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Video Game Law: Starting a Solo Practice with Niche Clients

Jul 19, 2015
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Ryan Morrison created a firm centered on helping video game developers. His work greatly varies depending on what his clients need, but often involves intellectual property and contracts. In this episode, Ryan shares his biggest challenges and how he built a rare practice from a pro bono matter.  Ryan is a 2013 graduate of New York Law School.

Transcript

Host:

From LawHub, this is I Am The Law, a podcast where we talk with lawyers about their jobs to shed light on how they fit into the larger legal ecosystem. In this episode, Derek Tokaz interviews a video game lawyer who discusses how he built his niche solo practice.

Derek Tokaz:

We're joined today by Ryan Morrison, a 2013 graduate of New York Law School. Ryan's solo practice focuses on video games, helps game developers figure out and meet their legal needs. So video games are a pretty sexy area of law, the type of thing that might get people interested in law school in the first place or something that they might start to dream about in law school. So I'd like to know a bit about what got you interested in law school and how you ended up getting into the video game practice?

Ryan Morrison:

It's funny you call it a sexy area of law because the women in my life would certainly disagree, my girlfriend in particular, but that said, there's obviously a lot of gamers. Video games make more money than movies, TV and music combined. It's the highest grossing entertainment industry and, because of that, there's obviously a lot of people that enjoy the field. All these gamers who are turning into lawyers are, they message me constantly saying, "This sounds like endless fun. Do you just play video games all day? I can't wait to try to do this as a career." It's not exactly that, but how I wound up here is basically through a lot of strange scenarios. I went to school to become a history teacher. There was absolutely no jobs as I was going through the certification process. Wound up bartending and working in a kitchen at the same restaurant.

I had wanted to go into criminal law. Sob stories aside, my father was incarcerated throughout a portion of my life and I sat in a lot of courtrooms and watched a lot of injustices happen, not to him necessarily, but just the age-old, you have money, you're free, and if you don't, you go behind bars, and that really infuriated me. I wanted to do criminal law. Then at school, we had a really good IP department. I didn't know what IP was, I didn't know what the difference between a trademark and a copyright was. There was a class called Video Game law. I had been a nerd my whole life, so I took it and kind of went from there.

Derek Tokaz:

Before taking that class, did you have any experience in the video game field or was that sort of your first foray into it?

Ryan Morrison:

I grew up playing hockey and had my more "normal" friends and things like that, but my nerdier friends were kind of uber nerdy, so we would do things like try to look into the programming languages or understand really the source code and back end of things, and because of that, we had fiddled with making our own games and pipe dreams about releasing something down the road. During law school, kind of coinciding with this video game law class, I had started working with a developer called Large Animal Games in New York City, who made a lot of the social and mobile games that you might block on your Facebook, and then some legitimately fun apps that were great. And they were all wonderful people. They really showed me the ropes of the business side of the industry.

So it was a great little entranceway into the game world from a legal side, and most importantly, I learned that none of these game developers, even Large Animal who was a very successful company, they didn't want to use an attorney. Attorneys were out outrageously expensive, and the worst part was, they were afraid to pick up the phone and ask a question. As most law firms do, they charge for phone calls and emails, and every question or every double checking something turned into $100 process that they just didn't want to do. It showed me a lot of the hiccups with the entrance to the game world as a lawyer and I tried to fix that as I started my own practice.

Derek Tokaz:

So I'm curious about your third year of law school and graduating, what your career trajectory was looking like at that point?

Ryan Morrison:

I had a couple different plans that I would've been satisfied with but not thrilled with. Around the second year of law school, when I started really getting into IP and understanding that there was potentially this world of law here, I started really falling in love with the idea of opening my own firm. I knew I had absolutely no chance of getting a job at one of these larger law firms that charged $1,200 an hour and represent all the AAA studios, and I also knew that if I went to a smaller shop, I am the kind of personality that would've been sitting there furious that I'm doing basically the work for this solo guy and getting 1/100th of what he's making off of it. Figured if he can do it, I can do it basically and went out and planned to open up my own shop about. Eight days after I got sworn in, this thing happened where the game Candy Crush, which everyone with a phone has at least gotten an invite to, they tried to trademark the words Candy and Saga in the video game industry.

What that means is, they were going to try to prevent other games and applications on all devices from using the words Candy and Saga. Saga is one of the oldest words in nerd culture. It quite literally means long, epic tale in the Norse language, and there was this Norse game called Banner Saga coming out that was obviously using the name and completely different than Candy Crush. No one was confusing the sources of goods, but Candy Crush was still trying to prevent them from using the name. Little eight-day-old lawyer me was reading the headlines and decided to reach out to the other smaller studios that they were bullying around and saying, "Listen, I've been a lawyer for about four hours now, but I'll help you for free if you want to fight this." Because their main complaint was they just couldn't afford legal help even though they knew they were right.

