Star Citizen - Chris Roberts, lots of spaceship porn, lots of promises

[dsmart]

Also, without seeing the loan agreement, in which the key terms are defined, how on earth are we supposed to know what is and isn’t included in “the Game” and “Star Citizen”. They could perfectly well be defined so as to be mutually exclusive.

Because the Charge has to be in sync with the loan docs for it to be legal. That Charge is our equivalent of a UCC-1, but under UK law, is more thorough.

In that regard, Section 4 of the Charge, already defines what’s included, and what isn’t in the Charge. The only thing we don’t know is the definition of “Game”. We only assume it to be Squadron 42 by virtue of common sense exclusion, since that’s one of the two games, and the second game has some excluded assets.

And once again, I’m not sure if this is not coming through. There is NO Squadron 42 WITHOUT Star Citizen. So they can’t even BE “mutually exclusive”. And THAT’S why the Charge lists specific items.

[dsmart]

No, I’m missing it. What problem do you see here?

Are you serious right now?

[Ginger_Yellow]

There is NO Squadron 42 WITHOUT Star Citizen.

Conceptually, sure*. Legally? That’s entirely up to the draftsfman.

*Conceding for the sake of argument. In reality, I have very little idea of what the difference is other than that “Star Citizen” is the main thing and “Squadron 42” is some kind of single-player standalone part of it.

[dsmart]

Conceptually, sure. Legally? That’s entirely up to the draftsfman.

Right. And now we’re back at square one: the ambiguity that, if this loan defaults and ends up in dispute, that they’re now going to be fighting over whether or not they have a security over parts of Star Citizen since those parts are used in Squadron 42. And I can 100% guarantee that the bank’s position is going to be that, as per 4.2.2 and 4.2.5, because SQ42 contains code that came from SC, that they are entitled to that as well. And in that regard, parts of the Star Citizen IP (excluding what is specific to “Excluded Collateral” in the Charge)

[Ginger_Yellow]

But the “ambiguity” is entirely down to the fact that we don’t have the definitions for the key terms, because they’re in another document. There may not be any actual ambiguity at all.

[dsmart]

*Conceding for the sake of argument. In reality, I have very little idea of what the difference is other than that “Star Citizen” is the main thing and “Squadron 42” is some kind of single-player standalone part of it.

There is really nothing to concede. It’s just an interpretation of contract law. And what you wrote there, actually summarizes the issue : the fact that SQ42 is derived from SC. Q.E.D.

[Ginger_Yellow]

But it’s not QED legally. Squadron 42 as we understand it, is not “the Game” as contractually defined, and Star Citizen as we understand it is not “Star Citizen” as contractually defined.

I mean, all that said, I’m perfectly happy to “concede” that if they default on the loan, they’re fucked. I said that at the start.

[dsmart]

But it’s not QED legally. Squadron 42 as we understand it, is not “the Game” as contractually defined, and Star Citizen as we understand it is not “Star Citizen” as contractually defined.

Right. But as I said above, we already know it’s Squadron 42, and Ortwin (partner) already confirmed it. He also confirmed that Star Citizen was “excluded”. Which is what this furor is about. How can Star Citizen be excluded, if it’s assets and tech are used in Squadron 42?

[Timex]

Are you serious right now?

I am, sorry.

Is your belief that since SQ42 is dependent upon Star citizen, that the collateral must include star citizen, otherwise the collateral would be worthless? And that is a problem?

I’m not trying to put words in your mouth, I’m just trying to understand what you are saying.

[dsmart]

I am, sorry.

Is your belief that since SQ42 is dependent upon Star citizen, that the collateral must include star citizen, otherwise the collateral would be worthless? And that is a problem?

I’m not trying to put words in your mouth, I’m just trying to understand what you are saying.

Yes.

Point being, whether it was intentional (to mislead the bank by giving them SQ42, while excluding SC) or not (inadvertently including some Star Citizen claims by virtue of the broad collateral in SQ42), there is argument as to whether or not the bank could very well have a claim to Star Citizen.

As I mentioned earlier today (and in my blog update), none of this will matter if they don’t default on the loan, or go bust before they pay it off.

[Timex]

Well, I believe that there is no suggestion made that the collateral would include an actual functional game (insert joke about how even star citizen isn’t a functional game here, heyooo!). Part of this would depend upon how the term “game” is actually defined in the terms, but we do not have access to that, and so it would be pure speculation.

