Legal Considerations and Challenges

[Segev]

Or "Paradise City?" Or even "Paradice" for the punny misspelling? (We ARE gamers...)



Yeah, foolish to think you can duplicate WoW's base; they have that many players; you're mostly fighting Blizzard for that audience! If you want to tap an "untapped vein," you have to find a genre with a big following who don't play MMOs but who would enjoy one if their genre were represented.

CoH won't tap untapped veins, but it's got its miners in the richest of the superhero fan ore. ...and that metaphor is more than stretched enough, I think. c_c

[TimtheEnchanter]

Or "Paradise City?" Or even "Paradice" for the punny misspelling? (We ARE gamers...)

Paradigm?

Yeah, foolish to think you can duplicate WoW's base; they have that many players; you're mostly fighting Blizzard for that audience! If you want to tap an "untapped vein," you have to find a genre with a big following who don't play MMOs but who would enjoy one if their genre were represented.

CoH won't tap untapped veins, but it's got its miners in the richest of the superhero fan ore. ...and that metaphor is more than stretched enough, I think. c_c

Ore... lore... take your pick. Our miners will dwarf the competition, and the gamers will dig what we do. And the precious gems we find, will be both yours and mine. As for those 'other' superhero games, consider them bound for the Scrapyard.

[jbazzrea1]

Having owned a small business, and having dismantled it later...

Based on experience, I would say that a Corporation is the best way to go...I formed an LLC, but then, I was the only investor...so the interests of any other's stake were zero.

Here's why I think this would work best:

As an LLC, or a Corporation, there are limitations to liabilities as previously stated...however, by having the players own stock in the company, we can control who the executive officers are and the company's direction.

Annual stockholder meetings conducted by most publically traded companies also allow all shareholders to convene with the executives that operate the company, and the board of directors.  So you can essentially deal directly with them if you don't like their direction.

This does not have to be set up like a large company, but it could be if so desired.  The number of officers required varies based on the needs of the company.

Furthermore, each stockholder could still contribute to subscriptions and transactions as they would normally...but these shareholders would be entitled to dividends on profits earned quarterly.  This means if the game does extremely well, and continues to earn money, you will get money back in your pocket based on the provided dividends agreement with the company.

This will require an attorney to setup...however, I incorporated my business in an LLC for about $1100.00 in the state of Texas.  That figure may change by going to a corporation, and depending on the complicated nature of what we are wanting this entity to be, it could be as much as $10,000.00 for all I know...I haven't done research into this aspect yet, but it could be done.

Another hurdle to consider as well, is what location we want the corporation to be in, as some states provide tax advantages...(such as TX and NV having no state income tax for citizens or companies).

Company names are generally fairly easily found, and "reserving" one is a little more complicated...you would have to actually incorporate a business under that name to keep it from being taken by another company who is willing to pay the state to start that company.  Note here: Not all company names are taken in all states...for example...Joe Q. Public's Jet Ski Company in Oregon, does not mean that the name Joe Q. Public's Jet Ski Company is a taken name in any other state, unless that company has registered their name in that state officially...(likely under a DBA agreement or some other corporate action in that state...which is another matter entirely)

The next thing to consider...is how many shares are we selling and for what price?  The sales of shares will actually generate the startup capital, and so a kickstarter wouldn't be needed, although...we should be leary of this, as we do not necessarily want a large number of these shares to go to a competitor, or someone who could potentially gain 51% control of our company...so there should be some calculated strategy there to ensure that this does not necessarily happen.

On another note, the set share price is another thing to consider, in the IPA, you'll want to set a share price so that once the given number of shares to be sold have been sold, then you will have the requisite capital secured to continue your investment strategy and conduct your business...

All food for thought...

[Victoria Victrix]

If all this hypothetical stuff is referring to Plan Z, I think maybe it would be a good idea to ask the talent--ie, the coders and writers--what they want.

[SithRose]

If all this hypothetical stuff is referring to Plan Z, I think maybe it would be a good idea to ask the talent--ie, the coders and writers--what they want.

So far the general impression I've gotten is that we want to have a pool of potential names (for studio, game title, and city name) vetted by an IP lawyer, then presented to the community for a vote. :) The general consensus seems to be that we want to have Titan in there *somewhere*. There's a Phase 2 Planning thread in the Sunset forum that's addressing these subjects specifically right now.

[Olantern]

Here are some posts from a thread where a poster (Sailboat, mentioned below) posted about the possibilities inherent in trusts and Section 501 entities.  This can also serve as my weighing in on the recent spate of "nonprofit or not" posts in this thread.

My First Post (on Section 501/Nonprofits):

Okay, as usual, this is not intended as legal advice.  While Section 501 is not my area of specialty, I do specialize in dealing with the Internal Revenue Code of which it's a part, and I've dealt extensively with trusts (often sham trusts, unfortunately) in a litigation context.

There are two interesting issues raised by this thread.  First, there's the issue of having the IP owned by a nonprofit entity.  While there's been back and forth on this, in my view, many expressing interest in nonprofits are simply acting from a kneejerk hostility to the idea of "profit" and other buzzwords usually associated with corporate culture, which many around here are using to conceptualize an enemy.  (I'm not saying that's what's happening in this thread, mind you.)  But "nonprofit" and "for profit" are really issues of recordkeeping and business (entity) purpose.

In legal terms, a nonprofit is an entity organized under Section 501 of the Internal Revenue Code.  Provided it meets the requirements of that section and the regulations promulgated by the IRS, the entity doesn't have to pay tax on its income.  The statute requires that in order to be exempt from tax, the entity has to fall into one of several categories, listed in 501(c).  These include the well-known 501(c)(3), entities "for ... charitable ... purposes," as well as things like labor unions (501(c)(5)), "clubs organized for recreation ((c)(7)), and over twenty others.  It's very difficult for something like an organization to develop and run an MMO to fit into one of these categories.  Courts and the IRS construe them pretty narrowly.

The regulations require extensive recordkeeping, particularly for 501(c)(3)'s, and the penalty for violating them is revocation of tax-exempt status.  It's very easy to violate them in a variety of ways.  (See the "Legal Considerations" thread for some discussion of this by someone who's worked with exempt organizations.)

Put another way, the only reason to operate as a Section 501 organization is to gain that exemption from income tax.  That's it; that's all.  Notice that there's no requirement that only section 501 organizations can operate for "charitable purposes."  Nor does being a for-profit entity mean the entity is solely concerned with profit at the expense of everything else.

