KII Minsk 2025: Report by Semenov & Pevzner on What to Pay Attention to When Signing a Contract with a Publisher

Continuing our series on the video presentations (and their transcripts) from the Minsk session of the Game Industry Conference (GIC), held in April. Today, we're featuring a talk titled "How to Check a Publisher Contract Without Stress: A Step-by-Step Guide from a Lawyer" by Irina Gushchina, Senior Lawyer at the IT and IP Transactions Practice in Semenov&Pevzner. Also, a reminder: on July 10, the "Game Industry Conference" will take place in St. Petersburg.

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My task is to give you a comprehensive understanding of publisher contracts, what types exist, and the points to pay attention to, possibly ones you haven’t considered before.

First, a bit about myself. I work in a legal consulting firm. We work with large brands like Angry Birds, Atomic Heart, and others. So, we have some experience in this field. Before moving into consulting, I worked in game development, at a company that created mobile games, but since 2022 it is no longer operational in Russia.

What will we discuss today? First, we’ll talk about the types of publisher contracts and intellectual property contracts that exist. We’ll start general and move to specifics, discussing key terms involved.

Let’s get started.

The main types of contracts can be divided into two kinds: assignment contracts of exclusive rights and license agreements. You might already know something about this, but I’ll explain it in more detail, just in case.

If you assign exclusive rights, it means you transfer it entirely. You're no longer the rights holder, and the person or entity who received the rights from you will manage all exclusive rights to the game, but you retain moral rights.

What does this mean?

All intellectual rights are divided into two significant groups: exclusive (proprietary) rights and moral (non-proprietary) rights. They operate slightly differently. Usually, when speaking about these rights, people refer only to exclusive rights. They can be assigned and encompass all methods of using your intellectual property. For example, you transfer it, copy it, distribute it in some way, upload it to the Internet, translate it, adapt it—this is all usage.

Regarding moral rights, there is a different story. They are inseparably linked to the author’s personality. For instance, the right of authorship, the right to be credited.

So, what’s the gist? You’ve transferred your intellectual property, but these rights remain with you. Say, you’re a renowned environmental artist. Everyone knows you, and when someone sees your work, they immediately recognize it as yours. Even if you did a piece on commission for a project and fully assigned the rights to the client, you retain the right of authorship. You can declare that you created these works, even though another rights holder uses and manages them entirely. This also applies to works that enter the public domain. Famous books entering the public domain are free for use, but we maintain proprietary rights regarding crediting the author. For instance, we all know the author of “Alice in Wonderland” is Lewis Carroll. This exemplifies moral rights that remain with the author indefinitely.

A contract functions differently; it’s not a full assignment of all rights but a transfer of exclusive rights to the extent specified in the contract. Restrictions can involve the period of use, the territory of use, and methods of use.

An important point: if exclusive rights belong to multiple individuals, for example, two co-authors who created a work or game, any disposition of these rights requires mutual agreement by default. Otherwise, it won’t be valid, and the contract won’t hold. As we discussed, moral rights always remain with the original creator by default.

Licenses are divided into two main types: a simple license and an exclusive license, often called exclusive rights.

An exclusive license means the grantee can use the license in the scope given, but only the grantee can use it. And unless otherwise stated in the contract, you can’t use your work either.

If the license is simple, it means you can grant such licenses to multiple parties, with overlapping ways of use, but you just decided that you’ll be licensing to different parties.

Publisher contracts are typically licensing, so we’ll discuss licensing agreements in more detail here.

To conclude a licensing agreement, you must explicitly state the license boundaries. This could be the license's duration or territorial restrictions. For instance, you might grant exclusivity to one publisher for the CIS region and exclusivity to another publisher for a different market because they do not overlap.

A very, very important point: you need to specify exactly what you are licensing. In publisher agreements, this can be very crucial because, for example, you might be transferring only a certain initial version of the game. Or perhaps you’re transferring an already developed version, a 2.0 version, or even later, and you need to describe it in detail.

A good practice is to have a reference file to look at later. You can even specify in the contract that an archive is sent to a particular email address, containing precisely the version you are providing. Because if disputes arise later, each party might claim that they transferred rights only to this version, not that one. The other will argue the opposite.

Next.

Can the licensee, the one to whom you granted a license, in our case, the publisher, grant sublicenses?

Usually, they can, but it’s better to limit this to affiliated and necessary parties for distribution purposes. It’s crucial not to give them blanket rights to give out these sublicenses to anyone.

Can you yourself use the game in the ways licensed in the agreement? This is an interesting aspect because even if the publisher has exclusivity, the agreement can foresee that you can also use the game yourself. You can’t transfer it to someone else, but you retain the right for personal use.

Concerning ways of usage, in legal terms, using a game doesn’t mean just implementing the game however you want. Ways of usage are subdivided into any possible actions you can take with the game, each having its name. For example, the right to distribute, to rent out physical copies. The most popular in our case with games is making it publicly available, which, in short, means when a game is accessible online.

Creating modifications of your software is also a separate usage. Therefore, you need to pay attention to what you allow the publisher, what usage methods they intend to implement.

Yes, the right to create merchandise, use game characters in other projects—this, too, is usage, as are marketing and promotion.

