Game developer and contracts with the client company.

Digilaw has more than 6 years of experience in drafting contracts that the client company enters into with its contractors in the GameDev sector. The company also has significant experience in analyzing such contracts and identifying risks for developers. Thus, lawyers do not always represent the client company; sometimes we also defend the interests of developers and engage in negotiations with the opposing party.

In this article, I will not talk about how important it is to enter into contracts with companies; everyone already knows that. I will try to explain why these contracts are necessary at all and what key points should be paid attention to when signing them. Well, let's get started.

Why am I being asked to sign documents if I am just doing a test task?

This is a fairly common question, as it is still unclear whether you will pass this test task and whether you will be accepted into the team based on the results of this test task or not. So why and what exactly needs to be signed?

Most often, the document that you may be provided to sign before starting the test task is a Non-Disclosure Agreement (NDA). Yes, it sounds a bit daunting, as if some obligations are arising, but there is no need to be scared. The company is trying to protect information that is confidential, as it is not uncommon for real projects to be provided for test tasks. Everyone understands that the Game Development Document, scenes, art guides, plot ideas, and characters of each game project of the company are not publicly available information.

Moreover, the company will always protect its intellectual property. What does this mean? The game's code or part of it, images of characters, scripts — all these are separate objects of copyright, the combination of which constitutes the game. So if your test task was developed using the company's intellectual property or confidential information — most likely all your work will also be the property of the company (but the provisions of the NDA should be analyzed). And if you were even paid for the test task — it can be assumed that the author's remuneration has been paid, so I do not recommend using or posting the results of the test task anywhere, at least without obtaining written permission from the company.

The test task has been successfully completed. What is this pile of contracts that I need to sign now?

Yes, yes, the NDA at the testing stage was just the beginning, but don’t be scared, it’s not as scary as it seems at first glance. Let’s assume that the NDA has already been signed. What other documents may the company provide for signing?

A Service Agreement and a Non-Compete and Non-Solicitation Agreement (NCA and NSA). Sometimes the NDA or Service Agreement may include provisions for the NCA and NSA.

Service Agreement

The rights and obligations of the parties, the procedure for communication between the parties, the payment procedure, applicable law — all these provisions will be contained in the Service Agreement. The document can range from 3 pages to 20+, depending on how detailed the company wants to reflect its policy in the contract. Of course, there are exceptions when the company provides a one-page offer. Consider that you hit the jackpot, as usually, in an offer everything is brief, clear, and understandable.

NCA and NSA

The name of these two documents speaks for itself. A Non-Compete Agreement (NCA) — is about non-competition (the contractor agrees not to compete with the company for a certain period after the termination of services), while a Non-Solicitation Agreement (NSA) is about non-solicitation (the contractor agrees not to solicit clients, employees, or other persons of the company with whom they have worked).

There are cases where the provisions of the NCA and NSA can be challenged in court, but it all depends on how the provisions are formulated and what law applies in the relationships between the parties. But that is another topic for discussion.

The company may also ask you to fill out additional forms for the tax authorities of the country of its registration. For example, American companies most often send the W8-BEN form. The W8-BEN is a form submitted by non-residents of the U.S. who receive certain types of income from the U.S. By submitting this form, the individual is entitled to a reduced rate or even exemption from taxation if there is a double taxation avoidance agreement between the U.S. and the country of which the recipient is a tax resident (such an agreement exists between the U.S. and Ukraine).

What should I pay attention to when signing?

Of course, I would recommend thoroughly reviewing all the provisions of all the provided contracts, but this can be quite tedious and exhausting. So I suggest a general checklist of which provisions should still be reviewed before signing the contracts.

NDA:

• most likely all information transmitted in any form to you by the company will be considered confidential. So searching for what is not confidential is not a very good idea (of course, unless it is a claim or a court case);
• the term during which information cannot be disclosed. Usually, this is 3–5 years after the end of relations between the parties, but indefinite obligations are also encountered;
• direct obligations (to delete information at the request of the company or upon termination of relations, to inform the company about receiving a request from government authorities for disclosure of information, etc.);
• of course, liability. The contract may establish both fixed penalty amounts and may not have any penalties at all. But do not relax, compensation for damages is a quite applicable and effective provision in the contract.

