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INTERVIEW WITH: Patrick Sweeney, Esq., (guest blogger from IE Law Group)

Patrick Sweeney is one of the leading attorneys in the video game industry, having served both as in-house and external counsel to a variety of companies in his career. In the Q&A below, Patrick shares with our readers his thoughts on current game industry trends and their implications. He also sheds light on some of the most common issues faced by game developers.

Q (Tracy Liang): You used to work at Paramount and Vivendi Games. What were your roles then, and how have those experiences influenced you as a video game attorney?

A (Patrick Sweeney): Paramount was my first job out of law school. I was in charge of drafting license agreements for the distribution of syndicated television shows in local markets throughout the U.S. I handled about 1,000 licenses per year, and the exposure to that volume of deals at an early stage of my career was a great experience. After that, I moved on to Vivendi, where I was an in-house attorney for about five years. That position gave me my first experience in games. I handled everything there from regional distribution deals and OEM to my first development deals and film licenses. It was a really rewarding time.

Q: Can you share with us some of the exciting projects that you recently worked on?

A: Sure. Last fall, I was involved in the sale of Double Helix Studios to Amazon. Around that same time, I represented Lionsgate in the licensing of The Hunger Games to Kabam for the title The Hunger Games: Panem Rising. More recently, I worked with Dave Jaffe on his new game for Sony, Drawn to Death, through his new studio, Bartlet Jones Supernatural Detective Agency.

Q: How has the rise of mobile and other non-console based platforms impacted your clients and the deals?

A: My clients have been impacted in a variety of ways. They are looking at different ways to bring their vision to market besides the “traditional” publisher funding. Each deal now is truly different, whether it is co-funded, externally funded, etc. The deals are still somewhat similar, but the funding adds a different element to each party’s return on their investment. And, of course, there is a lot more thought put into the post-launch live-services side of the development.

Q: What do you think of crowd funding in the video game industry?

A: A lot of my clients have had a great success through crowd funding. Companies like Cryptozoic with Hex and Double Fine with many of their titles have really done well with crowd funding. At the end of the day, I’m a proponent of any mechanism that gets great content to the players.

Q: What are you seeing as far as publishers signing exclusivity agreements with console manufacturers? Are these deals getting rarer nowadays or the opposite?

A: I think there will always be opportunities for that, whether it be for a short window of time, some console-specific content or full exclusivity. But I don’t see the third-party publishers doing that too regularly.

Q: What are some new opportunities to exploit video game ancillary rights, and what are some of the challenges?

A: I have a client (RVCKVS) that is doing great with merchandise, collector’s editions of games, etc. There’s always going to be an opportunity for ancillary rights in that fashion, even if it is only for the big franchises.

Q: What are some common types of agreements between game developers and publishers? Are certain types of agreements more complicated than the others?

A: They really are all different these days. It used to be that most deals were standard work-for-hire, software development agreements. Due to the fact that 100 percent of the development funding is not always coming from the publishers, the deal will be much more creative and interesting from my perspective. Ownership of the game’s intellectual property and more importantly, ownership of the customer, are much more open for negotiation.

Q: Can you share any advice or general guidelines in negotiating milestone payments in game development contracts?

A: As much as possible, be clear on what the deliverable is so that everyone’s expectations are aligned. I’ve seen too many publishers and developers disagree on that simply because they were not on the same page at the outset.

Q: What is the typical range of profit-share or royalty-share percentages in distribution deals and publishing deals?

A: There really is no “typical” any more. I’ve seen splits all across the spectrum. I’m not trying to be coy about that, but it really depends on so many factors now.

Q: With the emergence of crowd-funding mechanism as well as the growth of low-cost mobile games, it is more common for developers to retain intellectual property rights to video games. What strategies would you recommend for game developers to secure appropriate IP rights?

A: I usually sit down with my clients and try to prioritize their goals. IP ownership may be important in some situations but not as important as other points. But in other situations, retaining ownership is far more achievable. You really have to look at the totality of the deal, including your alternatives. I agree with you that developer retention of IP is more common now than 10 years ago, but it is not necessarily the “new norm.”

Q: As more and more developers are pursuing self-publishing, what issues should self-published developers pay attention to?

A: Great question! Self-publishing brings up a lot of internal resource issues that many developers never had to consider in a work-for-hire scenario. IP protection, privacy policies, marketing and UA costs, and planning and budgeting for live ops are just a few examples.

Q: When should a developer consider filing for patent, trademark and/or copyright protection?

A: Developers should be considering IP protection as early as possible in development. That’s not always feasible, but it should be discussed with your IP attorney, even if the ultimate decision is to wait until the game is closer to launch.

Q: What are things to keep in mind concerning the licensing of intellectual properties for uses in video games?

A: At a high level, it’s a cost-benefit analysis. Is this brand going to drive enough players/consumers to my game beyond the cost of the license? But really, it’s more about the creative side. Does the license help you tell a great story or make the game you really want to make? If it does, there’s a deal there. Licensors see that vision and that passion most of the time.

Q: Since a lot of the video game deals are done with international business partners, have you encountered any contract disputes caused by misinterpretation of translated contracts? What is the best practice for drafting multilingual contracts?

A: I wouldn’t say that problem is unique to international deals. I work with companies from about 15 different countries, and for each of them, expectations need to be aligned as much as possible. But that being said, most of the agreements are in a contractually agreed-upon language and have a defined jurisdiction for the governing law in any dispute. Regardless of the contract, it’s more important to ensure that there is a business-level “meeting of the minds” that occurs. Most of the game companies I have dealt with around the world are sophisticated enough that there hasn’t been too much of a problem.

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About Patrick Sweeney (guest blogger from I.E. Law Group):

Patrick has over 15 years of experience in the games industry, spanning hundreds of game releases and more than 50 major motion pictures and television properties. In 2013 Patrick established the Interactive Entertainment Law Group, a law firm that specializes in representing companies and individuals in the video game / app / interactive media sector. Previously, Patrick headed the video game practice for Reed Smith LLP and helped to grow the practice into the largest game-specific legal team in North America. In addition, Patrick is a member of Manatt Digital Media’s team, an Adjunct Professor at Southwestern Law School, a founding member of the Video Game Bar Association and a member of the Advisory Board for Interactive Entertainment Professionals.

You can follow him on Twitter: @IELawGroup or @PSweeney99.

About Chenxi “Tracy” Liang (Royalty and Compliance auditor at Green Hasson Janks):

Tracy has over three years of experience in entertainment accounting and forensic investigations. She specializes in contract compliance and royalty audits on behalf of clients in film and television, music, video games, live entertainment and licensing industries. Tracy has also provided consulting services in entertainment litigation matters. Prior to joining Green Hasson Janks, Tracy worked as a royalty auditor at Hurewitz, Boschan & Co., LLP.

Tracy Liang
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Tracy Liang

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Chenxi “Tracy” Liang, CPA, has over seven years of experience in contract compliance audits and forensic investigations. She specializes in performing audits of the production and distribution of motion picture and television programs on behalf of investors and third-party participants, as well as…Learn More