In 1972 Atari released its simulated table tennis game, Pong. My parents purchased a copy for our family. My sister and I spent hours playing against one another. The only feature you could adjust was the speed of the ball, but we were transfixed to the television set recreating famous tennis matches we had seen on TV: Ashe v. Connors, McEnroe v. Borg, Navratilova v. Evert. You get the idea. Pong went on to become the first video game to achieve mainstream commercial success. In ensuing years pioneering video game developers released a number of seminal games that defined an industry for a generation of American kids with time on their hands and allowance money in their pockets. The games – which included Asteroids, Galaxian, Pac-Man, Pitfall, Frogger and Donkey Kong, to name just a few – launched what would become a multi-billion dollar gaming industry.
From the birth of the industry, video game creators and developers have entered into contracts transferring their copyright interests to publishers, in large part, because they had very little negotiating power. They were presented with a standard contract assigning all intellectual property rights to a publisher in perpetuity in exchange for money to develop the game or as a royalty against sales.
All that may be about to change. Little known section 203 of the Copyright Act allows creators of copyrighted works, including designers and developers of video games, to terminate copyright assignments granted after January 1, 1978. The provision is intended to give authors of copyrighted works the opportunity to regain rights they may have previously transferred when they had little-to-no bargaining power.
In 1976, Congress amended Section 203 of the U.S. Copyright Act granting creators of post-1978 protected works the right to reclaim the copyright in their creations after 35 years. Section 203 states that a creator of video game software, or other protected works like video game music, characters, design documents, and the like, is entitled to terminate a copyright assignment 35 years after the first date of publication or 40 years after the execution of the grant, whichever comes first. After the proscribed term has passed, the creator or developer can recapture her rights and can potentially renegotiate a license with the publisher on more favorable terms or can monetize the copyright in the game in some other fashion.
The termination right in Section 203 trumps the language of any written agreements, even those agreements that state they are made in perpetuity. Section 203 is Congress’ effort to alleviate the imbalance in the “take-it-or-leave-it” negotiations that many copyright owners find themselves in when just starting out. The provision provides creators of copyrighted works with a second chance to monetize their creations.
If you remember one thing from this blog, remember this: As certain video games begin to reach the age of 35 the termination option under section 203 may become a possibility and potentially a lucrative option for creators and developers. Publishers of video games should begin to consider which older properties still retain significant value and what steps they can take to avoid the possibility of the termination of a copyright assignment. Now is the time for creators and publishers of video games that came out in the late 1970s and early 1980s to evaluate their copyright assignment termination rights to determine whether and how they want to protect their legal interest in these creative works into the future.
Finkel Law Group, with offices in San Francisco and Walnut Creek, has helped many creators, developers and publishers of copyrighted works, including video games, protect and commercialize their intellectual property rights. Our firm can help you evaluate your rights in post-1978 copyrighted works to determine whether and how to exercise your rights under section 203 of the U.S. Copyright Act. When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you with an intellectual property transaction or investment you may be contemplating, please contact us at (415) 252-9600, or info@finkellawgroup.com to speak with one of our attorneys about your matter.