Before I start, here is a disclaimer: I did a search for "liability" and "lawsuit" in this forum, and I couldn't find any threads that were satisfactory. I apologize if I couldn't find the thread that could answer me, and wasted your time instead.

I have been programming for quite some time. Some of my work is commercial through my employer, and some of it is just stuff I do on my own as a hobby. I would like to take my hobby to the next level and start selling them, thus, taking a leap into creating my own business perhaps.

A few things concern me at this point. My concerns are:

1) Software protection (crackers, piracy, etc...)
2) Personal liability

Item #1 is no issue until/if my application(s) become a big hit. I have been reading up on websites that explain how apps are cracked. I do quite a bit of assembly programming myself, and I am aware of tools like SoftIce to help debug applications. At this point, I am quite convinced that it is next to impossible to stop crackers especially on MS Windows systems due to the inherent lack of security measures and the lousiness of what does exist. However, I still wanted to ask around and see how the readers of this forum deal with the issue of their software getting cracked and made available online. Or even worse, the software being bought legit, and then made available online at warez sites.

Item #2 is a bigger concern since we live in a society in the US where people spill coffee on themselves and yet get rewarded for such stupid acts by the upholders of justice. I am planning to start my own company officially and legally as an LLC when the time comes. By this I mean, when I know there is a market for the software I write and I have paying customers etc... I read conflicting information about LLC and how much it can protect my personal assets. Apart from the LLC approach, is it enough -at least in the early stages of me trying to sell my stuff as shareware- to include a liability agreement such that whoever uses my software is agreeing to it and the contents of the liability agreement is that I won't be held responsible for any damage to the user's computer, data, etc.. However, this agreement will not mean that I don't have any customer service.

I downloaded a demo game from Dexterity to see what comes with Dexterity's demo games. The user agreement window that pops up during installation says the following:

5. NO WARRANTY.
THE SOFTWARE IS PROVIDED "AS-IS". NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARE MADE AS TO IT OR ANY MEDIUM IT MAY BE ON. DEXTERITY WILL PROVIDE NO REMEDY FOR INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES ARISING FROM IT, INCLUDING SUCH FROM NEGLIGENCE, STRICT LIABILITY, OR BREACH OF WARRANTY OR CONTRACT, EVEN AFTER NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

I don't know what the full version of the game would say. Do full version games come with any kind of warranty? If not, how much in sales does Dexterity lose because of having no warranty? Is it even an option not having any warranty (so that customers can't sue). Is including this "No warranty" statement with the demo game any protection from possible lawsuits?

I would appreciate any responses from anyone with real-life experience concerning these issues. And once again I apologize if my questions have been talked about and beaten to death earlier in this or another forum.

Thank you in advance!

Regarding the limited liability of LLCs:
According to "Form Your Own Limited Liability Company, 2nd Ed.", by attorney Anthony Mancuso (Nolo, ISBN 0-87337-419-3), "with the exception of corporate entities, the LLC is the only form of legal entity that lets all of its owners off the hook for business debts and other legal liabilities, such as court judgements and legal settlements obtained against the business." However, Mancuso mentions in a sidebar that owners must normally co-sign business loans, meaning you won't get a bank to give your company a loan unless you agree to personal liability. The only exception is when the LLC is negligent and that negligence results in harm to another person or another person's property.

I don't know of any software that offers a warrantee against damages caused by that software (I would imagine stuff like hospital life support control software has some sort of guarantee, but certainly not games). The "No Guarantee" clause you quoted from Dexterity's software is pretty standard boilerplate stuff (in both demos and full versions) and, because it's so widely used, lack of such a clause might lead one to believe your software is guaranteed. In conversations I've had with lawyers in the past, they've always told me to include a EULA in the installation process which must be actively accepted before installation will continue.

