Unit 13 - Understanding the games industry Assignment 3 Task 1 - Contracts of Employment
A contract is a legally binding agreement between two or more parties, this could be a developing or publishing company to it's employees if it's an employment contract. They are usually written but could be simply spoken or implied. They generally have something to do with employment, tenancy and sales or a lease.
An employment contract is a purpose to set forth any terms of the employment. In an employment contract things that could be included are the amount of hours you are asked to work, how much of a holiday time period you are given to use, whether any sick leave would be paid, would you get paid time off if a family member is ill and you have to look after them, could your boss demand you to work overtime, if you would be able to make games outside of working hours for yourself. However, the main clauses that are most likely to be included are any benefits that come with the role you take on. These include things that work well in your favour like health insurance, pension, holiday, bonuses, the amount you are paid, sometimes this could include stock options and royalties are very rarely covered. Confidentiality is another one which states what information can and cannot be disclosed, this is very much like patient confidentiality in the NHS. This could concern plans for future game releases, as well as, any techniques the company use etc. They also state what could happen if you do share any secrets or information you shouldn't to the press or other competitors. There are commonly clauses about inventions which generally states that anything you design or create is then owned by the company you work for. In the gaming industry you are most likely going to have any games or technology you produce outside possessed by them. They may or may not even release the game or create the idea but it's still classed as their property. Lastly, there will probably be another clause stating what would happen if you left the company but looked for another job in the same industry. This is called the non-competing clause but is most likely used for higher level employees stopping them from going to a competing company for quite some time to avoid trade secrets being shared. Here is a link to things that must be included in an employment contract: http://www.compactlaw.co.uk/employment-contracts.html
A development agreement is a contract that states all terms of a development deal, if you're the boss
of a development company, it's your job to care about this. After the first paragraph, which spells out the names of the contracting companies and their addresses, there is then an introduction paragraph. The Terms is the part of the agreement that says what amount the publisher will pay the developer, the time-frame the developer is given to start and finish the development of the game and if they will be given any royalties from the game and what the royalty rate may be. The obligations that each party in the relationship have are spelled out here. The Ownership part states whether the developer or publisher own the IP (Intellectual Property) of the game or if neither do in the case of a game based on a licensed IP, for instance. It all could also be split between the roles like the publisher could own the game, the developer could own the source code and a licensor could own the IP. The Warranties is where the developing company must swear not to use anyone else source code and the publisher must swear it has the right to ask the developer to create this particular game. This is so each company doesn't get in trouble for something the other one did. If a lawsuit was to happen, the actions that will be taken are stated. The Termination part of the contract is where various things are stated that might happen to cause the deal to terminate before the project is fully developed and published. It also so states what might happen if such an early ending occurs. The Legal Details are often at the end of a contract and involve a lot of technical stuff about determining what happens about disagreements and other things. Appendices are a lot of the important details of the contract that are added on at the end. The most important of these are the milestones and payment schedule, the game design document itself is attached as a appendix, how the royalties are going to be calculated, the confidentiality agreements which are signed by each member of the development company and ownership of the IP is signed over to whoever its applied to.
A License Agreement is what would happen if a publisher wants to make a game out of a movie or something. The owner of the movie IP and the publisher would execute a contract that states the
terms of the license out. Unless you're either a producer or a biz dev guy, you probably won't see many license agreements. If you are working on a licensed game then any work you do is guided by the terms of the license. What's being licensed is how the contract spells out exactly what the publisher is getting the rights to use. This could be the characters, story elements, names, visuals, sound effects and music from the film. What the license can be used for usually specifies that the publisher only has the rights to create it for PlayStation 4 and Xbox One, if the publisher want to expand the platform to Vita and 3DS they would have to pay more. The Territory in the contract specifies what part of the world the game can be published in depending on what rights the publisher has. They will often want worldwide rights of course but, the licensors will charge more for that. The usual territories that are given publishing rights are North America, Japan, Europe, Australia/Southeast Asia and South America. The Term is how long the contract will run for as it probably won't run forever. Most publishers lose their interest in a game product after 3 - 5 years so most license agreements only run for no more than 5 years. The Finance states how much the publisher must pay for the license. There is usually an up-front payment, called a guarantee, and royalties based on sales. This is sometimes either a per-unit amount or a percent-of-sales amount. There may be other terms to the agreement including what would happen if the publisher didn't finish the game or if the licensed property fails at the box office.
NDA (Non-Disclosure Agreements), Disclosure Agreements and Confidentiality Agreements let one party, in order to do business with another, must let a secret known to the other party. This would most likely be some sort of plan to create a new particular game, or a new technology or process/step for creating games or a business that has not yet been announced to the public or press. The other party agrees to not disclose the information entrusted in their party otherwise damage will be done to the original party. If such an event as the information is shared, the second party will be taken to court by the first party. Some NDAs are scarier to sign and agree to than others because of how much detail can be put into one. Some will fully specify that the party that breached the agreement must pay for any legal fees as well as the addition of any damage done in case someone from one party betrayed the other party completely. The reason that any actions taken against the second party are so dire is because of the amount of things left at stake to go wrong. Either company could lose a lot of money if they aren't careful enough and their reputation could go majorly down (not only to the public but to any other parties looking for someone else to create a NDA with).