What I think Sailboat's really trying to get at is that having the IP owned by a corporation isn't necessarily the best option if the idea is to keep the game running indefinitely.  This really sounds more like an argument for setting up an MMO as a co-op or some kind of corporate structure (not yet seen in the MMO world, to my knowledge) where players and only players are the shareholders.  See "Legal Considerations" for more on this.  (I should add that another is to have no one own the game at all and simply have everything given away free, which some people over in City Sunset have suggested.  This may or may not be viable, but it isn't the same as "a nonprofit.")

This brings us to the second point.  What is a trust, and what does that mean for an MMO?  I think I'll write that up as a separate post; be back shortly with more on that.

My Second Post (on Trusts):

So, trusts.

Trusts have been around a long time in the law.  The easiest way to think of a trust is to think back to the metaphor of property rights as a bundle of sticks.  In a trust, one person or entity gets the "benefits of the property" sticks, and another gets the "duties of ownership" sticks.  The one getting the benefits is the "beneficiary" of the trust, and the one with the duties is the "trustee."  The person who gives up the property to start up the trust is the "trustor" or "grantor" or the "settlor" (which always sounded like a Masters of the Universe character to me).  People (or entities) create trusts when they want someone to enjoy the benefits of something without enjoying all the rights (like something put in trust for a minor child) to it or all the burdens associated with it (like someone using a trust in estate planning to alter the tax effects of transactions).

Here's a simple example.  Jessica, owner of a stock portfolio that pays a lot of dividends, wants to provide for her minor child, Megan.  She wants Megan to get the dividends but doesn't want Megan to be able to sell the stock until Megan is adult and can make better financial decisions.  So she asks their friend Ray* to serve as trustee.  She signs the stock portfolio over with a "deed of trust," and the stock is held in the name of "Raymond Keyes, in trust for Megan Duncan."  Megan enjoys the benefits of ownership, such as the dividends, while Ray handles things like voting the proxies that stock owners get and the like.  As trustee, he's also responsible for maintaining the property for Megan.  In this case, that means that he can't sell it, and he also has the obligation to forward those dividends on Megan as he receives them.  In real cases, as Sailboat implied, the position of trustee is often (but not always) held by something like a bank or (rarely these days) a law firm.

Apropos of my previous posts, some trusts do qualify as nonprofit entities under Section 501 of the Internal Revenue Code.  However, the IRS keeps a very close eye on this.  (I know because I used to handle cases for the government where taxpayers abused trust structures.)  For instance, say Dean MacArthur, pursued by creditors who want his fabulous collection of ascots and other assets, decides to put his property beyond the reach of his creditors using a trust.  He conveys everything he owns to the Dean-O Trust Organization, Inc., as trustee for the benefit of Dean MacArthur.  Dean himself, of course, is the main officer of Dean-O.  In a case like that, creditors, including the IRS, can bring a lawsuit against Dean to get the property held by Dean-O applied to Dean's debts.  (This kind of situation is called "fraudulent conveyance" because Dean's transfer to the trust was a sham.)  The thing to take away from this is that in a legitimate trust, benefits and ownership (i.e., the trustee) have to be kept separate, or courts can disregard them, and the IRS will disregard them for tax purposes.  That last point means that even if Dean puts in the Dean-O trust documents that Dean-O is organized for charitable purposes and thus exempt from tax, the Service can still go after it as a taxable entity and deny its Section 501 status.

Now, we're finally ready to address Sailboat's thoughts.  If I'm reading the OP correctly, it suggests that NCSoft's primary concern is to avoid competition by CoH with its other games, leading it to avoid selling the IP to prevent a new competitor from arising.  (Personally, I don't believe that was the root problem with the sale to Formerly Paragon, but I'll assume it's correct here.)  Could a trust set-up of some kind solve this?

I don't think it could.  The same results could be achieved more simply with other legal mechanisms.  But I want to make sure I'm thinking through the proposed scenario correctly.  We have NCSoft as the trustor, a (nonprofit? for-profit? doesn't matter for this purpose) entity as the trustee, and, as the beneficiary ... I'm not real clear.  Players?  As I've pointed out elsewhere, "the players" as such don't have any legal existence.  The subscribers?  I've never heard of a trust entity that holds property "in trust for whoever pays X fee," but that doesn't make it illegitimate.  That idea sounds legally workable, at least in theory.

The problem comes with formation of the trust itself.  While the specifics aren't spelled out anywhere, I've got to assume the trust entity would be formed and administered by people with an interest in keeping CoH alive.  In other words, players, probably subscribers.  Again, we run into the Dean and Dean-O situation.  There's no separation between beneficiary and trustee, so the trust is likely to be declared not legitimate, at least for tax purposes.  Note that this isn't much of an issue if the trust organization isn't trying to operate as a Section 501 organization.

It's possible to preserve the spirit of Sailboat's suggestion through simpler devices.  As I've mentioned elsewhere, NCSoft, as the sole holder of IP rights in CoH, can sell or keep whatever rights it wants.  It could choose to sell limited rights in such a way as to prevent competition.  For instance, it could grant whoever's managing the servers (the trustee, some kind of player-created entity) a nonexclusive license to operate an MMO based on the property, nontransferable and revocable at will.  Here, basically, you have the trustee and the trust set-up, but without the beneficiary.  This can be done without the mechanism of trustee and beneficiary or the bookkeeping and other limits of Section 501.  Heck, any profits the licensee makes could be donated to charity, even if it isn't a Section 501 organization.

So, while I think there are some issues with the specifics and the legal issues here, I think the ideas proposed in the OP have some possibilities.

The problem, as always, is getting NCSoft to agree.

* I was going to use Synapse as the trustee, then thought better of it.

A follow-up post by Kheprera:

I cannot say much due to disclosure (*waves at the nice TIGTA** people*) but there are links posted in the Legal Considerations thread.  These links are on the public irs.gov website and contain plenty of information.

To me, and IANAA, running an MMO as a non-profit would be extremely difficult to justify.

