Who Owns Your Poker? (Part II)

Protecting IP in Poker Pro Representation Agreements

by , Feb 8, 2011 | 5:21 am

Many of the intellectual property issues I address as a gaming attorney are in poker representation agreements. These are agreements for poker pros to play for, endorse, and advertise for various poker brands, both Internet and land-based. Substantially all of the premier Internet poker sites with which I’m familiar employ pros. Some operators ask their pros to travel the world and represent their brands in high-profile land-based games and tournaments and on television. Other pros are incentivized to play more online and have less of a profile at bricks and mortar events.

I’ve acted for both poker pros and for poker operators in drafting and negotiating these types of agreements. The back-and-forth between the parties over who gets what specific rights to certain property (e.g., to the use of a personal branded website) and for how long is fascinating. It’s also critical to building poker brands and preserving one’s rights and value in poker properties. A pro negotiating one of these agreements will often want to ensure that her post-termination copyrights and rights of use are protected. An operator or a marketing rep will also want to be clear about what’s being purchased or licensed and the rights that are available to it post-termination.

The central question for the parties will be: what kind of commercial relationship are they after? In essence, what do they want from each other? The critical question for me as a lawyer is this: based on the commercial objectives, what are the rights of the parties that are in play based on the commercial objectives? Here are some of the things that I look out for in these kinds of contracts:

  1. Nature of the Agreement – What is the commercial nature of the relationship between the parties and what is being bargained for in the contract? Is the poker operator purchasing works (including copyrights to works made by the professional) from the professional that are to be owned by the operator in perpetuity, even after the professional has left and gone to promote and represent another brand? The pro in particular will want to think carefully about this. Will the professional have works and advertisements, for example, being broadcast by her old brand after she’s joined a new brand, and could that affect her endorsement value in the marketplace? Also, a general top-level domain name containing the pro’s name (e.g., www.annieduke.com) owned by the operator could present a problem post-termination; the pro has common law trademark rights in her name and use of such a domain post-termination is arguably bad faith. Or is the poker operator just purchasing a licence to use a particular body of works of the pro during the term of the agreement? Or are there no works to be produced or delivered during the term? Even if that’s the case, the parties will want to think about the right to (for example) use video of the pro wearing the operator’s  brands during the agreement’s run. All of these concepts should be considered and explored by the parties.
  2. Work for Hire Rule – There’s a general presumption in the US that the person that authors a work (say, a blog or a video recording) is the legally-recognized author of that work. The so-called “Work for Hire” rule states that, under certain circumstances, the employer or the contracting party (as may be) can recognized as the legal author of the work. This reverses the presumption in favour of the poker operator, who in this way can obtain copyright in the work. Title 17, section 101 of the US Code defines “work made for hire” as a work prepared by an employee in the course of his or her employment or, depending on the nature of the work and relationship, a work that’s specially ordered or commissioned, provided the parties expressly agree in writing. This can be important, for example, when the parties are grappling with who owns what and who gets to use which property post-termination.
  3. Co-Development – What if content on a website is co-developed by both the professional and her client? Think again about the www.annieduke.com example. What if the pro has contributed content and the name of the site but the operator has contributed design elements, branding, and other visual effects and functionality? Who owns what, and how can it be used, during the agreement’s term and afterwards? If the parties can agree to it, it may make the most sense for the professional to continually control her own domain name throughout the relationship with the brand(s).
  4. Independent Contractor & Corporate Form – Not an IP issue, but once a tax guy, always a tax guy, it seems. Being an independent contractor (as opposed to an employee) can open up a wider series of tax deductions in respect of legitimate business expenses. Be careful, though. In many jurisdictions, the question of whether you are an employee or a contractor for tax purposes is a question of substance and not form. Regardless of whether the parties call the relationship a contract of service or a contract for service, the tax authorities and the courts will generally look to the commercial reality of the relationship between the pro and the operator to understand whether the pro is an employee or an independent contractor. Factors in the determination may include the level of control the operator has over the poker pro, whether the professional provides her own tools and equipment, whether the pro can subcontract the work and/or hire assistants, and the professional’s opportunity for profit. Also, in certain systems of taxation, there may be an opportunity to defer and save taxes if the professional uses a wholly-owned corporation to provide services (on top of possibly limiting the pro’s personal liability).

Poker representation agreements can often be win-win for the parties. The professional can get expensive tournament buy-ins fully or partially covered, a steady income in an industry notorious for booms & busts among players, and performance incentives. The brands get effective and creative representation that can be efficient marketing spend that boosts the bottom line. As with many issues in poker agreements, disputes later on can be avoided by honestly and completely dealing with the issues up front and understanding what each party needs and wants out of the bargain.

Stu Hoegner is a gaming attorney and accountant based in Toronto. He’s a Master of Gaming Law, but thinks of himself more as a maven. Stu represents poker professionals, marketing companies, and Internet poker operators. You can follow him on Twitter @GamingCounsel.

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