Esports Biz 101: Part 2 – Business and legal considerations for professional esports orgs

This is a guest piece by Justin M. Jacobson

Justin M. Jacobson, Jacobson Firm

In addition to the legal considerations we addressed in part one of this piece, there are some other protections that an esports organisation should be aware of. We will now briefly explore some of those matters below.

Intellectual Property Protections – Copyrights

In addition to potential trademark protection for an organisation’s name, there are benefits to filing a copyright application for a particular logo as well as registering any other created content.

While it is established that a copyright is automatically obtained in a work upon completion of the original work of authorship when it is fixed in a tangible medium of expression; a formal registration of the materials with the U.S. Copyright Office within three months of public release provides additional valuable benefits to the work’s owner. Registering a copyright is also a relatively inexpensive procedure. Some of these benefits include that the ownership of the work now becomes a matter of public record and is available for search within the U.S. Copyright Office. This makes it easy to search and verify the ownership and extent of an existing, copyrighted work. Registration permits an individual to quickly find and contact the creator in the event that the individual desires to use or license the copyrighted material.

“There are benefits to filing a copyright application for a particular logo as well as registering any other created content”

Additionally, in order to bring a copyright infringement lawsuit when the owner believes that one of their works has been infringed upon, the work must be registered with the U.S. Copyright Office prior to instituting a lawsuit. A valid registration certificate constitutes prima facie evidence of valid copyright ownership in the work after five years. Also, if the owner has filed for registration prior to the infringement or within three months of publication of the work, the author may be entitled to recover actual damages incurred, statutory damages as well as attorney’s fees spent in pursuing the matter. These fees can even exceed the actual damages suffered by the copyright owner.

Registering a copyright is an easy and inexpensive procedure. Once the work is registered and the certification is issued, the benefits of the registration are retroactive to the original filing date of these elements. It is also important that if any third-party created or otherwise assisted in the creation of the logo or any other finished work, such as a graphic designer, that the individual assigns or otherwise licenses any rights that they have in the work to the organisation. This is typically effectuated by some sort of “work for hire” agreement or other assignment.

“To best protect the organisation, the use of formalised written contracts for any of its employees and any other team personnel, including any gamers, coaches, assistance, analysts, graphic designers, is prudent”

Overall, these intellectual property protections are beneficial in pursuing any imposter or confusingly similar organisations as well as pursuing any third-party selling counterfeit goods or otherwise tarnishing the team’s reputation.

Contractual Obligations

In order for a team to function properly, they require the proper infrastructure and personnel. To best protect the organisation, the use of formalised written contracts for any of its employees and any other team personnel, including any gamers, coaches, assistance, analysts, graphic designers, is prudent. The agreement typically outlines the salary or other compensation to the personnel as well as lists the individual’s obligations to the organisation. This could include a set number of streaming hours a player must adhere to, a set number of tournaments a coach must attend or any other listed requirements that the team wants to ensure are properly adhered to. For example, Blizzard’s new Overwatch League mandates the execution of standard written contracts with set salaries for all competing gamers.

An organisation should also be aware of the requirements and existence of an agreement with any sponsor. For instance, a recent sponsorship agreement was entered between League of Legends’ team, Flyquest and Snickers. The arrangement requires Flyquest to ensure that the Snickers product is present at the “FlyQuest team house and at fan activations” as well as obligating the team to create a series of custom “branded” content pieces. While the exact number of monthly or weekly custom content pieces to be created as part of the partnership was not openly disclosed, such information would be clearly outlined in such writing. It is prudent for a team to ensure that all their “deliverables” to a brand are clearly outlined in some formal writing. With an explicit formal writing, the team can easily understand what is required of them, e.g. how many sponsored social media posts they must provide a month, and the brand is aware of what they are receiving in exchange for its sponsorship. This also helps by confirming the details of the sponsorship, including how much and if any product is included, and if so, which product.

Furthermore, entering into a formalised writing, such as an investment agreement, for any potential investor or third-party owner is practical. The drafting of such an agreement outlines the organisation and the investor’s rights and duties, including listing the investment amount and how it is recouped. This is essential to the proper administration of the organisation; as without it, there could be confusion as to what the investor’s rights are in the team as a result of their investment.

There are many legal and business considerations for professional esports organisations. While it is not mandatory for a team to adhere to these suggestions, the potential issues that the lack of proper rights in a team’s name or contractual obligations could be the difference between a successful venture and an unsuccessful one.

This article is not intended as legal or business advice, as an attorney or other professional specializing in the field should be consulted.

© 2018 The Jacobson Firm, P.C.