**[Treasury Inspector General for Tax Administration, the government unit that monitors the IRS.  An IRS attorney once told me that a TIGTA rep made a special trip to their field office just to go through everyone's reports and books to see if they'd used the forbidden term "tax protestor."- Olantern]

[Enson Red Shirt]

gotta say i love being treated as if i know nothing i have discussed the issues with the game and how it could run things people seem to forget is that this would be a multi national corp or non profit as there are plenty of people in europe who play as for funding and how to get a company on the stock markets i know a thing or two

DoctorEvil@evilincorporated.us
chrischristierson@evilincorporated.eu
chrischristierson@evilincorporated.us
http://www.theofficialboard.com/bio/platmin/chris-von-christierson
http://www.forbes.com/profile/chris-von-christierson/
http://investing.businessweek.com/research/stocks/people/person.asp?personId=1161055&ticker=GFI:SJ&previousCapId=881155&previousTitle=FIRST%20QUANTUM%20MINERALS%20LTD

[Olantern]

Hi, all.  I have been busy with real life stuff that past week and a half and haven't been able to keep up with this thread to the extent I'd like, but I have been monitoring the boards.

In the interest of trying to keep this thread a general clearinghouse for law-related information, we've seen a fair amount of discussion of EULA's and the obligations of publishers lately.

In this thread (http://www.cohtitan.com/forum/index.php/topic,5688.0.html), Sekoia noted that the terms of the CoH EULA allow NCSoft to shut down the service for "any reason or no reason at all."  While the thread quickly moves into a discussion of how heavily business should be regulated (really more a political and philosophical discussion than a legal one), several posters also weigh in on what they think a proper player-publisher contract ought to contain.  That thread sparked this one (http://www.cohtitan.com/forum/index.php/topic,5724.0.html), where elvinnsword (sorry if I misspelled your name, elv.) raises the possibility of an "MMO player's bill of rights."  This could mean an actual change in the law or simply a change in how EULA's are written.  Again, much of the discussion is political rather than legal, but the issue is interesting, regardless.

I have some thoughts on EULA's and the obligations of the parties to them myself, which I'll post here when I've had a chance to get my thoughts in order.  For now, I wanted to make sure everyone was aware of the existing posts.

For those specifically interested in Plan Z, the effort to develop an entirely new MMO to succeed CoH, there's also been a fair amount of "law-like stuff" going on in the City Sunset forum, particularly "Legal and Such" (which might more aptly be titled "Business and Legal," but you get the point).

Finally, I'd like to take this opportunity to point out, once again, that none of my posts on the Titan Network are meant to imply an attorney-client relationship with any entity or person.  If you need legal advice, consult an attorney with expertise in the relevant field.

[Olantern]

I just posted this in a thread about ownership structures for Plan Z.  The issues it raises have more general relevance for anyone involved in the Titan Forums, though, so I thought it belonged here, too.  (It also touches on the same issues that have come up recently in the Save Paragon forum regarding what, if anything, an MMO player owns with respect to the game.)  You can find the OP in the "Funding, Ownership, and the Future" thread in "Legal and Such" in the City Sunset forum.

***

[Previous posts by others had raised the possibility of issuing new stock to each subscriber to an MMO.]

Stock ownership, the issuance of stock, and related matters are all heavily, heavily regulated, mostly by the Securities and Exchange Commission.  SEC regulations prescribe limits for when stock can be issued, how it can be issued, and how many investors different kinds of corporations can have.  Notably, they also control what rights and classifications can be attached to stock, such as whether corporations of a particular kind can issue both preferred and common stock.  (That last bit is especially important if one doesn't want new investors involved in certain aspects of governance or wants to influence who, if anyone, gets dividends.)  These regulations are also updated fairly frequently.

That paragraph almost exhausts my knowledge of SEC regulation, so I can't offer much more information here.  This (and the whole subject of this thread) is the sort of thing you discuss with a transactional attorney when you're setting up your business.

Aside from the legal problems, there are practical problems with a simple "subscription=ownership" model, at least if the business is a corporation of one kind or another.  (If the business is a cooperative, that's probably exactly the model to use, but cooperatives bring their own problems, such as an essentially democratic control structure.  Do you really want everyone you've seen posting on this board having a potential say in all the business's actions?)  First, as someone already stated, a corporation can't constantly issue new stock for legal reasons; it dilutes existing shareholders' shares.  But it also isn't practical from a "control of the corporation" standpoint.  If Plan Z, inc., starts out as a closely held corporation (in a factual, not the legal, sense) with ten or twenty shareholders, then issues new stock, even single shares, to the thousands of subscribers, there's suddenly an immense block of the corporation, all of which may have rights in the business, which that "close" group no longer controls.  In some cases, you may want that, but in others, it's a serious practical problem.

As a more general point, don't forget that ownership and control also potentially equal "liability."  If the business is a corporation and it's sued, every shareholder is liable up to the value of his or her stock.  If there's  a big judgment against Plan Z, Inc., say, by a Korean outfit who notices that the secret world takeover organization "Elba" is similar enough to "Malta" to justify a copyright suit, that's a lot of people who end up paying into the pot.  (And given what I've seen in other fora around here, those people are likely to be angry about paying for something they don't consider their fault, quite apart from anything law-related.  This is why liability is such a critical concern.)

So much for the "ownership" part; what about "control?"  Being an administrator of the business might subject you to liability if, for whatever reason, the business itself can't pay.  There are several mechanisms in the law that provide for this, essentially to prevent injuries from going uncompensated when a business vanishes, collapses, or otherwise ceases to exist.

For instance, one tax statute allows the IRS to go after "responsible persons" connected to a corporation that has failed to pay withholding taxes.  Whether a person is "responsible" is "a matter of duty, status, and authority," as one court put it.  That "status" can include status as an officer, director, or shareholder.  It's a highly factual inquiry, and the more you control with respect to a business, the more likely liability is to lie, which perhaps should be a concern to those heavily involved with administering Plan Z.  (You can bet some unlucky first-year associate or government trial attorney would be stuck reading through everything ever posted on the Plan Z fora in the event Plan Z, Inc. were sued.)

I say all this not to intimidate people, but to let you know that ownership and control are a big, big deal.  Further, it's a big, big deal full of traps for the unwary.  Or even the wary, sometimes.

***

[I also included this, on a totally different (and more fun) subject.]

In a totally unrelated matter, if you want to learn more about legal issues generally, I suggest picking up the recently released The Law of Superheroes, by James Daily and Ryan Davidson.  (No, I did not write this book, though I sort of wish I had.)  Written for a nonattorney reader, it applies real legal doctrines to various superheroic situations, dealing with issues like "Is the Joker legally insane?" (Answer: Probably not), "Does Superman violate the 4th Amendment when he looks through someone's wall?" (again, probably not), and "Can Spider-Man sue J. Jonah Jameson?" (yes, but not he didn't do it right in the comics).  For purposes of general Save CoH stuff, pay particular attention to the section on contracts, notably whether Johnny Blaze's deal with Mephisto is enforceable.  For Plan Z purposes, pay particular attention to the discussion of business law.