Finally, no legal entity is immune to being sued: if someone wants to bring suit against you and/or your company, all they need is a lawyer willing to go along with it. Remember: Bringing suit against someone doesn't mean the complaintant is right or that they'll win, it just means that they have money to spend on a lawsuit. My advice would be to take reasonable precautions (ie., use an active acceptance EULA, form an LLC (perhaps), see if your homeowners/renters insurance covers you, etc.) and then forget about getting sued. Unless you've got millions of dollars in personal assets or you blatantly steal someone's IP, no one is going to go after you for making a game!

A buddy in another line of biz has an s-corp and he's converting to llc. Reason being he bankrupted his company so someone is suing him trying to go after his personal assets. There's all sorts of funky rules for s-corps like having to have regular board meetings with minutes, etc. If not followed could possibly argue you are not an real corporation thus justifying piercing that shell. Since llc has different rules it's harder to pierce, he said nobody has ever sucessfully pieced an llc in his state.

Anyhow, probably s-corp should be fine. Even then business insurance might be good idea.

As far as the piracy issue goes, the main thing is to make your full game a seperate download rather than keycode-unlockable. Or else pirates can just distribute the keycode or keygen, and get the game off YOUR server! Apart from that, my personal feeling is that anything else you do is futile against pirates and/or annoying to regular customers, and wasted effort on your part. Instead, cheer yourself up by thinking, "A pirate copy is probably not a lost sale", and, "A pirate copy is still free advertising"

My feeling is that obscurity is a far bigger problem.

Originally posted by Anthony Flack
"A pirate copy is probably not a lost sale"

Nicely said Anthony. Most sales would come from legit users and as long as pirate copies are not readily accessible then it's not going to sap your sales and not be a real problem.

That said though.. for some reason it seems to be a hell of a lot easier getting hold of a hacked (great) "indie" game than it is to get hold of a hacked (great) "mainstream" game.

I say "great".. as there are obviously lots of not-so greatindie/mainstream games out there, who nobody would take the effort to hack.

If you have a great indie game on your hands, for some reason it gets hacked and pirated to buggery.

.. The most famous example of this was doom... where it is reaconed only 1% of the people playing the registered version owned it...

(but then, that never did it any harm)

Right, in fact it may have even contributed to its huge success. As I said, obscurity is the bigger problem. That 1%, was 1% of EVERYONE...

But the most obvious reason I can think of is that most indie games are designed to be distributed online; it's only natural.

IIRC DOOM did not contain any kind of copy-protection so there was nothing to crack.

Originally posted by kerchen
Unless you've got millions of dollars in personal assets or you blatantly steal someone's IP, no one is going to go after you for making a game! [/B]
A company I work for was sued by Hasbro because their titles bore a similarity to Hasbro's. From what I hear, they had a good chance to win if they went to court with Hasbro, but the cost of the legal battle would have been severe, so they settled out of court. I agree with you except that I don't think you need to have millions of dollars to make you a target. And I think there are some big bullies around that will throw a flimsy suit together, because they know you don't have money to put up a real defense, so infringement doesn't really need to be blatant, just arguable.

-Erik

Originally posted by entell
Item #2 is a bigger concern since we live in a society in the US where people spill coffee on themselves and yet get rewarded for such stupid acts by the upholders of justice. I am planning to start my own company officially and legally as an LLC when the time comes. By this I mean, when I know there is a market for the software I write and I have paying customers etc... I read conflicting information about LLC and how much it can protect my personal assets. Apart from the LLC approach, is it enough -at least in the early stages of me trying to sell my stuff as shareware- to include a liability agreement such that whoever uses my software is agreeing to it and the contents of the liability agreement is that I won't be held responsible for any damage to the user's computer, data, etc.. However, this agreement will not mean that I don't have any customer service.


Hi entell,

If the question here is if a usage license agreement will protect your personal assets, the answer is no. The agreement makes it difficult for a claimant to prove your software is at fault for their loss, but it does not prevent them from making the claim. Once the claim is made, no matter how unlikely it is to be found true, your personal assets are at risk as a sole-proprietor or general partner. The risk is much less because of the agreement, but not removed entirely.

