The video game market is booming. Whether it is personal gaming, competitive gaming, or the streaming of the former and the latter, the video game market is definitely one of the winners of the Covid-19 shut downs. This increase has also increased investors’ interest in the gaming world. Because I’m always thinking about the creators, this post is targeted at early stage game developers who are building their game and brand. Below I will highlight what game developers need to know about the intersection of video games and intellectual property to increase your company’s valuation. The goal is to give you enough information so that you can hold on to the total value of what you’re developing so that you are in a better position come deal time. Let’s start with copyright.
Video Games x Copyright
Copyright: a right connected to an original work of authorship fixed in a tangible medium of expression(think books, paintings, songs, video games; NOT ideas or thoughts).
Most relevant to you, you can also obtain a copyright in individual graphics, storylines, and the underlying code that make up your video game. Most important to you, you should absolutely register your copyrights (for only $65 as of this article!) in the video game, its graphics, storylines, and underlying code. The reason being, is that when investors look to purchase your video game, what they are purchasing for the most part are all the copyrights. And the more copyright ownership you can show them, with ownership registered to the seller(you or your company), the higher your valuation. The reason why having copyright ownership registered with the U.S Copyright Office increases your valuation, is because the Buyer does not have to worry about threats of infringement and will not have to include registering the copyrights themselves after sale into their budget. Copyrighting as much as you can as it relates to your game, lowers the issues raised in due diligence and increases your game’s value. This will set you up for an easier and more profitable sale.
Video Games x Trade Secrets
Trade Secret: commercially valuable information that is kept secret(by the way, most creators and business owners lose trade secret rights, not because the information is not valuable, it is because they don’t know how to keep and prove that they kept the information a secret).
If you use specific coding, graphic or design techniques that set you apart from other game developers, keep that information secret. You prove that you have kept that information secret by having employees, partners, consultants, and independent contractors sign confidentiality agreements. Another way to prove secrecy is by encrypting and restricting access to certain information. There should be a trail of secrecy, encryption, and NDA’s that lead to your trade secrets. Having documented secrecy ensures buyers that your secret sauce has not lost its value because someone blabbed. Again, this makes the value of your whole operation increase.
Take Away:
Think about IP ownership as you develop your games. These mostly administrative updates in your practice can yield huge dividends at deal time. So keep developing, keep copyrighting, and keep it secret.
THIS IS NOT LEGAL ADVICE, THIS IS JUST INFORMATION. I AM NOT YOUR ATTORNEY. GO GET AN ATTORNEY.