Firm & News

Thinking Before Modding—Players Don’t Own What They Make


As the Games Industry grows ever larger and as game engines’ modding tools become increasingly accessible to the average player, game modding is not just more common, but practically ubiquitous. This presents a problem for both developers and the players who mod their games. In this article, we will be exploring whether video game mods qualify as copyright infringement (they do), and what exceptions exist (very few).

What are Video Game Mods? Who are Modders?

A “mod” is any program, asset, or other piece of software—not produced and distributed by the video game’s developer and/or publisher—which alters the mechanics, look and feel, or other content of a video game. This description tells us both too much, and not enough. Let’s get a little more specific.

When you hear about a video game mod, the mod was likely a player-made mechanical or cosmetic alteration to an existing game. A popular mod emerged for “The Elder Scrolls V: Skyrim” shortly after its release which caused dragons to instead appear as a positively horrifying image of the Macho Man Randy Savage. Star Wars Battlefront II mods allow players to alter the appearance of certain heroes to resemble other characters in the storied franchise.

Some make mods to gain an unfair edge in competitive multiplayer titles—typically referred to as “hacks”, but their use are as much video game mods as those discussed above in the sense that they are third party software which alters a game’s mechanics. A common example of this is the “money drop” phenomenon in “Grand Theft Auto V”. Other examples are when a player in a MOBA (a so-called multiplayer online battle arena) uses a third-party software to make their character invulnerable. Effectively, this kind of modding/hacking amounts to cheating, and is generally opposed by gamers for creating an unfair multiplayer community, and by developers for throwing a wrench in whatever monetization plan they have set for their multiplayer game.

Rarer, dedicated amateur game developers will attempt to remake a classic or retro game in a newer engine, or with updated visuals. The well-known examples of this concept which this blog article will discuss include:

  • Skywind”—a total conversion of “The Elder Scrolls III: Morrowind” into “Skyrim’s” engine.
  • Another Metroid II Remake or ‘AM2R”—a remake of “Metroid II: Return of Samus” in the visual style of “Metroid: Zero Mission”.
  • Black Mesa”—the now-released remake of the original “Half-Life” game in Valve’s Source 2 Engine.

Of these three mods, Skywind is still in active development and apparently condoned by the copyright holder (Bethesda Softworks), Another Metroid II Remake (AM2R) disappeared following a DMCA strike from the copyright holder (Nintendo Co., Ltd), and Black Mesa has been released to general acclaim and, amazingly, all profits go to the developers of the mod (Crowbar Collective), not the copyright holder (Valve, Inc.). Amazing, because this occurs in the overwhelming minority of mods and should never be assumed as a given.

Who decides which mods live and which mods die? Do developers and publishers have the power to condone modding, or to prevent it? To answer these questions, we need to understand when copyright infringement occurs, who is protected, and who is liable.

Making a Mod infringes on the Exclusive Right of the Copyright Holder to make Derivative Works

Let’s get the bad news (or good news depending on who you are) out of the way: Modding is copyright infringement as a matter of course. On its face. Period.

Let’s start, then, at the beginning. Copyright is a constitutional right, granted through the U.S. Copyright Act, and which gives the holder of the copyright a set of exclusive rights, meaning the holder can exclude anyone from using her/his rights in their work. These include the right to reproduce a work, the right to distribute a work through traditional channels of commerce, and the right to produce derivative works of whatever work is in question. And modding is exercising your (or infringing on one’s) right to make a derivative work.

So, what is a derivative work? Generally, a derivative work is a new work, but includes elements or evidence of the copyrightable aspects of previous works. To this end, we will use AM2R as an example. DoctorM64, amateur developer of AM2R, was creating a remake (or, in copyright terms, a derivative work) of “Metroid II” (with Nintendo’s assets, no less). But what if Nintendo wanted to remake “Metroid II” themselves? Without copyright law, DoctorM64, an individual who holds no rights to the Metroid intellectual property, would have beaten them to release and cornered the market. It’s easy to call Nintendo’s DMCA strike of AM2R an act of corporate greed, but Nintendo’s actions could just as easily be construed as a good faith attempt to protect their rights to the Metroid IP and the marketability of the “Metroid II” remake, which they did end up releasing one year after striking down AM2R.

