Why gaming companies need EULA, what it happens, what you should pay attention to when preparing it for the game, — Svetlana Gordey and Daria Savko, specialists of REVERA law firm, told in their column for App2Top.

Svetlana Gordey and Daria Savko

EULA (End User License Agreement) stands for end user license agreement. This is an agreement between the software developer and the end user that:

  • defines the terms of use of the software;
  • protects the interests of the developer;
  • giving him control over the use and distribution of his product;
  • provides legal protection for end users.

Why is it important to have such an end-user license agreement?

There are several reasons for this:

  1. Despite the fight against piracy, the software is easily copied and distributed, and users can still use it in ways contrary to the interests of the developer.
  2. The software is a complex object that depends on other objects. Disclaimer of warranties and limitation of liability are therefore critical to protect software publishers from liability for conditions that may be beyond their control.
  3. An EULA is usually required to install or use the Software, which allows the developer to obtain the user's explicit consent to the terms of use, which must be complied with.
  4. The EULA helps the developer to limit his responsibility in case of unforeseen situations or problems that arise when using the software. The relevant provisions in the EULA may establish that the developer is not responsible for any damage resulting from the use of the program.

World practice has not developed a single standard form of EULA. An "example" of standard licenses are the license agreements of large companies (such as Microsoft), on the basis of which agreements are created for smaller companies.

License agreements can have different formats:

  • signed paper agreements;
  • "click-through agreements" or "packaging licenses" — they appear during the software installation process.

Most of us are more familiar with the latter format, which is presented as a "agree or disagree" offer, giving the user a choice: accept the agreement (if he wants to use the software) or reject it (in which case he will not be able to continue the installation).

Many license agreements define how a software application can be used. Most of them contain provisions prohibiting end users from distributing software in ways that could harm the developer. Some even include provisions prohibiting end users from openly criticizing the software or the company that released it.

As an example of the conditions that are most often contained in the EULA, the following can be cited:

  • license terms and conditions;

Here, as a rule, the characteristics of the license and its scope are indicated [i.e. exclusive or non-exclusive license, terms of use (for example, reproduction or modification only), etc.]. The more detailed the terms of granting a license for your product are specified, the more you are protected from unauthorized use. Accordingly, in case of improper use of your game, you can easily justify the reason, for example, the deletion of the user's account due to violation of the terms.

The Ubisoft License Agreement provides for the possibility of granting a license to install and use the product during the validity of the EULA:

"Ubisoft (or its licensors) grants you a personal, non–commercial, non-sublicensable, non-transferable, non-exclusive license to install and/or use this Product (in whole or in part) or any other Product (hereinafter referred to as the "License") until you or Ubisoft terminate this License Agreement."

Here is an example of the Electronic Arts license agreement, which explicitly contains a clause on the use of video games for non-commercial purposes:

"EA provides you with access to our games and services for your personal enjoyment. You are not a buyer of EA Services, but only purchase a license to use them. EA grants you a personal, limited, non-transferable (i.e. non-shared), revocable and non-exclusive license to use the EA Services that you have access to for non-commercial use and subject to your compliance with the provisions of this Agreement."

  • permitted and prohibited use;

Since games are a complex product, and there are many ways to use them, you should clearly separate which actions you would like to attribute to permitted, which to prohibited. Most often, the allowed ones include playback, downloading, installation and modifications inside the game (for example, the creation of original characters). Prohibited methods may include the use of mods, unauthorized copying, distribution, etc.

The Minecraft license Agreement, for example, contains a fairly clear and concise wording regarding the granting of rights, namely:

"When you buy our games, it means that you can download, install and play them. For the server version of Minecraft: Java Edition, you can install it on the server and organize an online game. However, you should not distribute anything that we have created unless we specifically agree to it. By "distribute everything we have created" we mean the following:

— transfer copies of our game software or content to anyone else;

— use everything we have done for commercial purposes;

— trying to make money on something that we have done;

"allowing other people to access anything we've done in an unfair or unwise way."

