Going Indie: legal considerations when leaving a game studio to form a new one
With the independence day holiday this month, there has been a lot of discussion of revolt and rebellion. One of the biggest acts of rebellion for an employee at an established game studio is quitting to start a new studio.
A soon-to-be indie developer should carefully review employment agreements with their current company.
These agreements are not always called “employment agreements” and relate to more than just the scope of work for the current employer. They might be labeled:
- Offer letter
- Proprietary information agreement
- Invention assignment agreement
- Confidentiality agreement
- Non-compete agreement
- Business protection agreement
- Something generic like “terms and conditions” or
- Anything similar to any of the above.
Each of these may contain restrictions on the types of activities the developer can undertake both during their employment and after.
The developer should check to see what preparatory activities they can do without inadvertently breaching their agreements or creating an interest for the employer in the new venture. They should never work on the new venture on the company’s time or equipment or in the company’s office. They should never use the company’s proprietary information to build their business.
Next, the developer should check what obligations will survive their separation from their job. They should carefully review non-compete and non-solicit obligations. These kinds of restrictive provisions vary in their scope and enforceability.
Once the developer is fairly sure they can work on a plan and will be able to execute it without issues with their employer, they should plan well before pulling the trigger to quit.
Developers should keep tabs on those nonsolicit provisions when making new hires and make sure they refrain from referencing materials or using code, assets or anything else from prior employers.
After that, it’s a new adventure. We’ve written before about the steps to form a new business and the ten steps an organization should follow.
We aren’t here to provide business, financial or marketing advice – but we do recommend that all new businesses consider professional support including a lawyer and an accountant. A smart founder knows when to invest the time and resources into developing a skillset, and when to hire someone else who already has it.
To use a game analogy: an AAA artist might be akin to a sorcerer, using their innate talent and refined skills to produce incredible results. But, without a tank and a healer, the sorcerer might not survive long on their own. Knowing what you don’t know can be critical to success.
Then, plan for success from the beginning. Organizing for diligence and putting processes and systems in place are key to ensuring that when the indie company grows, new challenges are surmountable.