In the world of real property, important questions like ownership of the land you’re building on are usually settled via long-standing institutions such as recorder of deeds offices and title insurance companies. The reason for this is pretty clear: spending lots of time and money unwittingly building on something you don’t own is, in legal terminology, “real bad.”

In the IP world, building on something owned by someone else can be pretty bad too. But the process of discovering this is different than with real property. An example from the world of video games is illustrative.

A Telling Contract Edit

In January, the video game developer and publisher Blizzard made headlines with changes to a document called an Acceptable Use Policy. In the new version of the document, Blizzard claims ownership of “Custom Games” made by others using game editors published by Blizzard.

As with most contract edits, this one arose from a lesson Blizzard learned. This lesson had to do with missing out on the control of popular games created by others using games and tools created by Blizzard. I’ll leave it to video game fans to check out the full story, which is a bit complicated. But, arguably, Blizzard could have become an even larger behemoth by taking greater control over a genre of games called Multiplayer Online Battle Arenas (MOBAs) that, in part, had their start in a game based on Blizzard IP but not owned by Blizzard.

Those details aside, the intent from Blizzard here is clear. They want ownership of games created by other people and companies using Blizzard assets.

A Hypothetical…

Imagine a group of friends creates a new game based on tools created by a huge publisher called ThunderSnow. Imagine also that this group of friends didn’t read ThunderSnow’s Acceptable Use Policy or the End User License Agreement referred to in the Acceptable Use Policy, because who reads that stuff anyway? Imagine the game takes off, the friends build a company called MOBACo based on their new game, and then ThunderSnow swoops in and claims ownership of everything sold by MOBACo.

The reason for this claim? The AUP and EULA say ThunderSnow owns it all.

ThunderSnow, in this hypothetical, would have a pretty good argument they own everything published by MOBACo. Depending on the details, MOBACo may have some arguments of their own, but at the very least, MOBACo has a serious legal battle on their hands. This battle is against a well-funded adversary capable of bringing lots of very good lawyers to bear on MOBACo. Now the priority for MOBACo isn’t publishing games; it’s making the lawsuit go away. MOBACo may be fighting for its life, simply because the founders didn’t know they might not own what they were building.

…That Wasn’t So Hypothetical

Variations on MOBACo’s situation are pretty common among software companies of all types. The underlying issues can impact anyone building new technology based on preexisting technology. And this includes basically everyone building new products.

In the real world, virtually no new software is created completely from scratch, and few other products today are built using entirely new science. Almost all development is collaborative, and just about everything worthwhile is built on work done by someone else. If you’re building a product or service you want to claim ownership over, you must understand the rules of the tools and materials you’re using to build your solution.

For MOBACo, building games based on only one set of tools, it would have been relatively simple to get to a good level of understanding. Reading a couple documents would at least have given them the idea that ThunderSnow would claim ownership of what MOBACo was building, and maybe MOBACo could have negotiated a better deal or chosen other tools early on. Understanding the problem only after achieving success put MOBACo in a real bind.

As with MOBACo, it is common for real-world companies to find out too late that they have built their solutions on top of other IP in such a way that other parties will have a decent claim to ownership.

Taking Action on IP Ownership

Addressing these kinds of IP ownership issues involves doing the hard work of: (a) knowing exactly what tools and materials you’re using to build your solution; (b) understanding the applicable license agreements; and then (c) using the tools and materials in such a way that you can move forward with the IP ownership plans you want.

One starting point is to figure out what licenses apply to what you’re using, which itself can be a big task. Then, review the relevant licenses and make sure your co-developers and contractors know about them. Ideally, you can put in place a process to develop and publish your work in a way that is compliant with both the licenses and your goals for distributing what you’re making.

This is not an easy process. It’s not as fun as building something new, and it is often ignored or delayed. But it’s better to pay attention to IP ownership issues throughout the development process than to discover there is a problem only after you’ve shipped a successful product.