law, specific words have specific meanings (that are not always obvious to us laypeople). As a result a contract wont mean what you think it means, what you want it to mean or even what both parties agree that it means - it means what the words [meaning in law] say and if you use the wrong words you can invalidate vital portions of the agreement. There is an example of this in a forum thread over at the IGDA, where someone has made a meaningless change to a contract by inserting a phrase they know is important but don't actually understand. The thread can be viewed HERE.

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I think it's standard to forfeit all rights to any programming you do while employed - in fact I believe this can extend for some period after your contract ends. So if you work for a game developer and carry on making an indie at home, there's potentially a problem when you release that game...

I don't use any code from when I worked in the industry, but some of their methodology is now my automatic way of doing things.

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> I have seen people lose tens of thousands of dollars
> (and the code) because they didn't pay $500 to have a
> contract done by a lawyer.

It works the other way around too. I've seen friends in a job limbo for months for not having a lawyer examine their contracts (details in the link below). This is a cutthroat industry, guys; as Dan rightfully pointed out, a lawyer is cheap compared to the consequences of an agreement failing.

http://www.gamedev.net/community/forums/topic.asp?topic_id=182254

-cb

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I would have to point out the fact that it can not imply in all states. Specifically in FL, its a right to work state rather than up-north in PA and a few others where its a privillage to work.

A no-compete will not work here unless the duration of the terms after parting ways is paid by employer 4times what the person can make in the market. This protects the employee from being abused, in the means of not being able to recover financially from a job because of a contract. You can sign one all you want in FL but will not hold up in court unless you pay the person for the inablity to obtain a job in the profession that they work in....

I am sure there are more than just FL in that but I live here and found that out fast.

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Quote:
Original post by d000hg
I think it's standard to forfeit all rights to any programming you do while employed - in fact I believe this can extend for some period after your contract ends.
It certainly isn't standard under UK law. In the UK (and in differing ways in the EU) intellectual property rights/copyright/patents etc need to be assigned in writing. That means a contract of employment must contain a specific assignment of rights clause, or a seperate assignment must be signed. A verbal assigment of rights is not binding.

I think it may be different in the US where they have the concept of "work for hire" which I believe transfers ownership of IP rights.

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If the programmer isn't paid your may not be able to keep the property even if it's specified in the contract. In the US there have been cases where contracts have been over-turned because of "one-sidedness". Basically if the programmer is not being compensated, don't expect to get any of his intellectual property. Even if they sign it away, without "fair" compensation they can possibly get it back.

This is why I pay all the people I contract.

------------

Sorry I took a law class 2 years ago in college but most of it escapes me. This includes terminology.

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What is considered "fair" comphensation? The employment agreement states that the Employee will work for the company, and the only comphensation the Employee will recieve will be experience.

Besides that question, I believe I have gotten my answer. It is just safer for everyone involved if the company has complete ownership rights over all material created for the company. I took a template employee agerement, and made sure that it included mention of Software in the ip rights, as well as artwork.

The agreement states that the employee has no right, title, or intenrest in anything they create. I added a line saying "except for self promotional actvities" which also describes what constitutes a self-promotional activity.

Would this be acceptable? I can post the agreement for review if you feel it would help in the discussion.

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> What is considered "fair" compensation?

If your company cannot afford cash nor cannot barter for marketable items, maybe shares in the company would do. Contributors can make a profit if there is an upside in the future; at worst, they can always add that one more line in their resume. Astute developers may require some guarantees you will not dilute their share in the company in the eventuality that more reserve shares are floated.

-cb

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It's hard to say what's fair. IP is just a very sticky subject. I use to do something similar to what you describe in your second clause in the past. The biggest problem you may have is not being able to stop the programmer from deciding to quit the project and take the code. Then you won't have an engine. That's also the thing with giving away company ownership. What if the person leaves? I bring these things up, because I've almost been burned by them.

Deferring payment is not a neccesarily a bad compensation model. My feeling is this, without money motivation is less and people may not want to stay or they may suck and you want them to leave. What happens then? Just make sure you answer that. I had to dish out money when this happened to make sure I wouldn't have IP problems later. I was not happy.