I worked with the IGDA, the International Game Developers Association, and together we were able to, and there's no official credit to us, but I very much believe that it's because of what we did that Candy Crush took back their applications and kind of ended what they were doing with these other games. It was a great entryway into the game space as a real attorney then. Through Reddit, which is my favorite community in the world because of all this, I started doing a weekly Q&A with game developers there and it turned into me going there originally saying, "Guys, trademark your games and this stuff won't happen." Their response, instead of saying, "Okay or F off." Was, "What's a trademark?" So it turned into a weekly thing where I go there and I answer questions still to this day, and just give out free general legal advice to the developers so they understand why they're getting bullied around or what they can do to cheaply protect themselves or things like that, and it steered my entire practice to just video games. About 99% of my clients are video game studios.

Now where I am today, I represent some of the biggest studios and publishers around. Basically if you don't have in-house council, there's only about four law firms on the planet that you'll use, and I am lucky enough to be one of those.

Derek Tokaz:

With so few firms doing this type of work, is it a very big space or is it really hard to come by clients?

Ryan Morrison:

So that's a very interesting question, because as I said, it has more money than any entertainment industry in the world right now, except maybe porn's probably still on top. The gaming industry has all this money, it has all these developers, and every year and every day it becomes simpler for anyone to make a game. There's now a hoard of new developers and new studios popping up that are releasing games on the app store, putting things online, not necessarily making a lot of money, but they are at risk the same way as if they were. That means there is an endless amount of clients here almost, but not too many who want to spend money on legal fees. It's about finding that happy medium of the guys who understand they need a lawyer and have the money to pay for it, even if you do keep your cost down, and that small group is absolutely growing every day, but it means the client pool is not endless here.

There's new attorneys every day opening up a solo shop, calling themselves a video game attorney, but as far as I know, they don't have any clients. What I've been doing on Reddit is trying to let everyone know that the law doesn't care if you make $3 or you're game's free. You're still infringing on that storm trooper that you stole. These guys, they're not anti-lawyer, but the developers in these studios never think to get a lawyer. They don't know that the law applies to them the same way it does to EA or Ubisoft. So these small mom and pop game studios or the guy in his dorm room, they need to protect themselves the same way they would if they were a hundred person studio.

That's the big thing I try to show people here. Spending a couple thousand dollars upfront to properly trademark yourself, to get a proper contractor agreement, to really set things up properly is so much cheaper than getting that cease and desist with the demand for $50,000. The disaster scenario scenarios are not uncommon here. So many of these teams start as late teens, early 20 year olds who are all best friends making a game together. They don't make the money quick enough, so three of those five people are going to give up on that or you're all going to wind up hating each other or things like that. A proper contract not only saves your game and makes sure the IP is where it's supposed to be, it also saves friendships.

Derek Tokaz:

I'm curious about sort of the breakdown of the types of clients you have, between the small indie developers that don't have a ton of resource, and then the big AAA name brand, the games that you're going to find at Best Buy.

Ryan Morrison:

I'd say we're about still 75/25 in terms of indie developers overtaking the major guys.

Derek Tokaz:

Do you charge these small indie developers the same rates as the large companies?

Ryan Morrison:

I make my prices public and I try to keep costs not only low but all flat fees and really make sure that you can budget your legal bills the same way you can budget any other expense your company has. I also do that with the AAA studios I work with that are the very large publishers, so my prices are a lot lower than the major firms and I'm not trying to sound like a commercial. I'm trying to say that a lot of the big AAA studios that don't have in-house council are starting to come to me, probably in a test run capacity right now to see if we do match better with them than the attorneys they've been using for 30 years.

Derek Tokaz:

So on the one end, you have competition from the big firms and in-house council, but what about on the other end? Are you seeing a lot of people trying to enter the field coming directly out of law school?

Ryan Morrison:

It's such a flooded sea right now of new attorneys trying to get into it. I'm not exaggerating when I say I get 25 to 50 resumes a week. Yeah, people really just think it sounds, like you said, like a fun, sexy career, and while it certainly is fun and it's amazing, there's not room for 500 attorneys to immediately pop up. We are now in the year where all the kids who grew up playing games are becoming adults. The average age of a gamer is not six years old, it's not even 18 years old. It's about 28 to 35 years old. Those people are the newer attorneys. They're the people coming in who are having trouble finding jobs in this economy and want to do something they love, so they open a solo shop and think it'll be that simple, but it's not.