An extremely important point is whether rights to any sequels, prequels, or other similar games you might make in the future are transferred. Does the publisher have a preference for making future game agreements with you? Do you allow the publisher to use your game anonymously? Meaning, can they release it as if it were their own, without crediting you? And if they can alter the game, to what extent, and who will own the rights to such modifications?

A quite realistic scenario is when you allow technical adaptations of the game if it’s being released on different platforms or with specific requirements, but the rights to these modifications are retained by you. This is negotiable and often practiced.

Another crucial aspect is finances. Compensation can be paid in different ways, depending on your agreements. There’s no golden rule here. Everyone bases it on the anticipated success and profitability of the game. Sometimes, you might have a combination where you receive a fixed upfront payment, followed by royalties.

There can be complex arrangements where royalties are paid as a certain percentage, but if the game’s total revenue exceeds a specific amount, a higher percentage is given. There are generally no restrictions here; you can do whatever you agree upon. But you need to check its enforceability and how personally convenient it is for you.

If it's a fixed payment, you need to check payment deadlines and taxes. It's good to find someone knowledgeable about taxes in the relevant jurisdiction, as taxes in different countries can consume a significant portion of the initially quoted amount. So, it’s better to understand from the outset what sums are involved.

If discussing royalties, you need to check the royalty rate, when it’s paid, and from what amounts those royalties are calculated.

For example, the royalty base might include all revenue generated from the game, or it might exclude certain amounts—taxes paid by the publisher, marketing and promotion expenses, localization costs, operating expenses, and more. You end up with almost nothing leftover, which is just the basis for the royalty you receive, not the entire sum.

It’s essential to verify and, if possible, adjust this.

At one point, developers of a popular game approached us, saying they received no money, despite expecting royalties of 50%. We reviewed the contract and discovered there was no marketing expense cap for the publisher.

Each month, the publisher informed the team: “Our marketing costs are substantial, and they’re deducted from the royalties owed to you, so we can’t pay you anything.” This had been going on for two years.

It was a frustrating situation, difficult to address. It's better to set a cap from the beginning, perhaps on a six-month basis, or establish an overall marketing expense cap. You can negotiate adjustments if necessary, but at least you’ll be sure no more than this amount is deducted from what you’ll be paid.

In general, a good recommendation is to critically review the contract, understanding what each side does.

You must review the publisher’s obligations, what they aim to take on, and their responsibilities.

We had a case in our practice. A team agreed with a publisher to release a game, but the publisher indefinitely delayed the release. The studio ultimately had to rebrand their project, lost time, and released the game two years later on other platforms under a new name. This was disadvantageous, incurring costs for lawyers and rebranding.

To avoid such situations, immediately check if you have any way to veto decisions by the publisher that don’t benefit you.

Another significant issue is publishers often demand extensive warranties for any reason. For instance, ensuring the game complies with legislation in all countries where the game is distributed. This is challenging, especially without your legal counsel, and when creating a game in Russia or Belarus, planning to release it in China, where there are undoubtedly rules unknown to you.

In such cases, it’s worth discussing this reasonably and politely with the publisher so that they at least provide recommendations, as they have experience in the market and are familiar with such nuances.

Main advice: try not to take responsibility for issues beyond your current capability.

Another important point to discuss within the contract framework is who handles third-party claims. For instance, Disney sees that the game distributed by the publisher features characters resembling Snow White and Sleeping Beauty as in the well-known animated film. Disney sends a claim, the game is frozen on all platforms, and the publisher decides what to do next. They look at the contract; if it states that such claims should be addressed to you, they forward the claim to you, and you must handle it. On the one hand, it makes sense—having provided the game, you should ensure its legal soundness. On the other hand, it may not be ideal since the publisher might have more resources and experience resolving such claims. So, it’s wise to consider a more sensible arrangement.

Liability. Often in contracts, there’s a clause stating the publisher is not liable to you beyond a certain amount, say $1000, while you are liable for everything, including actual losses, lost profits, and any damages under foreign jurisdictions. This is unfair. You could reasonably argue to at least remove the clause on lost profits.

Next, ensure both parties' right to unilaterally exit the agreement without cause. If you’ve simply changed your mind, without any substantial breach, or if the publisher can unilaterally exit without your major breach. Verify how symmetrical it is. For instance, if the publisher can exit with three days' notice, but you can never exit, discuss extending their notice period or allowing your exit.

Additionally, clarify arrangements made at the outset: who handles all auxiliary actions related to the game? Who conducts testing? Who provides technical support? Who manages customer support? Who handles localization? Who sets the pricing for in-game items? Who decides on in-game events?

The publisher might require you to host at least 36 events per year, which may be excessive. Evaluate the feasibility of these demands. Pay attention to the contract's jurisdiction and confidentiality. Some publishers stipulate strict confidentiality, prohibiting you from revealing the partnership, even though they distribute your games.

How to coordinate amendments?

Begin by asking if amendments to the contract are allowed. Often, publishers claim: “Take it or leave it.” However, they usually make concessions.

If amendments are possible, focus on the most crucial terms for you. As a lawyer, I understand receiving a contract highlighted in yellow/blue/red with every other line marked "delete" is challenging. It’s hard to comprehend and address reasonably without context. Clarify your reasons for making specific amendments. Also, propose alternative wording upfront. If your reasoning is sound, the opposite party may agree to changes.

You don’t have to speak in legalese or devise complex phrases to sound official. Your goal is to explain politely and clearly the precise issues you have with the contract.