Soapbox: About the Industry
Game Publishing & The Lawby Sandy Antunes
Soapbox: About the Industry
Game Publishing & The Lawby Sandy Antunes
Game Publishing & The Law
First, the inevitable disclaimer. I am not a lawyer, nor do I play one on TV. I'm just a business-squid with his own corporation, whose wife ran a DBA, and oh, we once were in a 2 million dollar lawsuit. So there are a few business suggestions that I can make in order to forestall or otherwise head off potential lawsuits for a start-up gaming company.
Note this column is totally biased towards US practices. Further, my maxim has always been, "Right or wrong, no one in this industry can afford the cost of a law suit". The profit margins are just too low. Hopefully this column will help you dodge a bullet or two, before they get fired. At the very least, we'll mix metaphors like they're going out of style.
With this column, moreso than any others I have yet written, I encourage people in the industry with experience to speak up in the Forum part, below, with their own experiences.
In any case, this is really a CYA (Cover Yer Ass) article, not a legal briefing. It's steps the ordinary businessperson can do when starting up a game company, to try to avoid trouble. When possible, I include URLs for supplemental/definitive information.
Think of it as an imaginary adventures...
Skip getting a Lawyer
It might seem odd for me to suggest this in a column about law, but here goes. Just to be appropriately paranoid, look up a lawyer that works in publishing, intellectual property, trademark or copyright law. You'll need them when it's time to file trademarks (at the very least). Criteria I suggest include: free initial consultation, good word-of-mouth from a colleague, able to give you an initial estimate for a simple trademark filing-- then they suggest you can do most of it on your own. Now that you've found such a critter, file them away and ignore them.
Then get an accountant...
Ditch that lawyer for now, while you form your business. You now need an accountant. Yes, ignore those who say "go to a lawyer to form your corporation". Face it, lawyers are great for some things, but to a lawyer, every case is a special case and they charge $250/hour. Whereas most business matters (such as setting up in the first place) is an accountant's bread-and-butter, at 1/4th the rate and with the accountant taking far less time to do it.
Your accountant can then also handle your taxes. Corporate taxes aren't just 'file each year', but often involve payroll issues, estimated tax payments, and a host of confusing stuff. So expect to pay your accountant to do this. It's worth it in terms of expertise purchased, time saved, and reduction of error-- and thus reduction of your legal risk.
Registering as a business (DBA vs LLC vs Corp)
First, there is DBA, "doing business as". For this, you just file with your city/state that you are doing business as "Company X". Presto, you can now accept checks as "Company X", with "Company X" simply being you (and using your SSN as a tax ID). The upside of DBA is ease of use-- one filing and then everything is just personal income. The downside? There's no legal differentiation between yourself and your company. So any legal action against "your company" is actually against you, directly-- and all your assets (house, car, kids... well, maybe not kids) are on the line. Far better to cough up $250 and incorporate yourself, to better protect your personal life. For that, there's LLCs and Corporations.
Talk to your accountant, as this differs state to state. In many states, you can form an LLC or Corporation with only 1 person. You also have the option of creating your corporation in a different state (Delaware is often popular), and your accountant can tell you the advantages and disadvantages thereof.
I do recommend you incorporate as an LLC or a Corporation because it provides some degree of legal shelter and (often) tax advantages. It does incur extra paperwork and fees, but hey, that's what you pay your accountant for!
The legal protection is, for the most part, "as long as you aren't stupid and are acting for the company's best interests, being a corporation shields your personal assets should someone sue you." It doesn't block you from criminal prosecution, and you are not totally scott free on any acts, but it is more protection than not having one.
Plus, it looks more professional, and it isn't expensive to do.
Keep Good Records
Once you are a corporation, you must keep excellent records. Even if you are the only member of the corporation-- or, rather, especially if you are the only member. This means, at a minimum, proper Bylaws, an annual meeting, and resolutions for significant actions.
