In today’s post, I am going to discuss a recent lawsuit filed by Bethesda Softworks versus Behaviour Interactive regarding the new Westworld mobile game and Bethesda popular Fallout Shelter title. We are going to take a look at Work-for-hire agreements, the necessary verbiage required, and why they are both dangerous and helpful to Studios and Publishers. I will not discuss alleged claims Bethesda has against Warner Bros. Entertainment, as it does pertain to the Work-for-hire topic. As always this is my option, and should not be treated as legal advice.

The Setup

In 2014, Bethesda engaged Behaviour to assist in developing the Fallout Shelter mobile game. The parties agreed to a Software Development and Services Agreement that set forth among many things several work-for-hire provisions, assignment of rights, and a multitude of confidentiality and trade secret provisions. Under the agreement, Bethesda provided the conception, design, and overall direction of the game’s mechanics, and the resulting look and feel of the title. Behavior would provide the implementation of Bethesda concepts and artwork to create what we know now as Fallout Shelter. Additionally, the Agreement expressly states, “all work product and any other materials created by Behaviour related to Fallout Shelter, including its source doe, content, assets, and associated intellectual property rights, were created as works made for hire for Bethesda.

The game “puts you in control of a state-of-the-art underground Vault from Vault-Tec. Build the perfect Vault, keep your Dwellers happy, and protect them from the dangers of the Wasteland.” Fallout Shelter was released on the App Store and Google Play in June 2015 and within a day of the release, became the most-downloaded free mobile app in the United States. On September 11, 2015, Bethesda was granted a Copyright Registration for Fallout Shelter’s underlying code and game assets. (Reg. No.: TX0008074781)

Around March 2018, Warner Bros. announced the Westworld mobile a brand new mobile game set in the Westworld universe developed by Behaviour Interactive. In Westworld mobile you “Build and control the park, create and evolve Artificially Intelligent Hosts, and indulge the many human appetites of your Guests. Prove yourself as an employee, and you’ll gain access to the park in ways only Westworld’s creators could have designed.” Warner Bros. demoed an early build of the game to overwhelmingly positive reviews at GDC and SXSW. Most if not all publications covering both events and saw the Westworld demo noted how the game closely resembles Fallout Shelter’s art style and gameplay concepts.

The Lawsuit

On June 21, 2018, Bethesda filed suit against Behaviour alleging breach of contract, copyright infringement, and misappropriation of trade secrets. The lawsuit details the overwhelming similarities between Westworld Mobile and Fallout Shelter, even going as far as to call Westworld Mobile “blatant rip-off of Fallout Shelter.” However, similarities are not enough to prevail, meaning just having the same gameplay concepts is not enough for Bethesda to succeed in its claims against Behaviour. This is because concepts or ideas are not intellectual property, and cannot be protected by copyright law.

Bethesda is able to show Behaviour allegedly copied the code they created for Fallout Shelter, and they did this by finding a very particular a bug in Westworld Mobile that was in the early builds of Fallout Shelter. The chance of the two separate games having the exact same bug without the same code being used is almost impossible. Additionally, Bethesda detailed how the movement of the characters from walking around the screen in a 2D space, to how the cartoonish NPC’s drink beer is identical in both titles. Furthermore, Bethesda explains how the camera in both titles works and moves exactly the same way by “double tapping” on an event space. Bethesda claims, these events could only be replicated in such a fashion that Behaviour used the exact code from Fallout Shelter to cut development time and costs for Warner Bros.

Work-for-hire

The Work-for-hire Doctrine

Before we can address the Work-for-hire issue at the heart of Bethesda, it’s important to examine the Work-for-hire Doctrine, and the relevant case law that’s evolved the concept over the past 40 or so years.

Generally, under the Copyright Act, ownership if a copyright and its exclusive rights vets in the original “author” of the work, unless they are otherwise properly transferred to another. 17 U.S.C. §106. These exclusive rights vested in the author include These include the right to reproduce the copyrighted work in copies or phonorecords, to prepare derivative works based on the copyrighted work, to distribute copies of the work by sale or other transfer of ownership or by lease, to publicly perform and publicly display the work and, in the case of sound recordings, to publicly perform the work by means of a digital audio transmission. 17 U.S.C. §106.

How does this play out in an independent contractor situation where party contracts to have a copyrightable work created for a particular purpose? For example, a Bethesda contracting with Behaviour to create the code for Fallout Shelter. Enter the Work-for-hire doctrine, where an employer or hiring party under appropriate circumstances acquire the status of “authorship” and entitled said employer or hiring party the exclusive rights that otherwise would belong to the actual creator.

In 1966 the Second Circuit heard the case Brattlebroro Publishing Co. v. Windmill Publishing Corp., one of the first Work-for-hire cases that applied the original work-for-hire doctrine to independent contractors. In Brattlebroro, the Second Circuit explained, the work-for-hire doctrine makes the employer the “author” of the work, whenever the employee’s work is produced at the instance and expense of the employer. Brattlebroro Publishing Co. v. Windmill Publishing Corp 369 F.2d 565 (2nd Cir. 1966). When applying the same principles to independent contractors, the Court held, “it could see no reason why the same principles are not applicable when the parties bear the relationship of employer and independent contract.” Brattlebroro Publishing Co 369 F.2d 565 (2nd Cir. 1966).