However, I know from experience that there is not necessarily an assumption that deliverables (or in this case, collateral) imply complete and independently operable works. I’ve personally worked on contracts which specifically did not include required dependencies, ultimately resulting in the recipient needing to pay license fees for the portions which were developed separately from their project.

In this case, if you removed star citizen, SQ42 definitely would not function as a playable game, but this does not mean that it would have no value. Things like musical scores, art assets, etc. which are specific to the SQ42 game could still potentially have value. Certainly not the value of a complete game, but you wouldn’t really expect such value for a fairly small loan.

And since this loan is against expected tax payments, (akin to accounts receivable from a customer who is guaranteed to pay), the only real risk for the bank is that the payments would come under the expected amount. But the bank could establish pretty easily how likely that is, and could decide that risk is low. They are still going to get paid some large portion of their money back, in that the payment from the government itself is the prime collateral.

So, worst case for the bank, they get paid what the government is estimated to pay F42, plus whatever value they can squeeze out of the collateral, which is likely not huge. That seems like a reasonable move for the bank, assuming they did their due diligence and F42’s financial records looked good.

So I guess, to me, the notion that the collateral presented is not a functional game, is not in fact a problem. It’s what I would expect.

Indeed, it’s kind of what most of the folks here also would expect, which is why it’s prompting questions like, “why on Earth would they mortgage their entire work for a few million pounds?!” I think the answer is, they didn’t.

To be fair, the loss of the collateral would actually be far more of an incentive for F42 to make the payments, than is value in the hands of others. It has more value to F42 than it does to anyone else.

Again though, without terms of the loan, it’s hard to know for sure, and I’m certainly not a lawyer. I respect your view and experiences as different from mine.

[dsmart]

Well, I believe that there is no suggestion made that the collateral would include an actual functional game (insert joke about how even star citizen isn’t a functional game here, heyooo!). Part of this would depend upon how the term “game” is actually defined in the terms, but we do not have access to that, and so it would be pure speculation.

If you’ve ever set eyes on a video game contract, you should know that the definition of “Game” is just the name of the game. Nothing more. Nothing less. And the Charge description already has a clear indication of what that is.

There is no ambiguity about what “Game” is. If it were defined differently, it would have been in the charge. It’s not. Why? Because it’s defined in the loan docs; and Section 4 is what determines the rest.

It’s not rocket science really.

In this case, if you removed star citizen, SQ42 definitely would not function as a playable game, but this does not mean that it would have no value. Things like musical scores, art assets, etc. which are specific to the SQ42 game could still potentially have value. Certainly not the value of a complete game, but you wouldn’t really expect such value for a fairly small loan.

Nobody is, or has ever, disputed this. It’s in the Charge docs, clear as day.

And since this loan is against expected tax payments, (akin to accounts receivable from a customer who is guaranteed to pay), the only real risk for the bank is that the payments would come under the expected amount. But the bank could establish pretty easily how likely that is, and could decide that risk is low. They are still going to get paid some large portion of their money back, in that the payment from the government itself is the prime collateral.

Wrong. The tax credits are one item in the collateral. If CIG fail to to qualify for the tax credit, or they get less - due to spending less - they are still on the hook for the loan payment. There is a lot of risk in the tax credit not being enough to pay back the bank, or the studio going out of business before they are even entitled to it. So the bank secured everything else to safe guard against that.

So I guess, to me, the notion that the collateral presented is not a functional game, is not in fact a problem. It’s what I would expect.

Wrong. That’s why the bank carefully carved out specific assets in Section 4, and listed them. e.g. the audio would have value in sales or licensing as a tangible asset, unlike a game source code that would require extensive work in order to exploit/extract value.

Indeed, it’s kind of what most of the folks here also would expect, which is why it’s prompting questions like, “why on Earth would they mortgage their entire work for a few million pounds?!” I think the answer is, they didn’t.

Except, according to the bank - and the Charge (which you are continuing to ignore) they did. Says so right there in 3 pages of Section 4. Plus they lost controlling interest in their own assets. See Section 5.

To be fair, the loss of the collateral would actually be far more of an incentive for F42 to make the payments, than is value in the hands of others. It has more value to F42 than it does to anyone else.

Yes. But that’s the thing with collateral. They’re as safe and valuable as your ability and intent to pay the loan that preserves them. Until you can’t.