Service Agreement:

• the amount of remuneration for the services provided, as well as the method and period of its payment. Not all companies (especially foreign ones) will pay remuneration directly to your individual entrepreneur account. A normal practice is to use payment methods such as Payoneer, Wise, PayPal, or even auxiliary services like Deel (and no, this is not an advertisement, although we also deal with account registrations in payment systems). Of course, we are not talking about the legality of using these payment methods and how and where to withdraw funds (well, you understand);
• the procedure for providing services. Of course, many companies have additional explanatory notes on all processes in the company, but it will not hurt to familiarize yourself with this section;
• intellectual property rights. If you provide services to a U.S. company — most likely all rights to the objects you create will belong to the company. But if the client is a Ukrainian company — there may be options. By the way, whether you can post the results of your services in your portfolio may also be specified in this section;
• liability. What can lead to a penalty and what may only lead to a warning depends on the internal policy of the company, so you need to be aware of such issues even at the stage of signing the document;
• termination of the contract. The contract may not even provide the developer with the right to terminate the contract from their side, and what will you do then? Most likely — turn to lawyers for help, but it would have been better to discuss such provisions with the company at the stage of signing the contract.

NCA and NSA:

• the period during which you cannot cooperate with past or current clients of the client company;
• the period during which you cannot engage in competitive activities to the client company and what the conditions of such non-competition are;
• the period during which you cannot offer other developers of the company to cease cooperation with the company;
• penalty sanctions. Penalties in such a document are usually quite significant, so it will not hurt to review such provisions.

4. What if I don’t understand anything, who should I turn to?

Of course, it’s better to go to your lawyer so that they can explain everything to you or not involve you in all these legal issues at all. But if you don’t have a lawyer, you can turn to the HR manager, who will either direct you to the legal department of the company or help you resolve your question themselves.

For example, if you do not understand whether you have the right to post the results of your services in your portfolio or show such results in subsequent interviews, it is better to ask an authorized person in the company and obtain written confirmation of permission. After all, such written permission (even in electronic form) can save you from many unpleasant situations in the future.

And if you understand that some conditions of the contract are not acceptable to you, you should also first turn to the company. Perhaps your arguments will be convincing enough, and the company’s lawyers will be able to make some changes to the contracts. But, in reality, it all depends on the internal policy. In practice, large companies are reluctant to make any amendments to their documents, so it is possible that you will have to accept their rules of the game.

5. I am already providing services to another company, and the previous company is still contacting me with requests to sign more documents. What should I do?

And again, signing something unclear — you thought. Yes, indeed, some developers do not understand what else is wanted from them if they are no longer providing services to the company.

What they want from the developer is probably a signed Intellectual Property Transfer Agreement (IP Transfer Agreement). This contract is a confirmation that the developer transfers all exclusive property rights to the results of the company's services, meaning that the company will be considered the sole owner of all developments. At first glance, it may seem that this is not a very important document, but in fact, it is not so. Investors, partners, or game clients may require the company to confirm that the rights to all elements of the game belong to the company and are not used by anyone else.

However, the IP Transfer Agreement may also contain provisions that need to be paid attention to. For example, compensation for damages in the event of the company receiving claims from third parties. This means that if the developer used part of the code or a character from another game without obtaining the appropriate permission or license, the rights holder has the right to contact the company, prohibit the use of such code or character in the game, and demand compensation for damages. And if the contract contains the relevant provision — all damages will be compensated by both the company and the rights holder, specifically by the developer.

So be careful when signing contracts and adhere to their provisions, as sometimes the conditions of the contract are laid out in such a way that even lawyers cannot find that same “loophole” so that the developer does not encounter either penalties or damage to their reputation.