Author: Mark Edwards, Entertainment Lawyer
Starting Your Game Company – Introduction
Starting your game company can be incredibly rewarding: you have the freedom to decide whom you work with and what you work on. On the other hand, as with starting any business, it also means that you need to think about the business of the business, which can feel overwhelming.
Edwards Creative Law has a legal package to help game companies, new and existing, to formalize their business. We can help you manage the business of the business.
Our package includes the following four elements
1. Incorporation of the business
This service includes incorporation of the business and preparation of the opening resolutions – issuing shares, electing directors, appointing officers, and passing by-laws.
Incorporating a company online simply creates an empty shell. To fill that shell and to make it functional, the initial director(s) need to create shareholders, by issuing shares. Those shareholders then need to elect new directors or re-elect the initial directors, to manage the company. The directors then appoint officers to operate and act on behalf of the company. Together, the shareholders and directors need to pass the by-laws that set out the detailed processes by which the company will be governed, managed and operated.
2. Intellectual property transfer or license agreement
These agreements are to ensure your IP is transferred or licensed to the business, which is where you need it to be. View related blog
3. Employment and independent contractor (freelancer) agreements
These agreements are for each employee and freelancer. View related blog.
From the inception of the game idea to the final delivered game, your company must gather IP rights from everyone involved. This ensures that your company has a complete chain of title — an unbroken series of documents that prove that your company owns or controls all the IP rights in the game.
A complete chain of title is important to your potential business partners. From investors to distributors, your partners want to know that all rights have been accounted for. This provides certainty. Neither you nor your partners want someone coming out of the woodwork claiming they own rights that were never assigned and demanding more money for their contributions to your game.
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In both Canada and the US, IP created by employees while on the job is owned by the employer, but IP created by freelancers is not. Ensuring that your game company owns the work of its freelancers is critical. In addition to the legal rights to the IP in your game, you need a waiver of moral rights (this applies to both employees and freelancers). Canadian law recognizes two types of moral rights of creators in their original works: a right of attribution (to be associated with the work by name or pseudonym, or to remain anonymous); and a right to the integrity of the work (to prevent changes to or uses of the work that would harm the reputation of its creator). Moral rights cannot be assigned but can be “waived” (i.e., a promise that they will not be enforced) in whole or in part. An assignment of intellectual property does not on its own establish a waiver of the creator’s moral rights, and without a waiver your game company may be prevented from making any changes to their IP – which is critical when developing a game.
4. Shareholders’ Agreement
Unless you are the only shareholder, or you and the other “owners” of the business are completely happy with the “bare-bones” provisions of the business corporations act under which the company is incorporated, you will want a Shareholders’ Agreement. A Shareholders’ Agreement defines who the directors are and which of the shareholders and/or directors have authority to make which decisions; deals with changes of shareholders or their situations; defines how shares can be sold or transferred; and defines a process for resolving disputes, without destroying the company.
If you have any questions or need any guidance with the legal issues involved in starting a game company, please give us a call. We are happy to help!
Check out our related Blog Posts:
Neighbouring Rights in Canada – Being a Musician is a Business
Setting up a Music Publishing Company in Canada
Copyright Protection & Classical Music
Work Made for Hire Explained
10 Co-Production Considerations in Canada – Ask an Entertainment Lawyer
Film Profits & Points – Ask an Entertainment Lawyer
The “Just Trust Me” Legal Agreement
Learn more about our Services:
Film & Television
Interactive Digital Media
Legal Support Services
Updated to November 18,2021
Edwards Creative Law is Canada’s Entertainment Law Boutique™, providing legal services to Canadians, and international clients who partner with Canadians, in the Music, Film & Television, Animation, Interactive Digital Media, Game, Publishing and Software industries.
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.