[Olantern]

Contracts and IP Redux: EULA's and Their Terms

Introduction

There's been a lot of talk lately about EULA's.  Or, rather, there's been a lot of talk lately about how EULA's are bad.  Most of the talk has focused on provisions like that in the CoH EULA: "the service ... [may be] cancelled for any reason or no reason at all."  If you have an emotional investment in the service continuing to operate, that's a very troubling term to you.  Thus, much of the ensuing talk has dealt with ways to prevent terms like that from being included in EULA's, or at least to prevent those terms from being enforced, either through rewriting them or through development of aspirational documents, like the MMO Gamer's Bill of Rights.  (See the thread of the same name for more on the substance of that.)

I aim to deal with two sets of issues in this group of posts.  First, why does someone include a term like "shut down for no reason at all" in an EULA?  Despite some of the rhetoric I've read here recently, it certainly isn't just for the sake of being immoral or to inflict pain on people.  So why include it?  And what would happen if they couldn't, or had a term like "only shut down if the game's unprofitable" instead?

Second, what effect might a "purely aspirational" document have on someone's liability?  Public concerns, like MMO publishers, love making nebulous public statements about how wonderful they are, regardless of how much substance those statements have.  So why haven't more developers or publishers come up with purely aspirational goals, like the MMO Player's Bill of Rights mentioned above?  Again, rest assured that it isn't just to be nasty.

For you tl;dr folks, I warn you that this is a long series of posts.  (Lawyers are totally incapable of saying anything simply; the term "legal brief" is irony verging on sarcasm.)  Even then, I don't hit all the possible, relevant issues.  The best summary I can give you of the two points above is that publishers are absolutely terrified of being sued, especially for things they can't control, just like everyone else, but the issues are more complicated than that.

I also caution everyone that this isn't a one-sided "players good, publisher bad" situation.  In particular, if you're a Plan Z developer, you're the publisher.  I realize that people are angry, and they are right to be angry, but I also hope they can gain some understanding of what's going on in their adversaries' (not their enemies', take note) minds.

Part One explains what EULA's are in a legal sense.

Part Two imagines how litigation over the shutdown of an MMO might play out under various EULA terms.

Part Three details a fundamental legal (and moral) problem with certain EULA terms.

Part Four assumes an agreement that says something like, "The Publisher must keep this game operating."  If the publisher doesn't, what remedy do the players get?

Part Five deals with aspirational statements like the MMO Players' Bill of Rights that has been suggested.

Now, take a deep breath and dive into a sea of words.

[Terwyn]

As well, anyone with experience with writing business plans is politely begged to contact me.

Virtually all of the business plans I've written in the past have been done in an academic setting, so although I know how to do it, having people provide feedback on what I'm doing would be greatly appreciated. We can't afford any mistakes on this part.

[Olantern]

Contracts and IP Redux

Part One: What's an EULA, Really?

Before we get to any of the important points people have raised recently, we need to define an "EULA."  End User Licensing Agreements are not just long chains of nouns.  In our context, they are a product of the legal system's (and parties') continual struggle to fit electronic material into the boxes of copyright doctrine dating back, originally, to the days before electricity.  It's been settled for centuries that a copyright protects the holder's right in the intellectual property of a work, unless the holder specifically sells one.  However, copyright only protects the holder's right in a particular copy of a work until the holder sells that copy.  Once the copy is out of the holder's hands, the purchaser can do what he likes with it: keep it, sell it again to someone else, destroy it, what have you.  This is called the "first sale doctrine."  (He couldn't use it as the basis of a new work of his own because that infringes the original holder's right to make derivative works, though, because that right wasn't sold with the copy.  See 17 U.S.C. Section 106.)

Now, this is straightforward enough when the copies in question are things like books or records, where the buyer would need a printing press or a record factory to duplicate them.  Even if the buyer wants to infringe the holder's rights, it's going to be hard for him to do it.  But when the copyrighted material is a program that can be downloaded and copied on a home computer, every potential buyer essentially has his own printing press.  Therefore, sellers of software (not always the original rights- holders, take note) developed EULA's to make it clear to buyers that they are selling only particular rights in the material.

I'm convinced that much of the internet community's hostility to property rights in general stems from the way it understands this issue.  (Much of the rest is due to the confusing way rights holders enforce copyrights, but that's a separate post.)  Most people I know through City of Heroes or its related fora (by far the majority of my experience with online communities) believe that electronic material they purchase is more like a physical book.  I.e., they can do whatever they'd normally do with things they own, which includes anything relatively easy to do, such as duplicating it.  Restrictions on use, which are implemented as restrictions on what's sold, are viewed as irrational acts of corporate greed.

Sellers see it very differently.  For the seller, the EULA isn't an act of greed.  If you want to characterize it with a negative emotion, consider it an act of fear.  (It's a rather horrible truth that much of law is a mechanism for frightening people or entities.)  The seller is, in many cases, not the original rights holder.  Sometimes, of course, it is, as with NCSoft, which owns all Paragon's products as works for hire.  Even if it is, it doesn't know what the buyer's going to do with that copy.  What if the buyer goes out and uses it to commit a crime (unlikely with most game software) or, more likely, uses it to inflict some civil injury on someone else?

It's a commonplace of tort law (the law governing civil lawsuits for injuries) that one party can be liable to a victim for injuries caused by a third party if the first person facilitated the situation.  For instance, if I hold a party at my house, someone gets drunk there, then kills someone in an auto accident, the victim's family could sue me as well as the drunk driver.  (This is why dinner parties faded as an American social institution by the end of the '80's, which is when the case that announced this principle finished percolating through the social consciousness.)  Returning to software, it's unlikely that the buyer could use the property to hurt someone physically or to damage property.  But the idea of facilitating an injury applies if the injury is to someone's emotions (say, someone uses the software to cyberbully or stalk someone) or to a nonphysical right, like someone else's IP rights.

Consider a couple examples closer to home.  Imagine there were no EULA for CoH.  What if you create Darth Vader in CoH, violating the IP rights of those who hold the rights to Star Wars and related works?  Bringing things a bit closer to home, what if you create Skandranon Rashkae, the Black Griffon, in CoH, violating the rights of his author and illustrator to create derivative works based on the novels in which he appears?  In the first case, some combination of George Lucas, Lucasfilm, and Paramount could sue you, but they could also sue the seller for making your infringement of their rights possible.  In the second, Ms. Lackey and Mr. Dixon can sue both the infringing player and the seller who made it possible.  (I use this second example advisedly, to show how this can involve a real person.  Copyright isn't just a tool for big, corporate meanies to pick on people.  It protects works in which authors or other creators have made an actual investment of time, effort, and, often, emotion.  To put it another way, the solution to everyone's woes here is not "get rid of IP rights.")