A Collaboration Agreement is used within indie or hobby projects. It sets forth how a project is managed and controlled, who owns the IP, how the game is intended to be used, how any possible income will be handled and the termination of the project is to be governed. A lot of people are creating these games and it's pretty crucial to have an agreement that covers all issues of ownership and compensation that are important in the creation of games that exist outside of the mainstream industry. These games may or may not ever create any income. With the majority of hobby and indie project being a flop, the blame can only be put onto the huge factors of failure led by who owns what, who's supposed to do what and who's going to get what out of the project along the way and at the end. Many things should be included like Distribution of Rights, Identification of the Parties and Jurisdiction, Venue, and Choice of Law etc. Here is an article by game attorney Mona Ibrahim including everything you should and would want to include in a Collaboration Agreement: http://www.sloperama.com/advice/article58.htm
References:
https://arstechnica.com/civis/viewtopic.php?f=25&t=357571
http://hsunit13.blogspot.co.uk/2012/05/contractual-legal-ethical-and.html
http://www.compactlaw.co.uk/employment-contracts.html
http://abunit13.blogspot.co.uk/2013/09/task-6-contractual-legal-ethical-and.html
An employment contract is a purpose to set forth any terms of the employment. In an employment contract things that could be included are the amount of hours you are asked to work, how much of a holiday time period you are given to use, whether any sick leave would be paid, would you get paid time off if a family member is ill and you have to look after them, could your boss demand you to work overtime, if you would be able to make games outside of working hours for yourself. However, the main clauses that are most likely to be included are any benefits that come with the role you take on. These include things that work well in your favour like health insurance, pension, holiday, bonuses, the amount you are paid, sometimes this could include stock options and royalties are very rarely covered. Confidentiality is another one which states what information can and cannot be disclosed, this is very much like patient confidentiality in the NHS. This could concern plans for future game releases, as well as, any techniques the company use etc. They also state what could happen if you do share any secrets or information you shouldn't to the press or other competitors. There are commonly clauses about inventions which generally states that anything you design or create is then owned by the company you work for. In the gaming industry you are most likely going to have any games or technology you produce outside possessed by them. They may or may not even release the game or create the idea but it's still classed as their property. Lastly, there will probably be another clause stating what would happen if you left the company but looked for another job in the same industry. This is called the non-competing clause but is most likely used for higher level employees stopping them from going to a competing company for quite some time to avoid trade secrets being shared. Here is a link to things that must be included in an employment contract: http://www.compactlaw.co.uk/employment-contracts.html
A development agreement is a contract that states all terms of a development deal, if you're the boss of a development company, it's your job to care about this. After the first paragraph, which spells out the names of the contracting companies and their addresses, there is then an introduction paragraph. The Terms is the part of the agreement that says what amount the publisher will pay the developer, the time-frame the developer is given to start and finish the development of the game and if they will be given any royalties from the game and what the royalty rate may be. The obligations that each party in the relationship have are spelled out here. The Ownership part states whether the developer or publisher own the IP (Intellectual Property) of the game or if neither do in the case of a game based on a licensed IP, for instance. It all could also be split between the roles like the publisher could own the game, the developer could own the source code and a licensor could own the IP. The Warranties is where the developing company must swear not to use anyone else source code and the publisher must swear it has the right to ask the developer to create this particular game. This is so each company doesn't get in trouble for something the other one did. If a lawsuit was to happen, the actions that will be taken are stated. The Termination part of the contract is where various things are stated that might happen to cause the deal to terminate before the project is fully developed and published. It also so states what might happen if such an early ending occurs. The Legal Details are often at the end of a contract and involve a lot of technical stuff about determining what happens about disagreements and other things. Appendices are a lot of the important details of the contract that are added on at the end. The most important of these are the milestones and payment schedule, the game design document itself is attached as a appendix, how the royalties are going to be calculated, the confidentiality agreements which are signed by each member of the development company and ownership of the IP is signed over to whoever its applied to.
A License Agreement is what would happen if a publisher wants to make a game out of a movie or something. The owner of the movie IP and the publisher would execute a contract that states the terms of the license out. Unless you're either a producer or a biz dev guy, you probably won't see many license agreements. If you are working on a licensed game then any work you do is guided by the terms of the license. What's being licensed is how the contract spells out exactly what the publisher is getting the rights to use. This could be the characters, story elements, names, visuals, sound effects and music from the film. What the license can be used for usually specifies that the publisher only has the rights to create it for PlayStation 4 and Xbox One, if the publisher want to expand the platform to Vita and 3DS they would have to pay more. The Territory in the contract specifies what part of the world the game can be published in depending on what rights the publisher has. They will often want worldwide rights of course but, the licensors will charge more for that. The usual territories that are given publishing rights are North America, Japan, Europe, Australia/Southeast Asia and South America. The Term is how long the contract will run for as it probably won't run forever. Most publishers lose their interest in a game product after 3 - 5 years so most license agreements only run for no more than 5 years. The Finance states how much the publisher must pay for the license. There is usually an up-front payment, called a guarantee, and royalties based on sales. This is sometimes either a per-unit amount or a percent-of-sales amount. There may be other terms to the agreement including what would happen if the publisher didn't finish the game or if the licensed property fails at the box office.
References:
https://arstechnica.com/civis/viewtopic.php?f=25&t=357571
http://hsunit13.blogspot.co.uk/2012/05/contractual-legal-ethical-and.html
http://www.compactlaw.co.uk/employment-contracts.html
http://abunit13.blogspot.co.uk/2013/09/task-6-contractual-legal-ethical-and.html
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