Fans of the 90s video game Discworld might have noticed an intriguing story circulating online in the last week, suggesting that 50% of the IP rights in the adventure title may have come to be owned by the Crown.

Whilst the details of this story are contested and the true IP ownership position is not certain from publicly available information (and so we do not seek to comment on the Discworld rights here), it raises two important and quite technical IP ownership topics of general interest: (1) the rules of bona vacantia (how a dissolved company’s IP may come to be owned by the Crown); and (2) how the IP rights in a video game might be jointly owned. We discuss these below. 

How does IP become bona vacantia?

Bona vacantia means “ownerless goods”. When a company is dissolved, it ceases to exist and can no longer own property. In most cases, the IP and other assets are taken out of the business before the company is formally dissolved. However, if for some reason a company still owned any assets immediately before being dissolved, those assets (including copyright and other IP) will transfer as bona vacantia into the ownership of the Crown. 

This situation may arise when a company is struck off for failing to make the necessary periodic filings (e.g. of annual accounts) at Companies House. This is known as an involuntary strike off. It may also occur when a company is wound up by resolution of the members (voluntary strike off), e.g. as part of a group restructuring, but certain assets of the company such as the IP are not properly assigned out of the business before this happens. 

There may also be unusual cases in which a liquidator is appointed to deal with the assets of an insolvent company but that liquidator and those buying the assets are unaware of the existence of certain IP, resulting in that asset staying in the ownership of the company at the time of its dissolution. 

How likely is this to affect a video games business?

It might be thought this situation would be relatively rare in the video games industry, given that IP is such a core asset and would generally be at the top of the list of priorities when looking to acquire a games business or to transfer its assets into a new group company. 

Nonetheless, given that the industry is also known for its high number of early-stage businesses and consolidation activity, it is also possible to imagine circumstances in which some IP could be overlooked in the process of a business transfer – something that perhaps may be more of a risk in relation to older titles which are not currently being exploited. 

We would always recommend thorough due diligence to identify key IP and the use of comprehensive IP transfer documents – which specifically list all known titles and use “catch all” wording to assign any other IP whatsoever that is owned by the business – to avoid anything falling into Crown ownership simply because it is overlooked when listing out the IP. 

Can anything be done to recover IP that is bona vacantia?

If video game assets have fallen into Crown ownership, there may be options for recovering that IP. 

If the company was dissolved within the last 6 years, it may be possible to apply to Companies House (in the case of involuntary strike off cases) or to the Court (in other cases) to have the company restored to the register. It would also be necessary to apply to the Crown for a waiver letter consenting to the restoration. If the company is successfully restored, any of its assets which had previously become bona vacantia will automatically be treated as the company’s property again. 

If the Crown has become aware of the asset and sold it to a third party in the meantime, then the restored company will be entitled to compensation from the Crown but the transfer to the third party will remain effective. As it is logistically difficult for the Crown to keep track of all assets becoming bona vacantia, such a transfer will typically only have occurred as a result of the third party writing to the Crown to request to purchase it. 

The process for acquiring bona vacantia IP from the Crown is outlined here. This involves providing evidence that the Crown owns the IP and certain other information, including an explanation of why the purchaser is interested in the IP and what they plan to do with it. The Crown will then investigate the IP and its value. If the Crown agrees to sell, this will be at open market value subject to a minimum price (currently £1,000 for copyright). 

Where the dissolved company owned IP jointly with another party (discussed further below), that party may also be entitled to apply to Court for a vesting order. Such orders can be granted to vest ownership of the asset in another person who claims an interest to it. The process will involve providing evidence to the Crown of the other party’s interest, and asking the Crown to disclaim its right to the property as bona vacantia. 

Joint ownership of copyright 

Like most IP rights, copyright can be jointly owned by two or more parties. In some cases, this will be because the relevant parties have agreed that they should share ownership. 

Joint ownership may also arise automatically, because copyright law recognises joint authorship, i.e. a copyright work which is produced by the collaboration of two or more authors, in which the contribution of each author is not distinct from that of the other author or authors. This requires the collaboration of the parties in making a significant contribution towards the creation of the relevant work. A joint authorship situation could arise in creating scripts, software code, music, artwork and other works featured in a video game. 

In such a case, the authors together are the first legal owners of the work, unless one or more of them they have created the work in the course of their employment (in which case any employee contributions will automatically be owned by the employer). Some authors may also be consultants engaged by the same company and their consultancy agreement may provide expressly for the transfer of IP to the company, but this does not occur automatically – making it very important for video games companies working with consultants to double-check IP their ownership terms.

What happens if a joint owner of copyright is wound up?

Joint authors will usually hold copyright as “tenants in common” in equal shares, but it is also possible for a Court to allocate unequal shares to the authors where their contributions are not judged to be equal. There may also be cases in which the parties have agreed (explicitly or impliedly) to a different share allocation, or to holding the copyright as “joint tenants” rather than as tenants in common. 

Whilst this sounds technical, it can be significant in a winding up situation. That is because copyright which is held jointly with a company and another party as tenants in common could see the company’s interest pass to the Crown as bona vacantia if it is ever dissolved. On the other hand, if the company and the other party are joint tenants, the company’s interest will usually pass to the other joint owning party when it is dissolved – potentially avoiding the need for the remaining party to try and recover the IP using the options above. 

Other potential pitfalls 

Joint ownership can potentially be tricky in any case, even when the Crown does not have the right to claim a share of the copyright. Significantly, a jointly owned copyright work cannot be exploited or licensed without the consent of all the owners. To avoid any uncertainty which might affect the development or future marketing of their project, legal advice is strongly recommended for any games companies considering a joint ownership route. 

An agreement to regulate the long-term use and protection of the IP in the game and to make clear how the shares in the IP are owned and allocated is critical to avoid being tripped up by the rules which will otherwise apply by default to jointly-owned IP. Alternatives to joint ownership (such as an IP licensing structure) should also be seriously considered before committing to this option.