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Although it is unfortunate, it seems there is little I can do to ensure 100% that the programmer will not walk off in the middle of the project, except to do a in-depth screening and interview process, and make sure we are protected as much as we can. It is a calculated risk, but what is not?

Everyone, thank you for your help in this matter. I look forward to contributing to the fourms more in the future.

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I am including a copy of the agreement I developed. I would greatly appreciate any comments or corrections that would help me improve it/make it a more sound legal document.

Employment agreement

Polar Bear Development Studios, owned by Jesse Crafts-Finch, located at *** ******** **, ********
**, *****, referred to in this agreement as employer, employs __________________, of
____________________________________[address], ____________________[city],
______________[country], _________________[state], referred to in this agreement as employee, as
__________________________[job title] to serve and to perform such duties at such times and places
and in such manner as employer may from time to time direct.

Section I.

1. Employee agrees to faithfully perform the duties assigned to him or her to the best of his or her ability, to devote his or her full and undivided time to the transaction of company’s business, to make to the company prompt, complete, and accurate reports of employee’s work and expenses, to promptly remit to the company all monies of company collected by employee or coming into employee’s possession, and not to engage or be engaged or be interested in any other business that conflicts with the interests of the employer during the existence of this agreement.

2. In consideration of such service by employee, company will give due credit to employee for all work performed for employer, or in employers name.

3. This agreement shall be in effect from date of signing until it is terminated by either party at any time on fourteen days’ written notice to the other party.

Section II.

1. Definition. "Self-promotion" as used herein, whether or not reduced to writing and in any and all stages of development, shall include but shall not be limited to, all activities which relates to the disclosure of: policies and practices; files or data; artwork; concepts; software or hardware development; specifications; documentation; techniques; or related information which were directly or indirectly developed or created by employee; by method of, but not limited to, posting on web page, attaching to a resume, or inclusion in portfolio, for the reasons of creating awareness of individual ability. Disclosure may not directly result in profit for the employee. Employer reserves the right to determine what activities and or materials are included under the definition of Self-promotion.

Section III.

1. Employer to have ownership of employee’s inventions
All ideas, inventions, software, and other developments or improvements conceived or reduced to practice by employee, alone or with others, during the term of this employment agreement, whether or not during working hours, that are within the scope of employer’s business operations or that relate to any of employer’s work or projects, shall be the exclusive property of employer, with the exception that they may use said IP for Self-promotion. Employee agrees to assist employer, at its expense, to obtain patents on any such patentable ideas, inventions, and other developments, and agrees to execute all documents necessary to obtain such patents in the name of employer.

Section IV.

1. Intellectual property rights
Employer shall own the complete and exclusive license to all right, title, and interest of every kind and nature, whether now known or unknown, in and to any intellectual property, including, but not limited to, any inventions, patents, trademarks, service marks, copyrights, films, scripts, ideas, creations, and properties invented, created, written, developed, furnished, produced, or disclosed by employee, in the exception of software, in the course of rendering services to employer under and pursuant to this agreement shall, as between employer and employee, for the lifetime of the product, as designated by the employer, to which the licensed material has been created or developed for, and employee shall have no interest of any kind or nature in to any results and / or proceeds from such property, with the exception that they may use stated IP for Self-promotion.

In witness of the above, each party to this agreement has caused it to be executed on ___________________[date].

Employee Signature______________________________ Date____________

Witness Signature________________________________________Date____________


Employer Signature_______________________________________Date____________

Witness Signature_______________________________ Date____________

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Guest Anonymous Poster
All I can say is that there is no way I'd sign that agreement.

The terms of my employment are much more lenient and I get paid twice a month.

Your agreement is strictly one-sided. There is nothing in it to cover teh employees rights.

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Quote:
Original post by Anonymous Poster
All I can say is that there is no way I'd sign that agreement.
I agree. It isn't even remotely reasonable, balanced or fair. It protects only the employer but provides no protection for the employee. In addition the concept that the employee should work full time, for zero remuneration and give all ownership (and all financial rewards) to the company is simply a joke. Quite simply how are they supposed to live, working full time for free? In addition why would they bother? If they can work for you for free they can do it for themselves and keep the rewards. As it stands the employee could even have to pay to travel where the employer tells them all for no pay.

