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2010 presentation to game developers at SXSW on when and why they need legal counsel. The goal was to make attendees better consumers of legal services by introducing them to major legal concepts. Topics addressed include key areas where legal counsel are essential: HR, M&A, licensing, funding, open source, EULA, TOS, transactions, contracts and IP. The presentation also covers how to find, evaluate and retain good legal counsel for the issue at hand.
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Game Developers Need Lawyers: When and Why
Frank Coppersmith VP, Finance & AdministraAon Challenge Online Games, Inc.
. . . And When They Don’t!
About Me Frank Coppersmith is Vice President, Finance and Administra1on for
Challenge Online Games, Inc. In this posiAon, he serves as a senior member of the execuAve team overseeing the company's financial and human resources operaAons, and providing legal counsel to the board of directors and senior management on a wide variety of strategic issues. Prior to joining Challenge Games, Mr. Coppersmith served as general counsel to Toppan Photomasks, Inc. (formerly DuPont Photomasks, Inc.), a globally-‐operaAng supplier of semiconductor materials. Prior to his promoAon to general counsel at Toppan, Mr. Coppersmith had served as deputy general counsel, plant producAon manager and customer service manager.
Mr. Coppersmith has also served in a variety of roles with the US Air Force,
including tours as counsel to NATO and deployments to Iraq and Qatar. Mr. Coppersmith is the president for the AusAn Chapter of the AssociaAon of Corporate Counsel for 2010.
Mr. Coppersmith earned a bachelor's degree in Electrical Engineering from the
Citadel in Charleston, SC and a law degree from Samford University in Birmingham, AL. He also holds an MBA from the Wharton School of the University of Pennsylvania with majors in Finance and OperaAons Management.
Mr. Coppersmith first began playing video games on an Atari 2600 and has an
original white box ediAon of Dungeons & Dragons.
“Microchip” Level 80 Warlock
Suramar Destruc1on Spec
Let’s get this out of the way...
Challenge Online Games, Inc.
We make engaging games for social pla1orms with high produc7on values
Images are © 2010 Challenge Online Games, Inc.; WarstormTM, Ponzi, Inc. ® and Gridiron LiveTM are the trademarks of Challenge Online Games, Inc.; All rights reserved
What is this presentaAon about? • NOT a sales pitch. . . – Spending more money on lawyers – Confusing you with legal jargon – Legal sclerosis (i.e. paralysis by legal review)
• GOAL is to make you. . . – A beber consumer of legal services – A beber client – A beber decision-‐maker for legal related issues
• HOW? – Give you the tools to idenAfy whether and when an issue or problem needs legal input
– What’s the most cost-‐effecAve way of going about it?
No crystal ball needed
Everyone Hates Lawyers • But why? – Too expensive • $300/400/500/hr? OMGWTF?
– Give confusing / contradictory advice • “On the one hand. . .but on the other. . .”
– Advice isn’t useful, helpful or acAonable • “Legal sclerosis.”
– Just slow things down • “The lawyers got involved and screwed everything up.”
Empty suit.
All of Those Complaints Are True • Why? – Didn’t set expectaAons ahead of Ame – Engaged too early or (more typically) too late – Insufficiently engaged with the client – Wrong experAse (generalist vs. specialist) – Needed fee alignment up front
Actual angry clients. . .
Legal Landscape
Li1ga1on (Land of Barbarians)
M&A Funding
Corporate Forma1on
Publishers TOS/TOU/EULA
Employment Transac1ons & Contracts
Compliance
Open Source
Licensing
Intellectual Property
Why? Worst Case: Lawsuit “LiAgaAon only happens to poorly managed, unethical companies, not a well-‐run company like mine.”
• DistracAon and Uncertainty – 260 pleadings in 18 months – Dev vs. Engine Licensor
• LiAgator View: this is all normal ü DeposiAons ü Discovery ü DuraAon ü Costs
§ Not normal to you . . . unless you like being deposed on video
§ Comes with territory: more products, channels, customers = more likely chance of a legal dispute
DISCLAIMER: This is the only scary slide.