And, in most cases, the player will be relatively poor.  The player may even be "judgment proof," which is lawyerese for "he's not worth suing because he can't afford to pay anyone."  Thus, the real target for recovery ends up being the seller.  Make no mistake, the seller is right to fear this.  This kind of lawsuit happens in the real world fairly regularly.  One well-known case involved a suit by author Harlan Ellison against a fan who posted Ellison's work on a website.  The suit against the fan was settled fairly early on, but the suit against the website, which merely facilitated the fan's infringement of Ellison's right to distribute (or refuse to distribute) his work on the internet, dragged on for some years.  Closer to home, you may remember the Marvel lawsuit against NCSoft and Cryptic from some years back.  Marvel's claims tracked what I just described almost exactly.  (Marvel lost because it failed to establish, or even allege, a critical fact: whether anyone had actually infringed its rights.  No infringement, nothing to facilitate.  Oops.)

To avoid those sorts of situations, sellers developed EULA's.  An EULA, in legal terms, is a contract that makes it really, really clear what property's being sold and what isn't.  For instance, it can establish that the ability to use the copy to infringe someone else's rights isn't being sold.  (Nearly all EULA's do this in one way or another.)  This may not be enough to stop a lawsuit for facilitating infringement dead in its tracks (notice how NCSoft didn't rely solely on the terms of the EULA in its arguments against Marvel), but it's much better than nothing.  It's one line of protection against that potential lawsuit.  In the absence of an EULA that says "no infringing use," the seller risks a lawsuit that costs money to defend even if it's totally frivolous, a lawsuit that would probably mean the loss of someone's job for letting that suit slip through.

(Legally irrelevant aside, feel free to skip:  This isn't likely to be the CEO of the seller, who knows too much about other aspects of the business to fire over this, or the partner at the law firm who billed the time for the contract (ditto).  It's more likely mean the second-year legal associate who actually wrote the EULA (who went thousands of dollars into debt to get her law degree because everyone told her "just college isn't enough any more") and her opposite number at the seller, who said, "I dunno about this law stuff.  Write something that's, you know, safe."  I think it's hard for people who haven't worked with large organizations, like businesses, governments, or universities, to realize how important it is for people to find someone to blame as a coping mechanism or to realize how serious the consequences of being the one who takes the blame can be.  If your answer to "why punish the attorney or the guy who dealt with her" is, "If you join an organization, you deserve whatever you get," then ... we have irreconcilable philosophical differences, I guess.)

So, now, we know EULA's are limits on an exchange of (intellectual) property rights.  That means they are also contracts.  With a few exceptions (transfer on death and squatting, mainly), any time you're transferring rights to property, whether it's rights in land, a physical thing, or IP, you're using a contract to do it.

Notably, EULA's are almost always "adhesion contracts."  This legal term means, essentially, that only one party, the seller, comes up with the terms.  The other party, the player, merely gets the option to take them or leave them.  We care about this because courts construe contracts of adhesion in the terms most favorable to the party who didn't draft them.  This is also important we consider the concept of unconscionability, below.

[Olantern]

Contracts and IP Redux

Part Two: What Reason for "No Reason at All?"- The Slough of Litigation

As I mentioned in an earlier post, parties can contract for nearly anything.  And that brings us (FINALLY!) to the first point I wanted to address: why and how would anyone write a contract saying, "We can shut this game down for any reason or no reason at all?"

As I discussed at unbelievable length above, a contract can specify nearly anything.  But why would anyone write the terms that way?  Allowing something to shut down for no reason seems like the height of unfairness.  Why put that in at all?  The terms here are drafted extremely broadly.  While I'm a litigator and contract drafting wasn't taught in law schools when I attended (still isn't, most places), I know enough about contracts to understand why it's drafted this way.  If a contract term is left unspecified and the parties end up in litigation over it, it's up to the court to construe the term based on what is specified in the contract.  Courts don't have unfettered discretion in doing that, but they can certainly act unpredictably and surprisingly.  The whole point of a contract is to resolve disputes ahead of time, to avoid having to bring in a judge at all.  By writing the broadest possible terms ("any reason or no reason at all"), the lawyer makes it absolutely clear that the terms of the contract cover every possible situation.

Notice, too, that the "or no reason at all" might not even be necessary.  It's hard to imagine how a game could be shut down for "no reason."  There's always a reason, even if it's as silly as "we adopted a corporate policy against the color pink and will no longer run any games that feature it."  Still, if the "no reason" clause weren't there, it opens the publisher to potential liability.   Imagine that the servers all burst into flame, the game shuts down, and someone sues, arguing he's entitled to damages because the game shut down for no reason at all.  The publisher counters with the testimony of Joe the Server Guy that "the servers burst into flames and were totally destroyed right in front of my eyes" and pictures of scorch marks on the floor, which would definitely be "a reason" to shut things down.  But in his closing argument, the player's attorney will undoubtedly argue, "Why should you believe Joe the Server Guy?  He's an NCSoft employee anyway, so he's obviously got reason to lie.  And anyone could have put the scorch marks there."

The scary thing is that the lawyer's right!  We, reading this hypothetical, know Joe's telling the truth, but all the jury has to go on is Joe's word, the scorch marks, and its common sense.  I've seen enough juries to know that common sense can work in mysterious ways; the publisher might well lose on those facts.  But if it can shut down the game for "no reason," that whole argument potentially goes away.

The example with Joe gets to another aspect of "why write it that way," and the one that really drove me to want to write this set of posts.  Like the other contract terms, "any reason or no reason at all" is a protection against liability.  I argue below that that's a good thing.  "But, Olantern," I hear someone cry, "how can you argue that this is a good thing?  Doesn't our emotional contribution to the game matter to you?"  Yes, it does.  In fact, it matters a lot.  But it doesn't matter enough to follow this road where it might potentially lead.  (You'll have to wait for Part Three to see where, but the road itself, in the next few paragraphs, is bad enough.)