Even if you're a 1-person company, you need to ensure that, first, your personal finances and your company monies never mingle. If they do, you may lose some of the legal shelter a corporation provides.
And, any purchases are clearly for the corporation, not you, and the property remains with the corporation. Put another way-- if you're buying something and you'd miss if it was gone, it's personal. If you could just hand off the item to a new employee without a backwards glance, it's corporate property. So yeah, those graphic novel purchases might seem 'corporate property', but are you willing to let them go without hesitation?
Get a Business Bank Account
These are often expensive, in startup publisher terms. Fees for balances below $1000 are common, per-check fees can exist, just having checking could have a monthly cost. Suck it up and get an account. You need this checking account so you can keep the company money entirely separate from your personal money. Otherwise, you're mingling assets and, should someone sue you, they can go after your personal stuff and totally defeat one of the big reasons to incorporate in the first place.
I found Bank of America had good terms for my corporation, your mileage may differ. You only _need_ a checking account to do business. A corporate credit card is often a free and handy way to handle expenses but do avoid actually incurring debt-- you should only use the card for convenience in tracking your cash flow.
Unique names (and domain names and trademarked names)
Now it's time to brainstorm, then invoke the mighty lawyer. We'll cover four names here: Your company name, Your trade name(s), your web/internet domain name, and your trademarked names.
Your company name is 'a unique name for your corporation'. Unique generally means 'within your business category' but you don't want to limit yourself, so try to get a name that no one else has. Otherwise, you can't expand into other areas.
So try not to limit too much. "Sandy's Games" is limiting, "Sandy's Entertainment Empire" is less so, "Sandy Corp" is even broader. Thing not only of what you will do now, but areas you might expand into over the next 20 years-- everything from t-shirts to snack foods to investment might loom in your future, so don't be too narrow here.
Fortunately, you don't actually have to do business with your corporation name, so you can make it really broad. To get more focused, you can apply for trade names.
Trade names are what you do business by. These can be distinct from your corporation name (e.g. "Sandy Corp" running "Sandy's Games"). You don't _need_ to have these-- you can do business by the same name as your corporation without any additional filings. They're much like aliases for your corporation. And you can have a bunch of them (one for each 'branch' of your mega-corp, really).
Web and internet domain names are "your internet address, as close to your corporation as you can find". So many common names are taken as web addresses, it may take you a while to find a domain name that fits your corporation. It's a paradox-- you want something ubiquitous yet unique.
As long as it is reasonably close to your company, you are fairly safe from accusations of 'domain squatting' should another corporation (in the same or a different line of work) decide they want the same name.
Finally, Trademarks are things you apply for to provide extra protection for 'uniqueness'. Look up a primer on trademarks, it's a tricky subject. The short layman's version is, you can claim a Trademark on any unique product name or saying (e.g. "RPGnet[tm]" and "The Inside Scoop on Gaming[tm]").
You'll likely want to go through a lawyer for the actual filings of Registered Trademarks, which allows you to put an R on it ("RPGnet(r)"), and provides much stronger legal protection should others take it. But, all trademarks do need to be searched first-- your filing is a waste of time if someone else in a similar line of work has already claimed something similar!
Contracts often have arbitration clauses, saying "both parties agree to arbitrate before going to court". These are great to have, but don't expect it to be a cure-all. Many times, someone will sue you directly and ignore the clause because, well, they can. Heck, most suits are over differing interpretations of a contract (or whether said contract is valid), so arbitration clauses can often be lost in that debate.
For example, if you sign a deal with Sandy Corp, then Sandy goes and does the same thing you'd struck a deal, you might think this violates the contract with Sandy Corp and request arbitration. However, Sandy as a free agent might countersue you over this, skipping arbitration because he's a distinct entity.
Ugh, this stuff makes my head hurt. Anyway, arbitration is great for well-intentioned folks on both sides who have a dispute over details, and they're good to have. Just don't think they're omnipotent.
Plagiarism (in general) and Cease-and-Desist
Folks out there will steal your material. Accept that as a given. It's the how and why you need to worry about.
