Video Games in Serbia – Employer Challenges with Copyright Law

From a legal standpoint, game developers and publishers face complex issues related to intellectual property (IP) rights, licensing, employment regulations, compliance and data protection, monetization challenges, and others. These issues are often intertwined – IP rights and employment matters are closely linked, as most games are developed by companies that employ creative professionals who contribute to the game's creation.

• Games are the result of mixed copyright

Games are highly intricate works, usually created through the combined efforts of multiple contributors. Their development involves design, storylines and lore, dialogue and voices, software, sometimes hardware and consoles, music, and other creative elements either created by different individuals within the same group, or company or through third parties’ licensing. This makes it challenging to establish who owns which rights and to what extent since these are usually subject to copyright if requirements set out under the Law on Copyright and Related Rights (‘’Copyright Law’’) are met. As a general principle – especially in Serbia - copyright arises from the creative work of natural persons, while the economic rights associated with that copyright can only be held by legal entities, such as game developers and publishers. So, natural persons are authors while legal entities are holder of rights.

The Serbian Copyright Law offers different approaches:

• Co-authorship - when two or more people work together to create a single copyrighted work, they are considered co-authors unless otherwise agreed, while enabling just a ‘technical’ support does not count as creative work. Co-authors share the economic benefits from exploitation in proportion to their actual contributions.
• Joint authorship - when different authors combine their works to create a product intended for joint exploitation. In such cases, each author retains copyright over their contribution. The law emphasizes the importance of agreements to define the relationships between the authors of joint authorship and their respective rights. Naturally, this is usually the case with games since different authors may contribute with different creative contributions (visuals and music, design, storyline and text, software, etc.).

However, applying either of these approaches, without proper agreements, can pose legal risks regarding ownership and exploitation rights. Game publishers, typically companies, intend to commercially exploit the game, but this requires securing clear IP rights and appropriate licenses if third parties are included in the creation processes. This is usually done through detailed contractual arrangements to ensure clarity, prevent disputes, and avoid potential liabilities - ranging from civil to criminal. 

• Games created within employment

When the company as employer is factored into the equation, the legal aspect becomes more complex. Serbian law treats employment-created copyrighted works differently depending on their type. For example:

• Software, including databases (whether considered copyrighted or not), is presumed to belong to the employer unless otherwise agreed, such as in an employment contract. This arrangement offers a straightforward and favorable solution for employers, enabling them to commercially exploit the created product without the risk of infringing on employees’ copyright.
• Other types of copyrighted works (music, literal works, original designs, etc.) - the author retains exploitation rights after five years unless an alternative arrangement is stipulated (g., in an employment agreement or rulebook). During these five years, the employer has the right to commercially exploit the work but is obliged to pay special remuneration to employee depending on the exploitation of such work.

If a game development company neglects to regulate these aspects properly, it risks being left without essential proprietary rights, with the game becoming legally insecure product to exploit. The Law on Copyright and Related rights does not recognize games as a distinct category of copyright (unlike software), so it is essential to regulate rights during the game's development with both employees and third parties included in the development process. Failing to address these issues can lead to different consequences infringing others IP resulting in civila and criminal liability.

• Employees’ contributions are usually not ‘free of charge’

Employers may regulate copyright ownership, but merely stipulating under employment agreements that ‘all IP rights and copyright’ belong to the employer is insufficient. This is because the Law on Copyright and Related rights explicitly states that an author (employee) is entitled to special remuneration based on the success of the copyrighted work's exploitation. The criteria for determining the amount and method of compensation payment are established through a general act (e.g., an Employer rulebook) or specified in the employment contract.

Usually, companies stipulate clauses in employment agreements transferring economic rights to the employer, stating that salary is sufficient compensation. However, this approach can be problematic and even court practice is not uniform in this aspect. If a game achieves significant commercial success (e.g., generates high sales), the gap between the employee’s salary and the revenue generated by the created work would become notably disproportionate. Worse still are cases where no remuneration for employees’ copyrights is provided, which could lead to direct legal exposure.

• Software is an exemption

On the other hand, the treatment of software under Serbian law is relatively straightforward. Due to software being the driving force of Serbian economy, the law presumes that exclusive economic rights to software created within employment belong to the employer. Special remuneration is only payable if explicitly agreed in the employment contract. This simplifies the process for companies, but it is still advisable to explicitly regulate the transfer of all economic rights to avoid potential disputes or liabilities.

• Copyright includes various legal prerogatives

Copyright includes a ‘bundle of rights’ categorized into moral and economic rights, with distinct rules for each:

• Moral rights - these are personal and non-transferable, always retained by the author. They include the right to be recognized as the author, the right to have the author’s name displayed on copies of the work, and the right to decide how the work is published.
• Economic rights - these are transferable and can be held by a legal entity. They include the right to authorize or prohibit reproduction, distribution, rental, public performance, broadcasting, and other forms of exploitation.

Companies can only acquire economic rights. For game publishers, acquiring economic rights is essential for commercializing a game. It is important to determine whether to acquire the full spectrum of economic rights or only specific rights (e.g., the right to distribute but not broadcast, etc.). Usually, licensing companies will grant license only for certain rights. However, overlooking other prerogatives could lead to limitations in exploiting the game fully and potential legal disputes. Therefore, negotiating better licensing conditions may show essential during the development stage.

• Conclusion

Considering the growth of the gaming industry in Serbia, it is crucial to address this issue with care. Since the primary goal of companies is to exploit games for commercial benefit, proper agreements and clauses must be established to ensure the publisher gains full control over the economic rights over these copyrighted works. Despite challenges, Serbia does have legal mechanisms in place that, while not perfect, enable stakeholders to operate within the gaming industry. The question of whether Serbia requires specialized regulations to make game development easier and more legally efficient will likely be answered in the coming years, through the old process of trial and error.

By Milos Maksimovic, Senior Associate, JPM Partners