Again, it's easiest to see why the "any reason or no reason" provision exists if we imagine its absence.  Say the relevant provision instead read, "The service will not be shut down unless it is unprofitable for the publisher to maintain it."  Imagine that the publisher decides that the game is unprofitable and does shut it down.  As in the real world, players miss their game and are angry.  They research the game's and publisher's finances and decide that either (1) the game actually was profitable or (2) the game could have been made profitable had the publisher moved the development offices to Topeka.  The players decide to sue and find someone who will represent them.  They sue the publisher for breach of contract, alleging the publisher breached its contract to keep the game operating, on either of the two theories I just listed.  (Multiple theories of recovery are common in lawsuits.)

The parties go into litigation, costing both sides money for lawyers.  The publisher files a motion to dismiss the case.  After some litigation, the judge says, "Motion denied.  Settle your dang case and keep my docket clear for my backlog of criminal cases, you whiny civil litigation people."  The parties go through a couple of settlement conferences, where each side says "no" until the court realizes they won't give up.  The parties go through discovery, where both sides' lawyers sift through boxes of documents about whether the game really was profitable or not.  Even if they agree on the numbers, they probably can't agree what the numbers mean, so each side also has to hire a forensic accounting firm.  (The accountants are known as "experts" in terms of the law of evidence.)  The experts on each side prepare reports and counter-reports.  The publisher prepares a motion for summary judgment, and the players prepare a cross-motion.  (Essentially, that means the parties are asking the judge to look over all the evidence and give them a decision without having to have a trial.)  The court denies both motions and repeats its demands that the parties settle.  They don't.  They go to trial, where both sets of experts testify.  The parties both put on evidence to educate the jurors about what an MMO is, how development works (from their point of view; think about what Sean McCann says on his blog versus what players on the forums used to say about development for how this'd play out), and the like.  The players put on evidence about the emotional and other damages they've suffered from the shutdown.  Sometime, a clerk actually hands the EULA contract to the judge, who finally reads it.

Assuming this is a jury case, the verdict comes relatively quickly.  If it's a bench trial, which it would have to be if the players wanted an injunction to keep the game running (more on that in a later post), it usually takes three to six months for the court to issue its opinion.  If the publisher wins, the case may be done.  If the players win, the publisher appeals.  An appeal isn't a "redo"; courts of appeals review the decisions of lower courts for legal mistakes.  If a court of appeals finds one, it often sends the case back down for the lower court to fix the legal mistake itself.  In this case, the publisher would argue on appeal that (1) there was some evidentiary problem with the evidence of whether the game was actually profitable, (2) the court below shouldn't've even considered the possibility that the game could have been kept open by moving it to Topeka, and (3) the terms of the contract are unconscionable.

Unfortunately, this parade of horribles is pretty realistic.  It's a side issue here, but I go through it in detail to show what the contract drafter is trying to avoid.  Having seen what happens in civil litigation, I can't really fault the drafter for trying to be thorough, even if that results in a contract that gives me, the player, an unsatisfying result.

[Olantern]

Contracts and IP Redux

Part Three: Terms Unfair to ... the Publisher?!

The parade of horribles is only half the story, though.  Let's play appellate court for a minute and look at the heart of the legal issues swirling around here.  It's unclear how the court of appeals would rule on (1).  I include that here mainly to show that evidence that appears conclusive to a party (i.e., is the game profitable or not) may not look the same way to a court.  (2) presents a tougher issue, but fortunately for us as readers of this hypothetical, the court's ruling on (3) would resolve it.  So, what about (3)?  Are these terms unconscionable?

You may be familiar with the idea of an unconscionable contract; the concept has gained a lot of traction in the internet world.  If you are familiar with this idea, you probably think of an unconscionable contract as "a contract that's really unfair," and if you do, you're pretty much right.  An unconscionable contract is "so one-sided that it shocks the conscience" such that only a delusional, dishonest, or unfair person would accept or offer it.  Kojovic v. Goldman, 823 N.Y.S. 35, 39 (App. Div. 2006)(highest court of New York describing New York's version of the law of unconscionability)*.  One-sided-ness is the key here.   If we accept the basic principle that you can contract for anything, we don't want the courts holding people to agreements where one party had no real choice in the matter other than to accept terms that shock the conscience.

You can see why this concept has caught on so intensely in internet communities, which tend to disfavor EULA's.  A player arguably has no choice other than to accept the terms of an EULA if he wants to use a piece of software (aside from rejecting the contract offered entirely, of course).  (This leaves out the party about shocking the conscience, but we'll leave that be.)  Because of this potential concern, EULA's don't always hold up in court.  And if a contract doesn't hold up in court, the court will construe a new contract that's more along the lines the judge believes the parties really meant to agree to (or should've agreed to, in the judge's opinion).

"But wait," I hear someone else cry, "you said the publisher can argue unconscionability!  How can a big, corporate meanie who's dictating terms do that?"  Good question.  Well, first of all, remember that in this hypothetical, the publisher isn't dictating the terms.  The parties agreed to an EULA that specified that the service will not be shut down unless it is unprofitable for the publisher to maintain it.

Second and more importantly, the term requiring the publisher to keep the game running is (at least arguably) unconscionable such that it shocks the conscience.  Why?  Because it compels the publisher to perform an act against its will.

Courts are very, very reluctant to enforce contract terms like this.  They tread far too close to contracts for involuntary servitude.  Such contracts have been viewed with suspicion in Anglo-American law since before the U.S. existed.  This issue was also the subject of a major war in the 1860's, of which you might have heard, and, perhaps most importantly, the subject of the Thirteenth Amendment to the Constitution, which prohibits "involuntary servitude" by its terms.

But if the game is still profitable (and let's assume it is, for purposes of this paragraph), how could that be involuntary servitude (and thus an unconscionable contract term) for the publisher?  An analogy works best here.  Imagine I sign an employment contract with my university to teach Federal Income Tax every semester for a salary of $5000 a semester.  The contract provides that "Olantern shall continue to teach the course so long as the university continues to pay him $5000 a semester."  If I decide that I don't want to teach the course any more, can the university force me to do so, provided it pays me $5000?  Hopefully, most readers said "no."  If I want to stop teaching and the university has already given me the money for that semester, the university gets its money back, but it can't force me to work for it, even with the contract in place.  For a court to force me to teach about taxes four days a week would probably shock most people's consciences.  Thus, the term's unconscionable and unenforceable.

The result in Players v. Publisher would probably be similar.  Even if the parties agreed that publisher would operate the game so long as it was profitable, a court won't compel the publisher to do so.  It certainly won't compel the publisher to move development to Topeka, even if that'd make the game profitable.  At most, it might compel the publisher to refund any money it's taken for future game services.