Many are misguided, and will 'excerpt' great gobs of your stuff or use your intellectual property (IP, i.e. the settings and stuff you've come up with, even if they aren't stealing your exact writings). They'll put it on web sites or publish it in fanzines. Time to stomp on them.
Oh, but stomp gently. Be polite, send a note saying "hi, glad you love my stuff, but it is our creation so we do need you to [remove it/get permission to use it/credit the original source]. Most violations of RPGnet "IP" have been of the clueless or unthinking. Folks see stuff on the web or in a book and just don't realize "gee, someone else owns that", so they post it or reuse it or make derivative works from it. When informed of the correct path, most people will say "Oops" and remedy the problem.
In formal terms, you're sending a cease-and-desist letter. Which is different from a cease-and-desist send by, say, a lawyer, but it _is_ nevertheless you taking a stand on the issue.
Now, if the person refuses to acknowledge your right to your own material, that's when you may have to consult with a lawyer for a more strongly worded item.
And some lawyers may say to contact them first, as you could botch the 'first contact' with the infringing person and accidentally give away the store. Which is possible, but economically, you're probably better trying the nice approach, assuming it's an honest mistake and giving them the option to correct it. Because otherwise, legal costs for trivialities can add up.
If this happens often enough, just get your lawyer to draft you a form letter 'cease and desist' so you're covered.
Now, there will be those who deliberately and knowingly violate your creative rights. They pirate the material in its entirety. Or you send a polite note and they play 'internet lawyer' (kinda like this column, hmmm...) and tell you you're wrong. Well, if that happens, you're kinda thrust into a fight. Good luck nailing them.
Conventions and Sales Tax
This is easy-- different states have different laws about how and when to collect and pay sales tax for sales at conventions in that state. So you have to do legwork to find out in advance. For well-run conventions, their staff can tell you when you register. For smaller ones, check with an accountant or do some research.
Do not assume that, if you did not find a tax law for it, that no such law exists. Keep researching until you get a solid yes/no answer.
Home-as-office and Tax deductions
If you work from home, it's often tempting to deduct some of your home as being your office and therefore a corporate expense. Check with your accountant on this, but this has two problems.
First, the office must be a totally separate space that is 100% used for work. So if your PC is there and you also let your kids play video games on it, well, that's not 100% corporate property then, and you might fail during an audit on that.
Second, it's a pain. Do you really want your home office to be considered a corporate asset, if you get sued? If it isn't totally distinct, just don't declare it corporate property.
For example, for my corporation, I use my office but do not declare it, because I also do my classwork and my recreational gaming from that room. I did declare my main PC, because it was bought with corporate funds and only does corporation-related things. For gaming and for writing, I use my other PC. So in theory, a malicious IRS officer could confiscate my main PC and investigate and find out, why yes, it's purely corporate.
Keep things separated-- that applies to money, to gear, and to office space.
Internet law, judges, and self-help
Judges, in general, do not understand the web. When they were appointed to office, it probably did not exist. So try to avoid a case that relies on an internet-specific nuance. Far better that your case be based on standard business issues-- tangible property, contracts, that sort of thing. As soon as you have to explain why a DNS change to a domain which Internic shows is yours does not count as breaking-and-entering, you're already in trouble.
One virtue of the US justice system is that it has actual people making decisions, not just a set of inflexible rules. But that's also the dangerous part of it-- there's a single individual ultimately ruling on most civil (as opposed to criminal) matters. While there are checks and balances overall, it's very costly to bring things all the way to trial.
See, in practice, anytime you go to court, your odds of winning are-- at best, if everything is in your favor-- 50/50. Really. If the judge didn't get his Wheaties that morning or thinks you look too much like his lousy brother-in-law, the best lawyer in the world can't save you.
Therefore, try to settle out of court. That doesn't mean "don't go to court"-- filing is often a good way to 'up the ante' and make the other party realize you mean business. But following the case through to completion is _expensive_, so be pragmatic in what you'll settle for. Your lawyer, of course, will help here.