If you expect people to work for you, you have to pay them. If you have no cash you pay when the project is a success or with equity in the company or a share of any benefits derived from the IP. Only a moron would sign that contract as it is and morons don't make very good games.

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Well, I'm glad I'm getting feedback. However, I wish some of it would be... more constructive?

I have explained that it will not be possible for this project to make money once it is complete. We are making a two hour, single player demo. For there to be any actual financial rewards, we would have to put a lot more time and effort into it.

I need to take out the "full time" part, so thank you for pointing that out. Our team members only spend 5-10 hours a week on the project.

Also, part of what I have been asking is "how" do I protect my team members. I do not have the money to go to a lawyer to construct a tailored agreement, which is why I have taken a stock agreement, and attempted to alter it so that "employees" get undisputed rights to use their work in self promotional means. That is why I have been asking for help on these fourms.

Thanks for the feedback so far everyone! I hope we can find a satisfactory solution.

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If this isn't a commercial venture then why do you need an employment contract? Simply have everyone sign a cross-licensing agreement stating that everyone else working on the project can make use of their IP for non-commercial purposes (use in their portfolio).

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Quote:
Original post by jcfinch
My requirements are:
1)Polar Bear must have control over who sees the engine code in order to prevent our code being copied in the event that we go public.

2)The programmer must be protected, in that if Polar Bear decides to go public in the future and use the existing game engine to create a fully commercial and publishable game, that the programmer will either be offered a position on the project, or will be compensated if they are not brought on. It would be unfair for others to profit off of their engine while they get nothing.


Contradicts your later statement:

Quote:
Original post by jcfinch
I have explained that it will not be possible for this project to make money once it is complete. We are making a two hour, single player demo. For there to be any actual financial rewards, we would have to put a lot more time and effort into it.


Several standard approaches:

1. all of you have full non-exclusive licenses over all the code for the demo (as was just mentioned). If you write a game on top, then the additional code needed to make the game would be private as per whatever contracts you sign for that stage.

2. you work really hard to decide upon a fair percentage of shares that each person will get in return for fulfilling their work. If you are correct that nothing commercial ever happens, there's no problem. If something does happen, then everyone will find themselves rewarded for the work they did. You do NOT say "oh, we'll work out the percentages when we get to that point". That's the lazy way, and it's a recipe for disaster, since if you cannot agree in the future, someone is probably going to get screwed - and in many cases, it turns out that everyone loses. You need to be careful to reserve lots of shares to separately pay for work done on the game AFTER the demo - otherwise you will have deadweights who worked on the demo then just quit, sit back, and relax - waiting for you to make the full game and give them a paycheck.

3. As for 2, except that you give people shares AS IF you were writing the full game in one go, except that they FORFEIT the shares if the game goes beyond a demo and they quit before the full game is completed. So, for working on the demo they get nothing if they don't also work to make the full game a success.


In the final analysis though, I don't see any obvious reason why Polar Bear "must have control" over "who sees the code". You say this is non-commercial and you're not paying, so where do you get the moral right for any control, let alone the need for it - except, of course, for where you replace "polar bear" with "mutual decision by all those involved". Personally, IMHO the fact that you even considered claiming advanced IP rights (patents etc) over volunteered work would be enough for me never to work for you; how could I trust someone who even for a moment thought that might be reasonable?

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Quote:
Original post by Obscure
If this isn't a commercial venture then why do you need an employment contract? Simply have everyone sign a cross-licensing agreement stating that everyone else working on the project can make use of their IP for non-commercial purposes (use in their portfolio).


I was not even aware that this was a option (limited knowledge of Business Law). Thank you for pointing this out to me, as it seems like path to follow in order to protect everyone involved.

I have not yet learned how to quote multiple posts, but I would like to thank the last poster on his comment on my inconsistant statements, as well as my contract post giving Polar Bear ownership of IP. Being "greedy" is natural when you have invested such a large amount of time in a project. Sometimes it just takes a little nudge from a outside observer to regain the correct path, so thank you.

I would also like to explore the idea of splitting shares in the company (which would only be valid if the project went commercial, and the member brought it through to completion). However, again, what percentage of shares would be given to whom is a difficult question. My initial inclination would be to take average pay rates for each position in the industry, and then use them as a percentage of the whole. Do you have suggestions for alternate strategies?

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