This frustrating (for the players) result isn't limited to our situation by any means.  Courts only force parties to complete contracts with things other than money in very, very limited circumstances.  Requiring a party to perform the terms of a contract as specified is called, appropriately, "specific performance."  Generally, courts only order it in cases where the contract is for the sale of land, the theory being that land is so unique that the only way to fulfill the contract's terms is to do exactly what the contract said.

That, in a nutshell, is my fundamental problem with requiring a publisher to continue operating a game, even when the circumstances look favorable to the publisher.  First, such terms probably can't be legally enforced. 

Second, even if they could be, enforcing them would be morally wrong.  This is one case where I agree with the rationales courts have given over the years.  I believe it's wrong to compel someone to perform a service against his, her, or its will, even when the someone is a big, corporate meanie.  If I wouldn't want a contract like that enforced against my friends or against me, I can hardly claim in good conscience that I want it enforced against an MMO publisher, no matter how much the publisher has torqued me off.  Frankly, the notion of requiring someone to do this frightens me a little; if we allowed it here, where would it end?

* As the 1989 classic Cvltvre Made Stvpid nicely put it, "This incomprehensible form of citation is used by lawyers to prevent people from going out and looking up the law for themselves."

[Olantern]

Contracts and IP Redux

Part Four: What Do We Get?- More Problems with Remedies

Earlier in this thread, I pointed out that players would have a problem with suing NCSoft because it would be difficult for them to show they'd suffered damages as a result of its actions.  If a publisher had included (or been forced to include) a term like "the game will not be shut down unless it becomes unprofitable" in its contract with players, then damages might be easier to show. Assuming the court doesn't care about the issues I mentioned in my last post and the players win the suit, the players might successfully argue that the publisher breached the contract.  If that's so, what might players get?

There are several kinds of contract damages.  The standard kind is called "expectation" or "expectancy" damages.  These are essentially "what the party would have received if the contract had been performed." 

Specific performance, which I mentioned in the last post, is one kind of expectation damage.  If the contract were for the sale of a piece of land, the players would get the land.  But since this is a contract for the sale of services (developing a game and running its servers), the players would get the monetary value of their end of the contract.  That is, the monetary value of game services until the point the game becomes unprofitable.  (The difficulty of calculating such damages might be another reason a court would be reluctant to enforce the contract.)  Alternatively, players might receive "reliance" damages.  Those are expenses the players incurred in reliance on the contract (duh!), or, put another way, the cost of putting things back the way they were before the contract started.  Here, the players would get refunds of the costs of their subscriptions for the period the game was shut down but still demonstrably profitable.

Finally, and particularly common in EULA's, the parties might have agreed to "liquidated" damages.  Liquidated damages are amounts of money set forth in the contract itself that one party agrees to pay the other in case of breach.  (The CoH EULA provides for liquidated damages in case of breach.)  Courts dislike liquidated damages, and they're rarely enforced, especially in adhesion contracts, like most EULA's.

One thing players could not get would be continued operation of the game. .  Aside from the basic involuntary servitude problem with the contract itself, there's a problem with getting this specific remedy.  When a court issues an order requiring a party to do or refrain from doing something, that's called an "injunction."  Here, the players would need to get an injunction to keep the game in operation.  And injunctions are hard to get.  Courts have made it that way over the years, primarily because of concerns like the ones I raised in the last post.  In order for an injunction to issue, the party seeking it has to prove, among other things, that it'd suffer irreparable harm if the injunction isn't issued.  While players might argue that they're suffering irreparable harm because nothing short of a live game can compensate them for their injury, the publisher will argue, and the court will almost certainly agree, that money damages are enough.

So, even if players could convince a publisher to include a term like, "no shutdowns unless the game becomes unprofitable," it's unlikely that such a term would force a publisher to keep a game operating.

[Olantern]

Contracts and IP Redux

Part Five: Aspirations and Implications, or, "Why Are These People Suing Me?"

So, explicit contract (EULA) terms that specify what a publisher must do have a lot of problems.  But what about aspirational statements, like a player bill of rights?  Could a publisher "safely" allow those, either by its own public statements or by acceding to players' requests for them?

It's certainly less problematic for a publisher than contracting for particular player rights.  But it still subjects publishers to risks.  Why?  And, for that matter, let's bring back our original question from the first post in this series.  Why have an EULA at all?  Again, the answer comes back to contract law.

Here, the issues revolve around the way the contract is formed rather than its terms.  In order to form a contract, you need three parts.  First, one party has to make an offer, such as Positron placing an ad in the classified ads saying, "One suit of atomic-control armor for sale, $5,000, good condition, slight wear.  Original owner only killed once.  First come, first served."  Second, there has to be an acceptance, such as Fusionette showing up with $5,000 in hand to buy the armor.

Third, there has to be consideration, which means an exchange of value.  Here, it's the $5,000 and the armor.  If Positron just gave the armor to Fusionette, there's no consideration and thus no contract, and a court wouldn't enforce the promise to make the gift.  The "value" doesn't have to be particularly valuable, though.  The parties could renegotiate so that Positron agrees to sell Fusionette the armor in exchange for a rock or an empty can of Red Beast Energy Drink, and that would be enough to furnish consideration, as well as (a new) offer and acceptance.  Consideration can even be something that benefits only one party, as in, "I, Positron, agree to sell you, Fusionette, this armor in exchange for your not running off like a crazed loon and getting yourself captured by every faction under the sun and/or mediported to New Overbrook General constantly."

Up to this post, we've been talking about written contracts, EULA's.  But, as the Fusionette/Positron example shows, a contract may be written or oral or a mixture of the two.  Sometimes, a contract doesn't even require words at all!  How can that be?

Imagine that right after the Rikti War, Paragon is in ruins, there are few heroes left, and there are wounded citizens trapped everywhere.  Paragon City offers a reward to anyone who rescues these citizens.  Hero Corp signs a contract with the city to perform the rescue work, then goes out rescuing.  Assuming Hero Corp's agents don't violate any of the contract's terms, the city must pay Hero Corp for their work.  But imagine that at the same time, Positron (who, if you've read your history plaques, you know doesn't like Hero Corp) goes out and starts rescuing people on his own.  In that case, Positron, too, could go to the city and demand that it pay him.  If it refuses to pay him, Positron could sue the city for breach of contract just as surely as Hero Corp could.  While Hero Corp accepted the offer in writing, Positron accepted it by performance.