Borrowed from: © 2009 Henry W. Jones III
Li>ga>on is bad. Maybe not this bad.
When Do I Need a Lawyer? • Core business acAviAes – If something goes wrong, does it cripple the company?
• LiAgaAon – No alternaAve; need to stop this before it starts
– “Bet the company” stakes • Highly specialized info – Patent filings, securiAes
• Maybe others – Depends on capabiliAes of current employees and availability of leadership team
– Time / cost tradeoff
Your lawyer has a nicer office than you. I blame “LA
Law.”
But Really, When? Misc. Topics
• Corporate FormaAon / Secretarial FuncAons – Cheap, easy to file on-‐line if simple – Not simple: stock opAon plans, divided ownership
• TOS, TOU, EULA, Privacy Policy – Don’t just d/l one; it’s worth having an expert give this a once over
every Ame your business operaAons change. • “Standard Agreements”
– Good to get a stable of typical NDAs, consulAng agreements, invoice templates, employment agreements, IP assignment, etc.
– Many affordable choices – Pay now or pay later
• Intellectual Property – Trademarks / copyrights are “do it yourself” (www.uspto.gov) – Patents are another maber – must have specialist legal support
• M&A, VC Funding, IPO – Who are you kidding? Get the best you can afford
What privacy policy?
When? Employees • Employees
– You can’t build games without employees – BUT: employees can represent the greatest legal exposure your company faces
– FMLA, discriminaAon, wage & hour – numerous pitalls for the unwary; compliance training is a must!
– Good news: employment law is a commodity and priced as such; lots of flexibility and availability
– Get support early (employment agreements, invenAon assignment, confidenAality of trade secrets) and oXen (discipline, terminaAon)
– Want to go it alone? www.dol.gov/elaws
Q: Which employee is going to sue you? A: Trick ques>on: all of them!
When? Contracts • Contracts are the lifeblood of any business • Must do:
– What are the deliverables on both sides? – When are these due? – How much do we get paid / or do we pay? – What happens if we fail? – How / when can we terminate? – Who owns the IP? Who owns the deliverable? – Who owns derivaAves? – If we disagree, how is it handled (e.g. ADR)? – Dis-‐incenAvize liAgaAon.
• No such thing as a “standard” agreement – But not every agreement merits legal review – Use own documents as much as pracAcable – www.USLegalForms.com
• Get legal support to establish a set of agreements; review of key documents (such as those with publishers, IP rights holders, engine licensors, etc.)
Claiming the salamander ate the contract won’t help.
How Do I Find the Right Lawyer? • Referral
– The absolute best way to find the right lawyer is to get a referral from someone in your space who understands your needs
• Talk to more than one – Fit is incredibly important – Ideally you want an advisor-‐counselor who understands you
• Fees on the table up front – Good lawyers won’t mind talking about it – Watch out for up front retainers
• In-‐house general counsel – Just hire your own lawyer to work for you
• Outsourced general counsel – If you don’t need a full-‐Ame in-‐house counsel
• Specialist versus generalist – IP, liAgaAon, securiAes (IPO) all require special experAse
Slightly easier than finding a unicorn
Wrap Up • Why? – Avoid catastrophic legal/business risks
• When? – Core business operaAons, areas of highly specialized knowledge, some employment mabers and contracts
• How? – Referral from industry, interview, fee discussion and experience
Big scary monster. Probably not a lawyer.
Had Enough of the Farm?
Thanks for listening!
hbp://apps.facebook.com/ponzi_inc/ hbp://apps.facebook.com/warstorm/
Credits
Frank Coppersmith VP, Finance & AdministraAon Challenge Online Games, Inc. [email protected] 512 560 7026
SubsAtuAng for. . . Henry W. Jones, III Law Office of Henry W. Jones 2002 Mountain View Road AusAn, Texas 78703 [email protected] 512 695 4673
He’s finally done talking. Party >me!
