1. Video Games and Intellectual Property Ownership
The first critical issue is establishing and defending clear ownership of intellectual property. In most development agreements, ownership of code, artwork, characters, and game mechanics must be explicitly assigned in writing, or disputes arise years later when the game generates significant revenue. Courts do not infer ownership from work-for-hire arrangements unless the contract clearly states it. Ambiguity here creates immediate litigation risk.
From a practitioner's perspective, I see ownership disputes emerge most often when independent contractors, artists, or music composers are not bound by written work-for-hire agreements at the outset. A developer may assume ownership of a character design, only to face a claim from the original artist years later when the game succeeds commercially. These disputes frequently settle for six-figure amounts because both parties have invested substantially in the game's success.
2. Video Games and Licensing Exposure
Licensing obligations create both revenue opportunities and significant legal exposure. Most video games incorporate third-party intellectual property, music, likeness rights, or engine technology. Each requires a separate license agreement with defined scope, royalty rates, and audit rights. Failure to secure proper licenses before launch invites cease-and-desist letters, takedown demands, and potential damages claims.
| License Type | Key Risk | Mitigation Step |
| Music and Sound | Mechanical and performance royalties owed to multiple rights holders | Secure blanket licenses or direct grants; document all royalty obligations |
| Celebrity or Sports Likeness | Unauthorized use exposes developer to right-of-publicity claims | Obtain written consent; specify permitted uses and term limits |
| Game Engine | Royalty obligations triggered by revenue thresholds; audit clauses | Track revenue carefully; understand revenue-sharing triggers |
| Trademarks and Branding | Use of third-party brands without permission infringes trademark rights | Clear written permission; understand territorial and media limitations |
In practice, license disputes are rarely resolved cleanly. A publisher may believe it holds a worldwide license to a character when the agreement actually grants only North American digital rights. When the game launches globally, the licensor demands additional fees or threatens injunctive relief. Real outcomes depend heavily on how carefully the original license was drafted and whether the developer documented its interpretation in writing.
Royalty Audit and Compliance
Most music and engine licenses include audit rights, allowing licensors to verify royalty calculations. Audit exposure is significant because developers often underestimate revenue or misclassify sales. An audit may reveal underpayment spanning multiple years, triggering back royalties plus interest and penalties. The practical takeaway: establish clear accounting systems from day one, and reconcile royalty obligations quarterly rather than annually.
3. Video Games and Regulatory Compliance
Video games face increasing regulatory scrutiny in areas that many developers do not anticipate. Consumer protection laws, data privacy regulations, and loot box disclosure requirements vary by jurisdiction and platform. Failure to comply exposes studios to fines, account suspension, and reputational damage.
Loot boxes and randomized rewards are now subject to disclosure requirements in several U.S. .tates and internationally. Some jurisdictions require developers to publish odds of obtaining rare items. Apple and Google have mandated disclosure in app stores. Non-compliance can result in game removal from distribution platforms, effectively killing revenue.
New York Court Procedures and Regulatory Enforcement
New York courts have increasingly addressed consumer protection claims against game publishers, particularly regarding deceptive loot box mechanics and in-game purchases. The New York Attorney General has authority to bring enforcement actions under the General Business Law for unfair or deceptive practices. A developer sued by the New York Attorney General faces both civil penalties and potential mandatory refunds to consumers. The practical significance: if your game is distributed in New York or marketed to New York residents, compliance with state-specific disclosure and fairness standards is mandatory, not optional.
4. Video Games and Strategic Considerations Moving Forward
The immediate priorities are threefold. First, conduct a comprehensive audit of all intellectual property ownership documents, including employment agreements, contractor agreements, and work-for-hire assignments. Identify gaps and execute supplemental agreements where ownership is unclear. Second, inventory all third-party licenses, verify that each license is current and covers your intended use, and establish a system to track royalty obligations and audit deadlines. Third, review your game's monetization mechanics and disclosure practices against applicable consumer protection laws in your target markets.
For developers considering external funding or acquisition, investors will scrutinize intellectual property ownership and licensing compliance during due diligence. Unresolved ownership disputes or unlicensed third-party content can derail funding rounds or acquisitions entirely. The time to address these issues is before you seek capital, not after. Our Video Games and E-sports practice focuses on structuring development agreements, managing licensing portfolios, and resolving ownership disputes. Early counsel can prevent costly litigation and preserve your competitive position as the market evolves.
01 Apr, 2026
