What is an EULA and what is it for?
An EULA (End User License Agreement) is an agreement between a software developer and an end user that defines the terms and conditions of software use, protects the developer's interests by giving it control over the use and distribution of its product, and provides legal protection for end users.
Why is it important to have such an end-user license agreement? There are several reasons for this:
- Software, despite the fight against piracy, is easily copied and distributed, and users can still use it in ways contrary to the developer's interests.
- Software is a complex object that depends on other objects. Disclaimer of warranties and limitation of liability are therefore critical to protect software publishers from liability for conditions that may be beyond their control.
- An EULA is usually required for the installation or use of software, allowing the developer to obtain the user's explicit consent to the terms of use that must be met.
- The EULA helps the developer to limit its liability in case of unforeseen situations or problems arising from the use of the software. Relevant provisions in the EULA may stipulate that the developer is not liable for any damage arising from the use of the program.
The world practice has not developed a single standard form of EULA; however, the “example” of standard licenses are license agreements of large companies, such as Microsoft, on the basis of which agreements for smaller companies are created.
License agreements can take a variety of formats:
- Signed paper agreements;
- «Click-through agreements» or «packaged licenses» - these appear during the software installation process.
Most of us are more familiar with the last format, which is presented as an “agree or disagree” offer that gives the user the choice of accepting the agreement (if they want to use the software) or rejecting it (in which case they cannot proceed with the installation).
Many license agreements define how a software application can be used. Most of them contain provisions that prohibit end users from distributing the software in ways that could harm the developer. Some even include provisions prohibiting end users from openly criticizing the software or the company that released it.
Examples of terms that are most often contained in an EULA include the following:
- License Terms. This usually specifies the characteristics of the license and its scope (i.e., exclusive or non-exclusive license, terms of use (e.g., reproduction only or modifications), etc.). The more detailed the license terms for your product, the more you are protected from unauthorized use. Accordingly, in case of improper use of your game, you will be able to easily justify the reason, for example, deletion of the user's account due to violation of the terms.
The UBISOFT License Agreement provides for the possibility of granting a license to install and use the product during the EULA:
«UBISOFT (or its licensor) grants you a personal, non-commercial, non-sublicensable, non-transferable, non-exclusive license to install and/or use this Product (in whole or in part) or any other Product (the “License”) until you or UBISOFT terminates this License Agreement.»
We give the example of Electronic Arts' license agreement, which expressly contains a clause about the use of video games for a non-commercial purpose:
«EA provides you with access to our games and services for your personal enjoyment.
You are not a purchaser of EA's Services, you are merely purchasing a license to use them. EA grants you a personal, limited, non-transferable (i.e., not for sharing), revocable, and non-exclusive license to use the EA Services that you access for non-commercial use and subject to your compliance with this Agreement».
- Permitted and Prohibited Uses. Since games are complex products and there are many ways to use them, you should clearly distinguish between what you want to allow and what you don't want to allow. Most commonly, permitted uses include playing, downloading, installing, and modifications within the game (such as creating original characters). Prohibited methods may include the use of mods, unauthorized copying and distribution, and more.
The Minecraft license agreement, for example, contains a fairly clear and concise wording in terms of granting rights, namely:
«When you buy our games, it means you can download, install and play them. For the server version of Minecraft: Java Edition, you can install it on a server and organize online play.
However, you must not distribute anything we have created unless we specifically agree to it. By “distribute anything we have created” we mean the following:
share copies of our game software or content with anyone else;
use anything we have made for commercial purposes;
try to make money from anything we have made; or allowing others to access anything we have made in an unfair or unreasonable way».
Some companies offer a fairly extensive and comprehensive list of prohibited activities that you should familiarize yourself with to avoid misuse issues. The Epic Games license agreement is an example of broad language regarding uses:
«You may not do any of the following with respect to the Software or any part thereof: (a) use them for commercial or promotional purposes; (b) use them on more than one device at a time; (c) copy, reproduce, display, perform, display or use them in a manner not expressly permitted under this Agreement or the Software Special Terms and Conditions; (d) sell, rent, lease, lease, license, distribute or otherwise transfer them; (e) reverse engineer, extract source code, modify, adapt, translate, decompile or disassemble them or create derivative works based on them; (f) remove, disable, circumvent or modify any proprietary notices or labels or security technologies included therein; (g) create, develop, distribute or use any unauthorized programs to gain an advantage in any online or other game modes; (h) use them to infringe or violate the rights of any third party, including but not limited to any intellectual property, publicity or privacy rights; (i) use, export or re-export them in violation of any applicable law or regulation;
(j) engage in conduct that is detrimental to other users' use of the Software or Services as provided by Epic, in Epic's sole judgment, including but not limited to the following: cheating, harassment, using abusive language, abandoning a game, disabling a game, spamming, social engineering, or fraud».