Some companies offer a fairly extensive and comprehensive list of prohibited activities, which you need to familiarize yourself with in order to avoid problems associated with misuse. The Epic Games license agreement can be cited as an example of the availability of broad formulations regarding the methods of use:

"You have no right to perform any of the following in respect of the Software or any part thereof: (a) to use them for commercial or advertising purposes; (b) to use them on more than one device at a time; (b) copy, reproduce, display, displaying, or use them in a way that is not expressly permitted under this Agreement or Special terms for the software; (g) sell, rent, lease, sublicense, distribute or otherwise transfer them. (d) carry out reverse engineering to extract the source code of, modify, adapt, translate, reverse engineer, decompile or disassemble or create derivative works based on them; (e) remove, disable, circumvent or modify any notices of proprietary rights or labels or security technologies included in them; (e) create, develop, distribute or use of any unauthorized programs to gain advantage in any online or other game modes; (g) to use them for infringement or breach the rights of any third party, including, without limitation, any intellectual property rights, publicity or privacy; (h) use, export or re-export them, in violation of any applicable law or regulation; (I) to behave in a manner that is detrimental to the use of the Software or Services to other users as provided by the company Epic, in the sole opinion of the Epic, including, without limitation, the following: fraud, harassment, the use of offensive language, the rejection of the game is to take the game down, spamming, social engineering or fraud."

  • creating content inside the game.

The content created inside is undoubtedly intellectual property, but the question often arises who owns it. The EULA should contain a disclaimer in this part, especially if the video game openly provides the opportunity to create intellectual property objects in it, for example, characters.

As an example of a license agreement that provides for the possibility of creating separate content, the Ubisoft license agreement can be cited:

"All types of property rights, including intellectual property rights in relation to the Product (including, without limitation, all texts, graphics, music or sounds, all messages or elements of information, invented characters, names, themes, objects, landscapes, costumes, effects, dialogues, slogans, places, images, diagrams, concepts, choreography, videos, audiovisual effects, domain names and any other elements that are part of the Product, individually or jointly), as well as any and all copies of the above belong to Ubisoft or their licensors. The product is protected by national and international legislation, copyright agreements and conventions, and other laws. The Product may contain certain licensed materials, in which case Ubisoft licensors have the right to defend their rights in case of violation of this Agreement. Reproduction or presentation of these licensed materials in any way for any reason is prohibited without prior permission from Ubisoft and, in some cases, from licensors and representatives of Ubisoft. Except as expressly provided in this License Agreement, all rights not granted to you herein are expressly reserved by Ubisoft. This License does not grant you ownership of the Product and should not be considered as a sale of any rights to the Product."

The Minecraft license agreement, on the contrary, provides that players own the rights to the original content created inside the game:

"We do not own the original materials that you create. However, we will own things that are copies (or substantial copies) or derivatives of our property and creations — but if you create original things, they are not ours. So, as an example: a single block of Minecraft (including its textures and "appearance") — it belongs to us; your creation of a Gothic cathedral with roller coasters running through it — it does not belong to us."

Thus, there are many variations of the conditions for compiling an EULA for your game project. We recommend that you take into account the features of your product, possible ways of using it, and actions that users should not take in relation to your game (for example, create mods) in order to ensure full protection of the product.

In the US judicial practice concerning intellectual property and video games, there are cases related to the interpretation and application of the EULA.

In the case of Bragg v. Linden Research, Inc., a dispute was resolved regarding the license agreement for the game Second Life. The bottom line was that, based on the concept of a video game that allows you to create virtual reality in which you can create various things, one of the users came up with a way to buy land (virtual) at a lower price than on the official market.

The user joined auctions that were not publicly accessible and bought such lands for $300, while their public price was $1,000. Linden Lab— the copyright holder of Second Life, blocked the player's account due to a violation of the EULA, as a result of which, as the player stated, he lost all his virtual property worth $ 4,000.

The court found that the player had not violated the terms of the EULA, since Second Life was a unique service that offers to purchase some kind of virtual real estate in a massively multiplayer environment, and the user did not have a "reasonably affordable market alternative."

It is worth noting that such cases are unique and most often depend on the specific qualities of each game. For example, in the video game World of Warcraft, the possibilities of the player's original actions are more limited, and a condition that transfers all the copyright prerogatives of the company can be regarded as fair.

However, violation of the EULA does not automatically mean copyright infringement. In a recent decision in the case of MDY Industries, LLC v. Blizzard Entertainment et al 3. a dispute was stated about a computer program that allows a player to play automatically (or "bots") in order to level up faster.

The court explained that although the use of bots is prohibited by the Terms of Use of the game, it does not follow that working outside the scope of the license leads to copyright infringement. To do this, the licensee's actions must, firstly, go beyond the scope of the license, and secondly, affect one of the licensor's exclusive legal rights. In this case, the provisions of the Terms of Use aimed at prohibiting automatic play and use did not affect copyright.

Therefore, it is important that software developers understand the key elements of the EULA, develop appropriate end-user license agreements for their organization, and track the people and organizations with whom such agreements are in effect.