Yes, this is a fairly standard example of payment terms between a publisher and a Video Game studio, though other setups exist. This reduces risk for the publisher.

Publishers take on a lot of risk when they invest in a Video Game in its development phase.

To mitigate the risk associated with providing an ‘advance’, the official name for these up-front lump sum payments, it’s common for publishing companies to require repayment in full before other revenue-splitting terms begin.

This way, if the worst-case scenario happens and the game is a flop, the publisher will make back as much of their investment as possible on the copies of the game that do sell.

Unfortunately, as the Video Game studio, this would leave you without a way to recoup your own costs, so beware of the risk you take on when you agree to these payment terms.

Each publishing agreement varies, but revenue sharing terms are typically tiered to benefit the developer rather than the publisher once higher sales goals have been reached.

While working with a publisher can grant you access to funds and markets that would otherwise be inaccessible or difficult to reach, there’s always one major concern: “How much revenue will I have to give up?”

Like most agreements, each publishing deal will be different. But, many publishing offers are based on a tiered payment structure, meaning that the more copies of the game that sell, the better the deal becomes for the developer. While these agreements tend to favour the publishing company while they recoup their costs, a higher sales target reached means more money for your studio

Check out our video and blog post where Amar Sidhu explores this topic in greater detail.

You’ll benefit from lower taxes, but your final sale price will likely depend on the business’ performance during the earn-out phase.

When a Purchasing Agreement involves an earn-out clause, it means that the seller will receive payment for the sale of their company based on profits over an agreed-upon timeline. The seller will typically stay with the company for a set period as the buyer takes control, helping to maintain operations, generate profits, and encourage the continued success of the brand.

How does this benefit the buyer? They have the previous owner helping to keep things running as usual, avoiding operational issues due to the transition of ownership. They also get to pay for the company purchase over time, reducing their upfront costs. Lastly, they don’t usually have to pay as much overall if the company doesn’t generate sufficient profits during the earn-out period, reducing their financial risk.

Why would a seller agree to this? It all comes down to taxes.

If payment for the company sale is received over a period of years, the overall tax implications will be softened, since the capital gains tax impact will be spread out over time.

An earn-out might be the right choice for you if you are willing to stay with the company for a few more years and want to maintain your brand’s reputation.

You’re most likely using assets you don’t hold the copyright to (typically music or sound effects.)

Unfortunately for Streamers, not all creative work can be used in your content. Recently, there’s been increasing pressure on Twitch and YouTube to remove content with copyright violations, and they’ve been working hard to eliminate the unauthorized use of copyrighted assets on their platform. While you may have gotten away with using popular music or audio clips in your streams previously, it is highly recommended that you change up your strategy to avoid video removal, account suspension, or legal action.

Check the streaming platform’s Community Guidelines to be sure that your game (or its content) is not specifically disallowed. Only stream your original gameplay to avoid a takedown.

There are a few games rated “Adults Only” that you can’t stream due to their content, as well as a list of what can and can’t be included in a game’s content (e.g. sexual content, hate speech, etc.).

Otherwise, you are likely fine to stream your favourite video games, as long as you record your own original gameplay, and avoid infringing on anyone else’s copyrights. A good practice is to check the game developer or publisher’s website as well, in case they have any specific rules about how you can use their video game in your streaming content (especially if your game of choice is by Nintendo or your stream is monetized).

If you can afford the high price tag, the answer is likely yes. Franchised leagues often have dedicated fanbases and offer stability in case of poor performance. However, there are significant legal implications to consider:

Fees and royalties: The league will likely collect a portion of any income you make outside of regular tournament earnings (e.g. sponsorships, merchandise, etc.). Be sure that you review your agreement carefully so you fully understand how much they will take.

Decision-making freedom: The league will probably have control over certain aspects of operations that would otherwise be left to management. Ensure that all stakeholders understand and approve of any loss of control associated with the franchise before signing.

League charters: In addition to operational constraints, the league may implement rules about team management and player conduct. Make sure that your brand and players are the right fit for the league before agreeing to uphold regulations that might cause internal conflict within the team.

The answer to this question depends on the type of IP protection you are referring to.

Copyrights: Once you hold a Canadian copyright, even if it isn’t registered, your IP is automatically protected in each of the 181 Berne Convention member countries. This is the easiest type of IP protection to manage in foreign countries. 

Trademarks: To protect your Trademarks overseas, you must apply for registration in the country you wish to do business in. You can apply in each country individually, or in up to 124 countries at once under the Madrid System. The Madrid System is administered by the World Intellectual Property Organization (WIPO), and is meant to reduce costs and simplify the process for those who wish to do business in many different regions.

Patents: Much like Trademarks, to protect your Patent you will need to apply for a Patent in each country that you want to expand to. Similarly, you can apply in multiple countries at once under the Patent Cooperation Treaty, also managed by WIPO.

Regardless of the type of Intellectual Property you are trying to protect, make sure to do your research before bringing your IP to a foreign country. Check that your desired Trademark or Patent isn’t already in use, and make sure you understand how IP laws and enforcement work before expanding across borders. 

Your Intellectual Property is vital to the success of your Video Game studio. Because IP law is complex in nature, and procedures and regulations vary by region, it’s easy to find yourself in a bind while trying to safeguard your work. Talk to a Video Game Lawyer for expert guidance as you navigate the laws surrounding Intellectual Property abroad.

Yes, you can register a Trademark to protect a recognizable catchphrase in relation to its use for commercial purposes (with some exceptions). Others will not be able to use the catchphrase for commercial purposes.

Remember, a Trademark will only apply to your catchphrase when it’s being used for commercial purposes, meaning that someone is making money off of a piece of work containing your catchphrase. The Trademark won’t protect your catchphrase from everyday use.

There is no governing body that monitors the use of Trademarks, so you will be responsible for catching Trademark infringements yourself.

Some exceptions to the typical Trademark protections include common phrases that are general in nature, though due to nuances in the field of Intellectual Property law, it’s still possible to have common phrases Trademarked for specific purposes. The complexities of IP law make it extremely beneficial to work with a Video Game Lawyer when protecting your work.

If it’s unregistered, you can still apply for the trademark, though the other party may file an opposition within a certain timeframe.

You can check to see if the party with the trademark is a registered holder in the Canadian Trademarks Database (https://www.ic.gc.ca/app/opic-cipo/trdmrks/srch/home). If it is, you, unfortunately won’t be able to use the trademark.

Yes. Your licensing agreement can include territorial restrictions, which only permits the licensee to have rights in the stated region.

What is the benefit of this? In some cases, you may find it easier to enter foreign markets by licensing your video game to a local representative. The licensee may also have more insight into the tastes and preferences of the local gamers, helping you to adjust your marketing strategy as needed and increasing your likelihood of success in that area.

Your customer list might be considered a Trade Secret if it contains information not readily available to the public, holds economic value, and reasonable steps were taken to keep it secret.

Information not readily available to the public: This includes additional information about your customers, such as their spending habits, products purchased, decision-making power at their company, etc.

Economic value: Your Trade Secrets hold economic value if you gain a competitive advantage over others in your industry who don’t have access to said information.

Keeping the information secret: Protective actions such as limiting access to customer data, password protection, non-disclosure agreements, and confidentiality clauses in employment agreements show that you treat this information as a secret.

Depending on your Employment Agreement, your employer may have the rights to a game created during your employment or made with company assets.

Common clauses for video game developers include:

• Allowing employees to publish their own games only if they are free to the end-user.
• Allowing employees to publish games that were not created using company resources, including equipment AND knowledge acquired during their employment.
• Disallowing employees to publish their own games at all.