Derek Tokaz:

So you're still a solo practitioner, though you get all these resumes all the time, so I'm wondering why you're still in a solo practice?

Ryan Morrison:

I absolutely overwork myself. I should absolutely be bringing more people on, but I'm a control freak as it stands right now. We are not even two years old as a firm, so it's a matter of also we're still growing. I did hire my first law clerk, Mida Asani, who used to work at Escapist, which is a game journalism website, and the reason I brought her on and not, is because I've seen her at every conference I've gone to. I've heard good things about her before she contacted me. The three people I work with closely, as of counsels, are people that were also at every one of those events. So I needed a patent attorney. So I discussed with Howard Eikenblad a relationship where he's going to take my patents, but we're still going to keep all the copyright and trademark issues in house. We need immigration work because a lot of game studios want to bring someone in from India or they want to, even Canada, whatever it is, they have immigration needs.

So we brought on Stephanie Gibbs to handle our immigration matters, but in enough council capacity. When I am ready to bring on more associates, which I plan to very shortly actually, I'm going to be pulling from the pool of people who kind of already think they would be on that short list. What matters is that you understand the industry, but you also understand that this is not just playing games all day and that this is something that requires a lot of hard work and a lot of hustling and a lot of travel that's not fun. Going to events that you're not going to enjoy just to meet with the studios and developers there.

Derek Tokaz:

I hear a little bit about the challenges that you face as a solo practitioner. There's learning the legal stuff and getting clients, but what are some of the other things that people aren't necessarily going to be thinking about? And I know you're working in a place where your expenses are, I would imagine pretty high being in New York. It's not a cheap place where you can sit around and not have money coming in for a while,

Ryan Morrison:

Right? Mida works remotely for me, and we were actually just talking about the rent she pays in North Carolina and it's, want to make me put my fist through the wall. I don't know why I stay in New York other than the pizza. Other than that, you're right, the cost here are insane, but it's part of the course because you're also in New York, which people just unfortunately or fortunately, whether you agree with it or not, they usually respect that more than if I was in Idaho. The other main expenses were, I guess hurdles is more accurate with opening your own solo shop is proving to people you're not that inexperienced young attorney who doesn't know anything. You're not the stereotype of someone who didn't study under another attorney for five years. Attorneys certainly don't respect me the way they would someone who's been doing this 30 years. I hear it in their voice immediately. Not only that, but where I went to law school, they just are not impressed you could say. That's great. I use that to my advantage.

I love being underestimated and there wasn't these same issues 15 years ago. So it doesn't matter if you've been practicing for 30 years. You don't know.

Derek Tokaz:

Let's get down to sort of the nuts and bolts of the actual practice itself and hear a bit about the type of work you do.

Ryan Morrison:

My main wheelhouse is trademarks. That's where I spend most of the day with my clients. For those who don't know trademarks, protect your name, your logo, they're basically what protects your brand. And that's so important in the video game space, especially the app store, as most people with the phone know. The endless amount of clones or people trying to confuse customers to come into their game is prevented by proper trademark usage and protection. So we try to do that for all our clients. And the important thing to realize, as much as I call myself a video game lawyer and very much believe I am, there is no video game law. There's a bunch of different areas of law within the context of video games. Every day is honestly different, which is fun, it's exciting and it's nice.

I do a lot of different things and I'm all over the place, but they're all things that kind of repeat on a giant wheel. So while I'm only doing five trademarks this week and I might not have any next week, the week after that, we'll go through the same thing. Or if I might be setting up 10 contractor agreements this week or setting up a partnership agreement between two guys in college or helping a major international publisher try to open up in Brazil, those are all things that I'm going to do again shortly, but might not do again for three months.

Derek Tokaz:

When you're doing trademark work, is it mostly trademark registration or are you also doing enforcement of the trademarks?

Ryan Morrison:

I would say the most I do is trademark applications. The thing that's important to me, and I try to make clear to my clients is that I do have a strong philosophy and love for the industry of games as well. I'm never going to be the firm who's sending out a hundred frivolous cease and desists for you because you have a trademark that you feel you can bully people around with. I will always send out a cease and desist and I have no problem helping you shut down thieves or people stealing things or even people who unintentionally infringe on you that just need to change their name because it's yours. That's fine and we will always do that and I do a lot of that, but I get approached a lot by what I would call trademark trolls who have potentially powerful trademark names and they want to send out 50 cease and desists a week demanding $10,000 each.