If you have to go to court, federal judges are often a bit more ahead on the technological curve, ergo, getting your case move to federal court might help. That requires, in most cases, that it involve commerce over state boundaries or trademark issues. You're already consulting with your lawyer if it's gone to this point.
Oh, and 'self-help' is when you take action into your own hands. An example would be if there was a dispute over who owned a car, and while that dispute was going on, you went over and stole the car. Even if you are later proven as the owner, you've engaged in self-help, rather than letting the court resolve things. Judges hate that. Unfortunately, in the internet world, 'self-help' can get murky. Is it self-help if you block the IP address of a pirate warez site? Who knows, alas, this is why net-saavy lawyers are needed.
The Golden Rule
A lot of times, people argue over whether something is legal or not. If you have to argue that, you're already in trouble. The real issue should be, is it good _business_ or not. (Heck, it took Guy McLimore to teach me that bit, it's not as obvious as it looks!)
Business concerns include the public relations value of an incident, the economic cost in pursuing it, and the economic position that the decision leaves you in. For example, say you want to run a convention called GenConn, for "General event in Connecticut".
Legally, you could debate whether that violates GenCon[tm]'s trademark or not. You could wait for Peter Adkison to sue you. Or you could look at the business case. In this case, would the name confuse your customers? Well, duh, yes. Does the name give you any benefits? Let's see, either they're confused, or they realize it's different. If it's different, it could be _any_ different name (like ConnCon), since you're branding from scratch. So there's no point in having a potentially violating name, since it's not giving you any advantage, it's opening you to legal risk, and you risk negative PR if people start to make an issue of it.
So if you see a potential legal risk, first look at the business case before proceeding with the risky behavior.
And in turn, don't immediately hire a lawyer (or threaten to do so) just because you think there's a conflict out there. Talk first. Talk is cheap, and can work wonders. Compromise makes good economic sense.
And just as you'd like the chance to explain and understand a possible problem before getting sicced on by pit bulls, hey, that other party probably wants the same. Similarly, issues phrased in business terms are often easier to work out than those in legal terms. Compare:
"Hi, I think our company names are similar and customers will get confused. As I have a lot of ads out already for my Satanic Nymphos game, I thought I'd warn you that this might make things tricky for your new Christian Science RPG. Let's check who filed first, and maybe we can figure something out. I'd hate for us to confuse our different customer bases!"
... or ...
"Dusty Corp sounds like Sandy Corp, you're ripping off my name, I'm calling my lawyer!"
The answer, by the way, to anyone who tells you they're calling their lawyer, is to reply (calmly): "Fine. Here's my lawyer's address, once he gets your lawyer's correspondence he'll reply." [Another good reason to have a lawyer, even if you don't expect to use him.] See, the "I'll sic a lawyer on you" is, for many people, a bluff. If you call it, and don't seem phased, they'll often go away.
Only in a column about lawyers would the "Golden Rule" section be full of tips on bluffing. Oh well, business is not a wholesome world, but that's no reason for you to engage in bad behavior.
Really, business is like mating. It's pretty clear that doping a student to unconsciousness so you can sleep with him/her is wrong, and that sleeping with your spouse is right. Then there's the grey area, say, slipping off your wedding ring before heading to GTS in Vegas-- some would say that's your choice, others would call it wrong. Is mating just a matter of propagating genes, is business just a matter of making money?
Well, duh, no. If you just want to make money, you shouldn't be in the game business-- you want to play cutthroat, play for real stakes. Obviously there are other factors. Work enjoyment is one. Creating good works is another. And being able to sleep at night is a third. "All's fair in business" is a pretty short-sighted way to live in this industry.
Either way, it's _your_ choice, and you should apply your own ethical standards, even if you think other people are 'getting away' with stuff by relaxing theirs. In the end, you choose your own path, and you prosper with it. If you're not having fun, you're in the wrong business.