- Content creation within the game. Content created within is undoubtedly intellectual property, but the question often arises as to who owns it. The EULA should contain a clause in this part, especially if the video game explicitly provides the possibility of creating intellectual property objects in it, for example, characters.
The UBISOFT license agreement is an example of a license agreement that provides for the ability to create stand-alone content:
All proprietary rights, including intellectual property rights in the Product (including, without limitation, all text, graphics, music or sounds, all messages or items of information, invented characters, names, themes, objects, scenery, costumes, effects, dialog, slogans, locations, images, diagrams, concepts, choreography, videos, audiovisual effects, domain names, and any other items that are part of the Product, individually or collectively) and any and all copies of the foregoing are owned by UBISOFT or their licensors. The Product is protected by national and international laws, copyright agreements and conventions and other laws. The Product may contain certain licensed materials, in which case UBISOFT's licensors are entitled to defend their rights in the event of a breach of this Agreement. Reproduction or presentation of these licensed materials in any manner for any reason is prohibited without prior permission from UBISOFT and, in some cases, from UBISOFT's licensors and representatives. Except as expressly set forth in this License Agreement, all rights not expressly granted to you herein are expressly reserved by UBISOFT.
This License does not grant you ownership of the Product and should not be construed as a sale of any rights in the Product.»
Minecraft's license agreement, on the other hand, provides that players own the rights to the original created content within the game:
«We do not own the original materials you create. However, we will own things that are copies (or substantial copies) or derivatives of our property and creations - but if you create original things, they are not ours. So, as an example:
- a single Minecraft block (including its textures and “look”) - we own it;
- your creation of a gothic cathedral with a roller coaster running through it - it doesn't belong to us.»
Thus, there are many variations of terms and conditions for drafting an EULA for your game project. We recommend that you take into account the features of your product, possible uses, and actions that users should not perform in relation to your game (e.g. creating mods) in order to ensure that your product is fully protected.
U.S. intellectual property and video game jurisprudence includes cases involving the proper interpretation and application of EULAs.
The case of Bragg v. Linden Research, Inc. was a dispute over the license agreement of the Second life game. The essence was that, based on the concept of a video game allowing the creation of a virtual reality in which various things could be created, one of the users had devised a way to buy land (virtual) at a lower price than on the official market.
The user connected to auctions that were not publicly accessible and bought such lands for $300, while their public price was $1,000. Linden Lab, the copyright holder of Second Life, blocked the player's account due to violation of the EULA, as a result of which, as the player stated, he lost all his virtual property worth $4,000.
The court found that the player had not violated the EULA because Second Life was a unique service that offers, in a massively multiplayer environment, the purchase of some form of virtual real estate, and the user had no «reasonably available market alternative».
It is worth noting that such cases are unique and most often depend on the specific qualities of each game. For example, in the video game World of Warcraft, the possibilities for original player actions are more limited, and a condition that transfers all copyright prerogatives to the company may be considered fair.
However, violating an EULA does not automatically mean copyright infringement. In the recent decision in MDY Industries, LLC v. Blizzard Entertainment et al 3. a dispute was stated over a computer program that allows a player to play automatically (or “bots”) to level up faster.
The court explained that although the use of bots is prohibited by the Terms of Use of the game, it does not follow that working outside the scope of the license results in copyright infringement. For this to be the case, the licensee's actions must, firstly, go beyond the scope of the license, and secondly, affect one of the licensor's exclusive legal rights. In the present case, the provisions of the Terms of Use aimed at prohibiting automatic play, use did not affect copyright.
Thus, it is important that software developers understand the key elements of an EULA, develop appropriate end-user license agreements for their organization, and keep track of the people and organizations with whom such agreements are in use.
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