Congress sought to codify the existing law regarding work-for-hire under the Copyright Act of 1976. Congress crafted definitional provisions of the statute in response to a carefully balanced compromise between the interest of employees and the actual creators of the various copyrightable works. H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 121 (1976). Section 101, of the Copyright Act of 1976, Congress set forth a threshold tests stating, “a work qualifies as a work made for hire if its created by an employee within the scope of employment or if its specially commissioned work that falls within one of nine categories and its accompanied by a written agreement signed by the parties that provides that the work is a work-for-hire.” 17 U.S.C. §101. These nine categories include a contribution to a collective work, part of a motion picture or audiovisual work, a translation, supplementary work, compilation, instructional text, a test, answer material for a test, or an atlas.

The most important case that shaped the modern work-for-hire doctrine was Community for Creative Non-Violence v. Reid 490 U.S. 730 (1989). In Reid, the Supreme Court set the work-for-hire test pertaining to independent contractors. The Court held for a work to be considered work-for-hire, it must fall within the range of the nine categories set forth in 17 U.S.C. §101, and there must be an express writing signed by the parties that consider the work to be one for hire. Reid 490 U.S. 730 (1989)

Work-For-Hire in the Interactive Entertainment Industry, and The Rise of Assignment of Rights

The most important thing that Video Game Developers/Publishers need to take away from the Reid case, and §101 is literary works are not considered works for hire. Generally, computer programing/video games code is considered a literary work for copyright purposes. Therefore, a studio or publisher contracting with another to create code, such as the case with Bethesda, simply having a work-for-hire clause in your agreement does not transfer the authorship of said code to the studio/publisher.

So can you do? As a Studio/Publisher contracting with another to create anything outside of the nine categories, you must have an assignment of rights in your agreement. An assignment of rights is a simple paragraph that transfer ownership of any and all works not considered work-for-hire to the party contracting party. A fantastic example of an assignment of rights is the one Bethesda used in its agreement with Behaviour that stated:

“Bethesda owns all intellectual property and rights related to the development of Fallout Shelter, including all associated versions, derivatives, artwork, game designs, gameplay features, programming, trademarks, trade names, copyrights, know-how, patents, trade secrets and other Intellectual Property Rights. Any rights resulting from the development of Fallout Shelter not automatically vesting with Bethesda under this contract are irrevocably and unconditionally assigned to Bethesda.”

This section of the agreement between Bethesda and Behaviour clearly transfer the ownership of any and all rights in Fallout Shelter to Bethesda. This effectively takes a work not part of the nine categories in §101 and turns it into a work-for-hire by transferring the rights over. Bethesda takes it one step further in the agreement by contracting that Behaviour appoints Bethesda as attorney-in-fact for Behaviour for the right to execute such instruments in the name of Behaviour on Bethesda’s behalf on a work made for hire basis. The goal here is to ensure there is no possible way the rights in the work Bethesda contracted for would ever stay with Behaviour.

So what happened here, and how can I avoid it in the future?

Without knowing all the facts of this case, and only going off of what Bethesda stated in their complaint, I can only speculate. I don’t want to go out and say Behaviour used to knowledge and access to the Fallout Shelter code to create Westworld, but based on Bethesda’s complaint and evidence it’s hard not to. This is the risk you take as a Developer or Publisher contracting with a third party to work on your project. Yes, you can contract to protect yourself and it gives you the legal remedy to file suit, but is that really going to stop your contractor from ripping you off? In some cases, yes, but this is not an uncommon occurrence. There a multitude of the story’s about Studio filing suit against contractors who stole their game assets or copied their code and created a competing product.

How can you protect yourself? This is a challenging question, on one hand, it’s easy to say we have a contract and both parties are bound by those terms, and those terms will protect me from this happening. As you can see from this present case, that’s just not entirely true. What I always tell my clients in this position is don’t give away your secret sauce. When entering contracts with third parties to provide work on your games, only give them what they need to complete the agreement, nothing more. Don’t give them access to the source code of the game library if they don’t need it Always have a strong contract with very detailed and specific terms in place, and never sign anything with reviewing it or having your attorney review it.

What about works made prior to the work-for-hire? This question was asked by a Client who performs contract work on the side of large studios to fund his projects. This Client was presented with a predicament, one of this contracting studios wants the Client to create some code to complete a battle system in a game the contracting studio is working on. The Client just happens to have exactly what the contracting studio needs as the Client was working on the code for his own project. Would signing a contract with the work-for-hire provision and the assignment of rights transfer ownership?

The answer… It depends. If my Client created code for his own works and signed a contract with contract studio, then depending on the terms of the contract, the code modified to work for the contract studio could transfer over to the studio. A way to avoid this is by licensing the rights in the code over while retaining ownership. My golden rule for these types of issues is if you paid to create something, and you signed a contract to do so, chances are is going to be a work-for-hire situation, and your rights in what you create are going to vest in the partying paying you.

Press Start Legal is well versed in creating work-for-hire and assignment of rights agreements. If you have any questions about a contract or need a contract drafted for your next project send us an email at Info@PressStartLegal.com