You could even imagine a situation where both offer and acceptance are implied by performance.  If I leave a rake lying around my lawn, you rake my leaves on your own initiative, and I pay you $10 after you've done the raking, we've created an implied contract by our conduct.

What does this have to do with an MMO Player's Bill of Rights?  Well, it's possible that a court might read the terms of such a document into a player-publisher contract.  A player could argue that by furnishing a game and agreeing to the terms of the document purely by implication, those terms have become part of the player-publisher contract.  I should note that I consider this pretty far-fetched, but it isn't outside the realm of possibility.  And the mere possibility of something is enough to frighten a publisher's employees when they known their jobs are on the line if they're not careful.

For that reason, I don't think it's wise for publishers to come up with, or even explicitly agree to, things like players' bills of rights.  That's a job for players themselves.  The publisher's fear of expanded liability becomes that much more unrealistic if the publisher isn't the one inventing them or agreeing to them.  The publisher may still get sued, but it's less likely to lose the suit, rendering the whole thing much more economical for it.

By the way, most of the people discussing this issue around here seem to have gotten this point intuitively.  Many people view such a Player's Bill of Rights not as something to be enforced but as a kind of notice to potential publishers that if they don't follow its terms, players aren't likely to contract with it (i.e., buy its products).  (This has the added advantage of putting control of the whole situation in the player's hands.)

So, if there's a bottom line here, it's that I think things like bills of rights are fine, as long as they remain a player-generated endeavor.  (I might take issue with some terms of some that I've seen, but the principle is sound.)

Now, all this discussion is out the window if the "bill of rights" in question becomes a bill in the legal sense of the term.  That is, if someone convinces Congress to pass a law stating that MMO publishers must operate in a certain way, we're dealing with a completely different area of the law.  If something like that were to happen, the terms of the bill of rights couldn't be so easily brushed off by publishers, and players might well have legal claims against publishers who violate them.  Personally, as a player, I consider this a Bad Idea.  Unlike a purely aspirational document, this could subject enough publishers to enough liability that they either stop publishing or write EULA's in such draconian terms that playing games becomes difficult.  (The MMO market might return in another form after a new set of publishers figures out ways to live with or work around the law, but I'm not sure I'd want to wait the time for the former or be a player in the world of the latter.)

As a practical matter, Congress is fairly unlikely to get involved in this kind of thing.  It rarely dirties its hands with the specifics of regulating industries.  Instead, it leaves this sort of thing to administrative agencies, parts of the Executive Branch that do the actual work of applying the laws, often through making regulations.  (The SEC, mentioned a few posts ago, is one example.)  I'm not certain which agency would be the appropriate one to deal with this issue- the FCC?  An agency more concerned with commerce? ... Perhaps you have a theory of your own?

[Segev]

While I understand the need for agencies that are supposed to enforce rules being given the power to create the specific regulations, it has honestly gotten way out of hand just how broad that regulatory power really is. Knowing modern Congresses of the last decade or two, they'd probably pass the "Players' Bill of Rights" with terminology such that a new regulatory commission to "protect the rights of the players to expect return on their investment of time and emotion and money" with the broad statement that the specifics of what those expectations can legally be and what methods of redress are available being "as the Director of [new agency] shall determine." Effectively saying "we like this idea; we empower the Executive branch to make the actual law. And change it at will."

[Codewalker]

I can't argue with your conclusions Olantern, though the terminology is a little off. I attribute that partly to the fact that the City of Heroes license agreement seriously confused the terms as well.

Most of what you're discussing would be traditionally covered by a Terms of Service agreement (TOS), not a EULA. For some reason I can't fathom, the NCSoft lawyers decided to make a document which consists mostly of their TOS, combine it with a few EULA-like sections covering the client software, package the whole thing up and title it "End User License Agreement".

TOS agreements cover the recurring service provided from one party to another. These have been around for ages and are well accepted. It's no different than the contract on your cell phone, or a lease agreement on an apartment.

Terms of Service includes what are acceptable uses of the service. This is the part that would say, "you cannot use our service for X," and covers the Darth Vader example above. Most TOS agreements include restrictions against using the service for illegal activities, including copyright infringement. Now that may seem a little silly, since those activities are against the law anyway, but it's mostly done for liability reasons -- so they can point to that clause and say, "No sir, we were not facilitating or contributing to this activity. We explicitly prohibit it, see?"

And yes, most TOS agreements do include the "termination of your account for any reason" clause. It's typically done for CYA reasons, and individuals signing them don't really get a choice about it. A large corporate client may have enough pull to negotiate a different arrangement, but big deals typically involve some back and forth on the contract anyway.

EULAs are a different beast entirely. The End User License Agreement is the source of the whole "this software is licensed, not sold" argument. In the case of an online game, it would cover the client software that you either download or buy in the store, but would not cover the service itself or the online aspects. In the absence of a EULA, standard copyright law applies. The only thing copyright law prevents you from doing is making copies. The book analogy is actually rather apt in that case -- you can read it, resell it, burn it, do whatever you want to it except photocopy it (or otherwise duplicate the contents).

So why do EULAs exist and how can they possibly be enforced? The main argument I've seen is that in order to run a computer program, a temporary copy of it must be made in memory (ref: Blizzard v. Glider). As ridiculous as that sounds, it's the primary "in" for abusing copyright law to restrict use rather than just distribution. The argument goes, even though you bought the disc, you can't actually run it without breaking copyright law, that's why you need a license. And as long as they're licensing it, they might as well set some terms in which they're willing to license it to you, preferably favorable ones for them.

The big question is of course what do the courts say about it. There's not just a whole ton of case law on the subject, which is one of the reasons it's a gray area, but there is some. So far it's been hit or miss. Some courts have bought into the "software is licensed" argument. Others have rejected it and said, "No, this is clearly a sale, you can't enforce any restrictions post-sale -- standard copyright law applies." Things like online activation, software updates, and downloadable content further muddy the waters. It really is uncharted territory when it comes to MMOs.

So keep that firmly in mind. The above is one of the main reasons that most open-source licenses don't mention use at all other than the standard liability disclaimers; because duplicating and distributing the program is the only part you actually need a license for. However the content and media industry is pushing hard to change that, as proposed laws like the mostly-shot-down UCITA have shown.

[Olantern]

Thanks for the clarification there.  (As I've mentioned before, IP and even contracts are not my area of specialty.)

[Codewalker]

Sure. I Am Not An IP Lawyer (TM), though I have done a fair bit of research of the subject. So if you see something that looks wrong or needs clarification please do so. :)