I am very quick to turn those people away. I have no desire to help those people, and on the flip side, I have a standing offer with the Reddit community and extends to everyone else that if you get one of those frivolous cease and desists, I will happily look into it and respond for you for free. That doesn't mean I'm going to do a six figure litigation battle for you for free, but I'm happy to at least show them that you're not going in blind and you do really understand the situation and I'll never charge for that.

Derek Tokaz:

Are there any specific issues or problems that you see your clients running up against over and over?

Ryan Morrison:

The number one question I get asked is whether or not it's fair use if they don't charge for their game, and I like to tell them that fair use doesn't exist for indie game developers. Yes, it technically exists, but you have to prove fair use in a court and that's going to be a six figures legal battle that you're not going to win against Disney because you made a free Star Wars game. The other one is the friends making a game together who down the road are going to argue over who owns what or what revenue split they all get. "I did more work than him, et cetera, et cetera." When a simple contract would've fixed all that. Trademark trolls are a huge part of this industry, unfortunately right now.

It's actually, what I've seen firsthand a lot is casinos and slot machines. They're in the same class of goods in trademark world as video games. A number of my clients or would-be clients get cease and desist that will demand $50,000 and for them to take their app down for an app that only made 25 cents, but it happened to be one of their endless slot machine trademarks.

Derek Tokaz:

So when you get one of these developers that's making somewhere between no money and zero money, and they get a cease and desist letter, and are on the hook for whatever settlement you're able to negotiate, what's actually happening with these developers. Are you seeing them be on the hook? Are they personally liable for the damages?

Ryan Morrison:

We are usually able to negotiate these down substantially so that they're not life ruining. Knock on wood, I've yet to have a six figure judgment against the client or something like that, that it would've been that devastating. The nice thing here is to realize that if they do set up a corporation or an LLC beforehand, and they are making no money, then that caps what the other side knows they're going to be able to get, and they're not going to pursue it through quarter, things like that. So as much as the liability shield exists and is a nice reason to set up these corporations, in a real world sense, it makes the other side not think you're worth it. They know that your company's just going to go under and they're going to get 1/100th of what they spend on legal costs and they drop it a lot quicker than they would otherwise.

A lot of these clients thank the moon that they did have an S-corp set up or something like that to be the shield here because, I have, and on the other side, I have had clients that were forced to pay life ruining amounts in the sense that they had an app that they put up for fun and, next thing you know they're paying out $25,000 and their wife's leaving them, taking the kids, they're losing their house. They didn't have a corporation set up and they didn't think they were doing anything that wrong. Next thing their life's ruined because of a lack of legal knowledge and it's a shame and it's something that is more common than we like to think it is in this industry.

Derek Tokaz:

So are there other major issues that a company in the gaming industry might not anticipate that could end up having pretty major potentially disastrous effects down the road?

Ryan Morrison:

The contractor agreements or lack thereof. This whole industry runs on contractors. So a really good programmer and his buddy who's a really good artist will contract out a musician, or more commonly, they'll contract out an artist to help them finish and polish up the game. The arrangement will be something where it's, "Here's $10,000, thank you for the art and that's it. Good day to you." What they don't realize is without a proper IP assignment and without the actual clause in the contract that transfers ownership, they're operating under an implied license that's easily revocable. That $10,000 isn't buying you the art. It's buying you a license to use the art that they can revoke, and that happens. Not a lot, but a common enough that it's a huge issue. A game will be about to launch and the artist who has been already compensated will come back and say, "You're not allowed to use my assets. Either take down the entire game or give me a large revenue share portion of what you're making."

That could have all been prevented with a proper IP assignment clause in their original contractor agreement, and that's kind of the last big one that I would say is a common pitfall with these developers that we try to watch out for.

Derek Tokaz:

I think this ties into what we were talking about early on where, one of the big challenges for you is educating your clients or your perspective client. What you have to do is convince people that they need a lawyer in the first place.

Ryan Morrison:

That's absolutely true. The biggest competition I have is no one. Meaning that they're just not going to use an attorney. The frustrating part is, I spent all this time doing this and now all these darn kids are going to come in and steal all the clients that I made aware that they needed work. But that's fine. I much prefer this industry be run more as an actual business instead of a bunch of hobbyists. Nothing wrong with having a hobby you love, but once you start selling a product or putting it up for others to use, it's no longer a hobby. It's a product. You're a business and you need to act like one. The game industry is still a baby. It's still young, and unfortunately it's still acting a bit like a baby in a legal sense. It needs to grow up and realize that there are sharks out there. There's a lot of trolls out there that are going to come and take what's yours because you didn't do the couple steps necessary to protect yourself.

Derek Tokaz:

And that's not just within the game. There's trolls out in the real world.

Ryan Morrison:

That's absolutely true.

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