If you are wondering if you should consult a Video Game Law Firm before selling a game, the answer is an emphatic “yes.” If you need a Video Game Attorney, call us at Revision Legal at 231-714-0100 or 855-473-8474. Here are some reasons why it is essential to hire a Video Game Lawyer before you sell a video game that you have developed.

To begin, let’s look at the Sales/Purchase Agreement that you will be expected to sign. From there, it is easy to see how the legal issues “spin out” and why you need a video game lawyer at many earlier stages in developing your video game. In the Sale/Purchase Agreement, there will be a section called “Representations and Warranties.” In this section, you — the seller — will be asked to make representations. These are statements that you represent to be true. Further, you are warranting that the statements are true. A warranty is a form of guarantee that the statements made are true and correct. Further, it is understood — by video game lawyers, at least — that the buyer is relying on the representations and warranties. Thus, if it turns out that one or more statements are false, then the buyer can file a lawsuit alleging fraud. The buyer can seek substantial damages or can seek to have the transaction nullified and undone.

“SELLER represents and warrants that it owns or has properly licensed any and all intellectual property contained in the VIDEO GAME and that the VIDEO GAME does not infringe upon intellectual property owned or held by another, including copyright, trademark, patent, likeness, trade secret or any other intellectual property right.”

A representation and warranty of this sort are enforced by the indemnification provisions that are also contained in the Sale/Purchase Agreement. Indemnification clauses are often very long and convoluted. But, in essence, sellers are asked to “hold harmless” buyers if the buyers are sued by a third party because it turns out that a representation and warranty are false (or at least believed to be false). This “hold harmless” includes paying for attorneys’ fees if there is a threat of a lawsuit or a lawsuit filed.

So, can you sign a Sale/Purchase Agreement with this type of representation and warranty? Are you sure? Take the artwork, for example. Are you sure that all of the art in your video game is non-infringing? Who actually did the artwork? If your employees/contractors created the artwork, did they do the work for hire? Did you obtain copyright assignment agreements from them? The same questions should be asked for the story and for characters (if any) in the video game. Is there any argument that any of the characters infringe upon the rights of publicity for any natural person?

These few examples highlight the fact that dozens of legal issues are involved in the development and production of video games. Just one “spin-off” is the question of your own intellectual property. Did you take steps to legally protect and preserve your own copyrights, trademarks, and trade secrets? Are your copyrights and trademarks registered?

In summary, yes, you should hire a Video Game Law Firm before selling your video game.

Contact The Video Game Attorneys At Revision Legal For more information, contact the experienced Video Game Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

IP Due Diligence: What Buyers Will Demand

Any sophisticated buyer of a video game — whether a publisher, a private equity firm, or a strategic acquirer — will conduct intellectual property due diligence before closing a transaction. IP due diligence is a systematic review of all intellectual property assets and potential liabilities. In the video game context, due diligence will examine:

• Copyright chain of title for all game components — code, art, audio, narrative, and character designs
• Work-for-hire agreements and IP assignment agreements from all contractors and employees
• Trademark registrations for the game title, studio name, and key character names
• License agreements for third-party content — middleware, licensed music, third-party game engines
• Open-source software disclosures and compliance with open-source license obligations
• Evidence of any pending or threatened intellectual property claims against the game or its developers

A buyer who finds gaps in the IP chain of title during due diligence will either reduce the purchase price to account for the risk, require the seller to make specific representations and warranties backed by indemnification, or walk away from the deal. Addressing IP gaps before going to market is far less expensive than negotiating around them during a live transaction.

Work-for-Hire Doctrine and the Copyright Trap

Under the Copyright Act, 17 U.S.C. section 101, a work made for hire is either a work prepared by an employee within the scope of their employment (in which case the employer owns the copyright automatically) or a work specially ordered or commissioned that falls within one of nine enumerated categories AND is covered by a written agreement signed by the parties. Relevant categories for game developers include audiovisual works.

The critical risk arises with freelancers and independent contractors. A contractor who creates artwork, music, or code for a game does not automatically assign the copyright to the studio — the work-for-hire doctrine applies only if a written agreement is signed before the work begins. Without that agreement, the contractor owns the copyright and has granted only an implied license, which may not include the right to sell, sublicense, or adapt the work in a follow-on game or sequel.

Open-Source License Compliance

Many video games incorporate open-source software components — game engines, physics libraries, audio libraries, and networking tools. Permissive licenses like MIT and Apache 2.0 impose minimal obligations: generally attribution and preservation of the original copyright notice. Copyleft licenses like the GPL impose more demanding requirements: if you distribute software that incorporates GPL-licensed code, you may be required to release your own source code under the GPL as well. For a commercial game, a GPL compliance obligation could require disclosure of proprietary source code.

Before any sale, a qualified video game attorney should review all third-party software components for license compliance obligations, identify any copyleft issues, and advise on remediation strategies. Buyers will specifically ask about open-source compliance during due diligence.

Negotiating the Purchase Price and Earnout Provisions

The legal structure of the transaction — asset purchase vs. stock purchase — has significant IP implications. In an asset purchase, only the assets specifically identified in the purchase agreement are transferred. Every copyright, trademark, and domain name must be listed and properly assigned. In a stock purchase, the target company and all its assets transfer as a whole, but the buyer inherits all liabilities as well.

Many video game sale agreements include earnout provisions — additional payments contingent on the game achieving certain sales milestones after closing. A well-drafted earnout clause will define the relevant metrics clearly, establish audit rights for the seller, and specify the buyer’s obligations regarding continued promotion and distribution of the game.

The video game attorneys at Revision Legal have experience on both the buy side and sell side of video game transactions. If you are preparing to sell your game, contact us at (855) 473-8474 before you begin conversations with potential buyers.