Content Startup for Copyright Revenue Distribution Contract Drafting Points

Law firm Veat drafted a profit distribution agreement for copyrighted works at the request of content startup A (hereinafter "client").

​As the digital content industry grows, legal issues surrounding copyright are becoming increasingly important. Especially when developing new mobile games using intellectual property (IP) such as web novels or existing game products, it is essential to clearly define the profit distribution and rights relationship between the original copyright holder and the new game developer.

​Law firm Veat supported the client by drafting a copyrighted work profit distribution agreement, minimizing legal risks related to IP utilization and ensuring that each party receives a fair share of profits.

Key Points for Drafting a Copyrighted Work Profit Distribution Agreement

1. Eliminate Ambiguity in Contract Interpretation through Clear Definition of Terms

​A mobile game based on a web novel is a complex content combining various copyrighted elements, and if the ownership of copyright for each element is not clearly defined, it may lead to disputes in the future. To ensure smooth cooperation between the contracting parties, it is necessary to clearly define the terms that must be specifically defined in the contract.

- Terms related to the contract subject Original work (IP), new game product, derivative work, terms related to IP utilization ​- Terms related to IP utilization​ IP usage rights (license), scope of use (including domestic and overseas), IP reuse and derivative use, terms related to profit distribution ​- Terms related to profit distribution Revenue, in-app purchase revenue, advertising revenue, settlement period and method, terms related to intellectual property rights ​- Terms related to intellectual property rights Copyright ownership, joint copyright, intellectual property (IP) ownership and transfer, terms related to contract performance and termination ​- Terms related to contract performance and termination Reasons for contract termination, breach of contract and damages, dispute resolution clause

Clearly defining these terms reduces ambiguity that may arise in contract interpretation and allows each party to understand the contract based on the same criteria. However, the terms and concepts that need to be defined may vary depending on the contract, so it is important to have sufficient consultation between the parties before entering into the contract and to have the contract drafted by a copyright specialist to match the purpose and situation.

2. Restriction of the Scope of Intellectual Property (IP) Utilization

​Mobile games are inherently prone to having a scope of use that extends overseas, making how the scope of intellectual property (IP) utilization is defined a key issue.

Especially, limiting the IP usage rights to domestic use allows for additional licensing agreements or separate negotiations for IP utilization overseas, providing more effective protection for the original copyright holder.

​Setting the scope of intellectual property (IP) utilization to domestic use requires additional negotiations for overseas distribution. This can restrict overseas distribution or the use by overseas subsidiaries, allowing the original copyright holder to more effectively protect their rights. Additionally, if considering overseas market entry, it may be necessary to conclude additional license agreements or include royalty provisions. If unauthorized overseas distribution occurs, it may be necessary to discuss legal recourse options with a copyright attorney with extensive experience.

3. Clarification of Profit Distribution Criteria and Method

​Profit distribution is one of the most important elements of the contract, and in this copyright-related contract, the profit distribution ratio between the original copyright holder and the new game developer was clearly defined, referencing the termsheet that each company had separately negotiated, and the settlement period (monthly, quarterly, etc.) and payment method (bank account deposit, royalty payment, etc.) were confirmed in advance, and it was clearly defined who the intellectual property rights created in the new game belong to.

​By clearly defining provisions such as profit distribution criteria and distribution method and the ownership ratio of the intellectual property rights of the game produced under this contract, it has been possible to distribute profits fairly and maintain a long-term collaborative relationship.

4. Provisions to Minimize Legal Risks

​Clearly setting the penalties for breach of contract and conditions for contract termination allows for prompt response in the event of a dispute, including a contract termination clause, including a mediation clause to resolve potential future disputes, specifying the competent court for dispute resolution, and confidentiality clauses to protect information obtained during the contract negotiation and collaboration process, can prevent legal risks in advance by drafting contracts.

As the content industry develops, the importance of copyright and profit distribution agreements is increasingly emphasized, and Law firm Veat has supported stable business operations by reflecting thorough copyright utilization scope, profit distribution criteria, and legal protection measures, tailored to the needs of content startups.

Law firm Veat’s TIP (Technology Intellectual Property) Team is a specialized team in the field of copyright and intellectual property rights, handling all legal issues related to copyright and intellectual property rights. The TIP team is composed of leading experts in the copyright field, including Oh Seung-jong, Attorney , who serves as chairman of the Copyright Committee, Choi Sung-ho, Representative Attorney , selected as a ‘Leading Lawyer’ in the TMT sector of Legal Times, An Il-woon, Attorney , who is active as a specialist of the Korea Copyright Committee, and Jeon Yong-hwan, Attorney , who has extensive experience in ICT regulatory sandbox and empirical service law consulting.

If you need legal advice on drafting copyrighted work and profit distribution agreements, please feel free to contact Law firm Veat.

The following is a sample case of this work, which you can also check on the Law firm Veat blog.

- Key Points for Drafting a Copyrighted Work Profit Distribution Agreement for Content Startups

Thank you.

Law firm Veat