Understanding intellectual property from a business perspective can make or break a successful game launch.

In the dynamic realm of gaming, where creativity knows no bounds, there’s an invisible infrastructure that shapes everything from indie development to billion-dollar AAA collaborations. It’s not a game engine, a distribution platform, or even player engagement metrics. It’s copyright – and it’s the backbone that protects the innovative ideas driving game development and artistry.

Copyright isn’t just a legal term. It’s a business framework that determines who makes money, how partnerships form, and whether a gaming portfolio survives to see tomorrow.

The business foundation for licensing a 3rd party IP inside a video game

Let’s start simple: copyright means “you made it, you own it.” No registration needed, no paperwork required. The moment you create code, art, music, story, characters, or gameplay mechanics, you hold the copyright automatically.

However, in most cases, a game developer licenses a 3rd-party IP to develop the game.

The most straightforward license is for a game engine, typically Unity or Unreal. Review the available tiers, find the right fit for your game, and proceed. There are no ongoing checkpoints as long as you stay within your lane.

The more advanced option is licensing an external IP to appear in your game. It can be a famous character, a movie, a car, a celeb cameo, a soundtrack, a renowned dance routine, a fashion collection, a brand name, or even a word, or all of the above.

However, there are other cases in which a brand might appear in a video game, such as in an ad campaign; we will not cover this here.

Let’s break it down and see it from both sides’ perspectives. Here are the fundamentals (of course, if both parties negotiate other terms, that’s fine. However, below I’ll break down standard terms):

• For a developer: You developed a game, and you want to license a 3rd party IP. You know that integrating an external IP will enable you to deliver real value to your user base. For an IP owner: you are seeking new marketing channels, new revenue streams, or both.

• Defining the license with clear terms, such as limiting the term, sunset period, and distribution channels, helps the audience feel assured about legal boundaries. It reduces uncertainty, which is essential for their confidence in licensing agreements.

• Geo: In most cases, a license to distribute a video game is global, with specific geographic exclusions (e.g., China).

• Exclusivity: We need to define it so that each developer has their own lane (example: in-game genre, release window).

• IP ownership and exceptional use cases. Here are my best practices. Most topics are open to negotiation; however, I found that in many partnerships, these are the pain points and the win/win remedies.

Practical tips on how to eliminate IP questions in gaming agreements:

CASE #1: If this isn’t a work-for-hire contract, but a licensing arrangement, the developer will own the game code. This means that after the license ends, they may decide to replace the known IP with an original IP they have created. However, even if that is the case, they will not be able to use the same game build. Let’s illustrate how this will look: a developer has licensed the IP of a known soccer club and developed a new standalone soccer game based on that IP. Once the license ends, the developer will need to sunset the game. Then they may use the same game code, excluding the IP, and resell it as a new game. There can NOT be a continuation of the game if the entire game was based on that single 3rd-party IP.

CASE #2: To develop a game based on a 3rd-party IP, a specific adaptation of the IP’s look & feel is needed. The IP owner retains 100% of that ownership and may elect to collect the files upon termination. They should use it after that.

CASE #3: A licensed game was launched on a platform. Let’s use Roblox as an example; this applies to all game platforms. If the developer and IP owner wish to use the video game’s art style in other categories, they may do so if both parties agree; however, it is not guaranteed that Roblox will allow them to include their logo. That would be a new licensed deal. The right to launch a game on a platform doesn’t guarantee that the platform will allow use of its IP beyond that scope.

CASE #4: The developer and IP owner should also discuss who is responsible for infringement by games that unlawfully use 3rd-party IP. Let’s stay with Roblox for this discussion, as this is a well-known issue there. If you search any known IPs on the platform, you are likely to find numerous infringing games that kids (let’s assume there are kids) have developed around their favorite IP. Someone will need to monitor those infringing games regularly and file to have them removed. Those “cute” infringing copyright games are messing up the ASO (SEO and its equivalents). This means that when a fan searches for the official game, they might be misled by an infringing version. This will affect game rating and engagement. Launching on Roblox (or Fortnite Creative or Google Play) isn’t like launching on official retailers that enforce the IP owner’s rights and sell only official products.

CASE #5: Players who have gained legitimate access to a game during the term will be allowed to continue playing the game even if the agreement entered into the sunset term (remove from sale) and even after the term ended. While technically the developer can, in particular cases, remotely shut down a game, it’s bad practice to do so for all parties involved. AVOID!