Again though, without terms of the loan, it’s hard to know for sure,

No it’s not. There’s nothing missing in the Charge that would be immaterial to the loan docs because by UK law, it has to be accurate. Look it up. A charge doc is just a “memorialized list” of the “material assets” in a loan doc. Again, if you have ever seen what a software - or any contract - looks like, then you would know the difference between a short form (e.g. Letter Of Intent) and a long form (final contract) contract.

[sharaleo]

Yep, in Venn Diagram form, this is how I see it:

SQ42 is made from portions of SC, is made from portions of Lumberyard. (Assets, scores, scripts, IP, source code, mo-cap, video, etc, etc, etc)

CIG don’t have rights to transfer the Lumberyard engine itself, so we are talking about the overlap of the blue and green parts - purple.

I agree with Derek in that the contract is worded in such a way that the purple component could easily be under dispute if CIG defaults. Or, maybe the bank knows the dependency SQ has on SC and that purple is excluded, significantly reducing the value of what’s left of SQ42, which explains additional securities in the charges.

Either way, if a default occurs, the bank is going to want to value from it’s security and if they don’t think they can get it from the carcass of SQ42 once SC is removed, I can easily see them disputing.

Again, perhaps CIG will service this with nary a drama, but good business people don’t really take unnecessary risks and that’s what this seems like to me, for what is supposed to be an operational loan against future tax credits and some FX hedging.

[Timex]

I agree with Derek in that the contract is worded in such a way that the purple component could easily be under dispute if CIG defaults. Or, maybe the bank knows the dependency SQ has on SC and that purple is excluded, significantly reducing the value of what’s left of SQ42, which explains additional securities in the charges.

I guess they could dispute it, but given the pretty clear section excluding ALL intellectual property related to star citizen, it seems like they would be virtually guaranteed to lose such a complaint.

So, there is apparently a difference of opinion on how that works be interpreted by a court, but in every legal contract I’ve dealt with, language like that means ask creative works on that project. Which, for a software company, is essentially 100% of what they produce.

But it’s just my opinion, and I’m no judge.

Good diagram, by the way.

[sharaleo]

The question, to my mind, is whether the bank know how deeply dependent SQ42 is on SC. If they know, happy days, no drama, default means SQ42 is dead, CIG lose some other UK assets but otherwise continue on and SC is unaffected. (Note this would still be disastrous for CIG ,IMO).

If they don’t know, or have not been informed, or CIG have omitted how dependent they are and how much cross-over there is, then the bank would have a good case for the contract being negotiated in bad faith by CIG. That could be very bad, as to my knowledge the UK courts, to various extents, still value the faith under which contracts are negotiated, rather than the strict legal text. Who knows what the fallout of that could be.

Either way, no default = no problems. Probably.

[Timex]

If they don’t know, or have not been informed, or CIG have omitted how dependent they are and how much cross-over there is, then the bank would have a good case for the contract being negotiated in bad faith by CIG.

This is possible, but potentially hard to prove.

Ultimately, Derek is right in that all of this is likely to be moot, given the size of the loan and the money they are pulling in. I suspect they’ll pay it off and we won’t hear about it again.

If not, drama either way, because as you say, losing SQ42, would still be a massive loss for CIG. Its value to them is huge. They spent serious money getting folks like oldeman to act in it, and that would definitely be lost no matter how you read the contract.

[kedaha]

Any sources for that, or are you back to stating truisms?

Software in and of itself is never intellectual property. Novel software processes can be patented, but the patent is the IP and not the software that uses it. Copyright can be asserted, but copyright only covers the literal expression of the software and making enough changes to the software defeats copyright law.

Google search results are replete with examples of IP being sold off without said IP including copyright of previous software/games/movies/books. In media, IP is generally regarded as being branding rights as the processes to create said IP over time are generally worthless. Indeed, authors often sell off copyright while holding onto IP rights, as more software developers are starting to do.

[Timex]

Any sources for that, or are you back to stating truisms?

If you like, you can read the links that Derek posted there, about how Software is usually protected as intellectual property.

What I’m saying here isn’t really a controversial topic. I suspect every software developer here protects their work as intellectual property.

[Ginger_Yellow]

“Intellectual property rights” is defined in the deed and includes among many, many things, copyright in software. No need to speculate or follow random links.

[Janster]

How much is this loan, isn’t the tax credit payment the loan payer??