At some point in the video game space, game developers, content creators, esports players, other creatives, and virtually any other stakeholder who is in front of a camera or creating something that goes on screen, will enter into an agreement that licenses their content or their name, image, and likeness. Understanding the key terms around how a creator is licensing their rights is critical to protecting those rights and ensuring a creator receives fair compensation for work.
Licenses are typically accompanied by a laundry list of terms: limited, non-exclusive, revocable, non-sublicensable, non-transferable, royalty free, throughout the United States, during the Term, etc., etc. Each of these terms has a different application and understanding these terms will help creators know how they’re licensing their content or name, image, and likeness, or other intellectual property. Also, while this article will examine terms specific to licenses, this article does not look at all the other legal provisions that might appear in a licensing agreement as a whole.
One final note on terminology: the person or entity granting the license (the content creator, developer, player, etc.) is typically called a licensor, while the person or entity receiving the license (an advertiser, publisher, esports team, etc.) is typically called a licensee.
A perpetual license versus a limited term license: A perpetual license grants the licensee the right to use the licensed material indefinitely, while a limited term license restricts the licensee’s use of the licensed material to a specific period of time. For example, a video game developer might grant a perpetual license to use their game to a customer who has purchased it, while also offering limited term licenses for a demo of the game.
The geographic scope of the license (throughout a particular country versus throughout a continent versus throughout the universe or something else): The geographic scope of a license specifies where the licensee is permitted to use the licensed material. For example, a video game developer might grant a license for a video game to be distributed by one publisher in North America and Europe but another publisher in Asia. Sometimes licenses will also limit the platform. For example, a content creator might allow for a sponsor to only use promotional content on certain social media platforms.
A limited license versus an unlimited license: A limited license restricts the licensee’s use of the licensed material in some way, such as by limiting the duration or geographic scope, as described above, but also in some cases by limiting the purposes for which the licensed material may be used. An unlimited license typically allows the licensee to use the material in any way they see fit, subject to any other restrictions in the agreement. For example, a content creator might grant a limited license for a sponsor to use certain content in a specific marketing campaign, while retaining an unlimited license to use the content in other ways.
An exclusive license versus a non-exclusive license: An exclusive license grants the licensee the sole right to use the licensed material, to the exclusion of all others (including the licensor – no one else is allowed to use it except for the licensee). In contrast, a non-exclusive license allows the licensor to grant similar licenses to others. For example, a content creator might grant an exclusive license to a sponsor to use certain content for promotional services, while granting only a non-exclusive license to use the content creator’s name, image, and likeness.
A revocable license versus an irrevocable license: A revocable license can be terminated or revoked by the licensor under certain conditions while an irrevocable license cannot be terminated or revoked once it has been granted. For example, a music publisher might grant a revocable license to use a particular song in a film, but reserve the right to revoke the license if the film is not completed within a specified timeframe. A person appearing on a TV show would likely give an irrevocable license to a producer to use that person’s appearance on the TV show.
A royalty-free license versus a license that accrues a royalty: A royalty-free license allows the licensee to use the licensed material without paying any ongoing fees or royalties. In contrast, a license that accrues a royalty requires the licensee to pay the licensor a fee or royalty based on the licensee’s use of the material. For example, a stock photo agency might offer royalty-free licenses for some of their images, while requiring a royalty for other images. Royalties often apply to the resale of the licensed material.
A sublicensable license versus a non-sublicensable license: Sort of like a sublease of an apartment, a sublicensable license allows the licensee to grant sublicenses to others, allowing those sublicensees to use the licensed material as well. A non-sublicensable license prohibits the licensee from granting sublicenses. For example, an esports player might grant a sublicensable license to their name, image, and likeness to an esports team, who in turn might sublicense that right to team sponsors, allowing for promotional content of that sponsor using the esports player’s name, image, and likeness.
A transferable license versus a non-transferable license: A transferable license allows the licensee to transfer their rights to use the licensed material to another party while a non-transferable license prohibits the licensee from doing so. For example, platforms may want the ability to transfer their distribution rights to their affiliate entities if they re-organize. Or, a midrange publisher may want a transferrable license in order to sell the deal to another publisher (though this should be questioned!).
Fully-paid licenses: A fully-paid license means that the licensee has paid the licensor the full amount due for the license, with no ongoing payments required. In contrast, a not fully-paid license means that the licensee is obligated to make ongoing payments to the licensor, either as a percentage of revenue generated from the use of the licensed material, or as regular payments over time. For example, a software company might grant a fully-paid license to a customer who has purchased their software outright, while offering a not fully-paid license that requires ongoing subscription payments. While appearing similar in many ways to a royalty-free license, consider that a subscription fee means the license is not fully paid even though the license may be royalty free.
Licensing agreements can be complex legal documents, but they are essential for anyone who wants to share their intellectual property with others while maintaining control over its use. By understanding the key terms and concepts found in licensing agreements, creators can ensure that their rights are protected and that they receive fair compensation for their work. Regardless of the type of creator, it’s important to consult with a qualified attorney before entering into any licensing agreement to ensure that the terms of the agreement are fair and equitable for all parties involved.