If you form an LLC or corporation, it is that entity's assets that are at risk. That is one of the main reasons for forming an LLC or corporation. It does not take much time or money to set up either of these. A CPA or attorney can do it for you. They will ask questions about how you plan to work and recommend a solution for you.

Keep in mind that if you have no personal assets, it is not proof against a lawsuit. Many lawsuits are brought about with intent to punish a perceived offender rather than as a way to get money. Even if you don't have a house that can be taken you do have future wages that can be garnished.

I am not a CPA or attorney myself, I am an s-corp business owner. These are the things I learned from our CPA and attorney. They may be particular to our state, and you will want to talk to your own CPA or attorney to get the correct answers for your situation.

-Tom

Originally posted by entell
Item #2 is a bigger concern since we live in a society in the US where people spill coffee on themselves and yet get rewarded for such stupid acts by the upholders of justice.

To be fair, if you're referring to the McDonald's case the coffee really was too hot, far higher in temperature than what's recommended and I believe they had ignored many (100s?) of complaints at the time the lady burned herself.

Sorry, I'm a little off-topic.

Bill

Originally posted by the2bears
To be fair, if you're referring to the McDonald's case the coffee really was too hot, far higher in temperature than what's recommended and I believe they had ignored many (100s?) of complaints at the time the lady burned herself.

excuse me but someone who is not mature enough to wait until the coffee is not too hot anymore should simply stay away from hot drinks imho :rolleyes:

Sorry, I'm a little off-topic.

Bill
from time to time such behaviour is ok me thinks
:)

Thank you all for your valuable feedback!

Originally posted by dreeze
IIRC DOOM did not contain any kind of copy-protection so there was nothing to crack.

True.. you downloaded the demo for free.. then you paid for the full version where-apon you were given the full version to download.. (which is a method suggested higher up in this thread).

.. although most people bi-passed the "paying" step from the above... and a lot of people even now believe that it was totally free for the full version.

... but i use doom as only an example... but its a good one, as it's probably the most pirated game in history.

My 2c.
What do you care about piracy? All products are cracked. I would better be concerned about the quality and effectivness of a product, rather than start thinking about piracy and liability issues. :D

As you said, piracy is less of an issue since there is not a whole lot that can be done about it.

I don't agree with you in terms of liability though. In the context of a game, there is very little liability. However, I am thinking in a larger context. If you write an application to store data, and your customer ends up losing his valuable database of customers or inventory perhaps due to a crash in your program, then you might be in trouble.

In an environment where people's freedoms overlap each others' and the winner is often determined by how much money he/she has at his/her disposal, liability is always an issue whether you choose to ignore it or not.

Originally posted by entell
As you said, piracy is less of an issue since there is not a whole lot that can be done about it.

I don't agree with you in terms of liability though. In the context of a game, there is very little liability. However, I am thinking in a larger context. If you write an application to store data, and your customer ends up losing his valuable database of customers or inventory perhaps due to a crash in your program, then you might be in trouble.

In an environment where people's freedoms overlap each others' and the winner is often determined by how much money he/she has at his/her disposal, liability is always an issue whether you choose to ignore it or not.

Agree on liability in general. USA is a law suit happy country.
Games of the scope that we have around this forum are less likely to get in trouble, unless you make some clone with a same name :) However about DBs, I don't think Oracle would be responsible if their DB would crash somewhere and kill all the data. That's what backups are for. Well, I wont argue.

No software company has been successfully sued for their product not working correctly. At least, no software company I had heard of.

I believe standard in the EULA is the statement that the software product is being licensed without warranty. Maybe managers and bosses like to think that if something goes wrong, they can blame it on the vendor, but they are not going to be able to sue them successfully.

Of course, on a small scale like a newbie's first couple of games, the name of the game will be: whoever has the more expensive lawyers wins. Regardless if they can't win in court, you most likely can't possibly win the legal fees required to get there. Your biggest protection is the fact that you most likely won't get sued since you are not a major company with major assets. Same as with software patents (as discussed elsewhere on these forums).