In AM2R, we see how modding is, on its face, infringement. Whether you use original assets or not, a modder is still adapting a previously created copyrighted work in a way the rights-holder may enforce against—whether it’s a remake like AM2R, a hack, or a cosmetic mod. Further, United States courts will generally side with the rights-holder over the modder when issues over modding are litigated. Often, as in Blizzard Entertainment, Inc. v. Reeves, the modder will default in appearing before a court, or settle litigation before it gets too far. Why is this? It’s our favorite refrain: litigation is expensive and, if you are a single modder, it would be unwise and inefficient for you to attempt to out-maneuver a monolith like Blizzard in court.

What about Fair Use?

It is certainly possible but unlikely that a mod (whether free, only shared with your friends, or a parody) may be found to be a fair use under the so-named Fair Use Doctrine. Fair Use is used to argue that certain infringement is OK because it is, say, educational, satirical, or non-commercial. A mod, free or not, would still involve a modder’s use of copyrighted material to create a derivative work, and would most likely be outside of Fair Use’s scope. Furthermore, most modders will never even get a true Fair Use analysis from a court, as it is a litigation defense and (say it with me) litigation is really expensive.

Why do Skywind and Black Mesa get a pass?

A copyright-holder has the right to enforce the rights in their work, but they also have the right not to enforce as well. Therefore, a mod is “legal” only for as long as a rights-holder chooses to let it exist. There are good reasons to do this depending on a developer’s goals.

On one hand, Valve Inc, gave Crowbar Collective an unusually generous license for their remake of “Half-Life”, likely because Valve had been seeing such success with their digital storefront, Steam, and had not foreseeable plans to remake their game themselves. Again, this is exceedingly rare. If you are a modder, relying on this example to acquire a deal at a later point is negligent, to say the least, as you will most likely have created a mod in vain and may fall victim to litigation if you try to profit from it without a license.

Bethesda Softworks on the other hand encourages modding in an apparent strategy to foster and keep a community around their games beyond the games’ typical market lifespan. They even release dedicated modding tools for players to use with their single-player games. Many think that Skyrim owes its continued 9-year success at least partially to its vibrant modding scene. Given Skyrim’s success with modding, condoning Skywind (but which requires proof of purchase of both Morrowind and Skyrim) could be a no-brainer.

I’m a modder! What does this mean for me?

Well, the harsh answer is: either don’t mod at all, mod only for works where the rights-holder has condoned the practice, or keep your mod private instead of releasing it to the public (which is still infringement, but without anyone noticing it). If a rights-holder does not like your mod, then they can and will strike your mod down (via a cease and desist letter and a DMCA Take Down Notice most likely). Once that happens, there is not really anything you can do. If you want to release a mod of a game you do not own any copyright in, your best bet is to ask the rights-holder for permission.

What does this mean for developers?

It is largely up to you as rights-holder. If you want to prevent players from modding your game, then good news! The law is on your side and you have powerful legal tools like DMCA takedowns as a mechanism of defending your works. Or, you could be like Bethesda and foster a modding community around your games to extend their lifespan.

Note, however, that if you do release modding tools for your game, you will need to make sure you craft your End User License Agreement (EULA) with very clear restrictions and permissions to ensure that a modder (or, more importantly, a court of law) will know exactly what scope you intend for your modding community to occupy. For example, Bethesda’s EULA for “Skyrim” explicitly forbids the creation of mods for their game using any other software than the creation kit they provide on their website, using the license they specify. The EULA for “Skyrim’s” modding tools explicitly states clear restrictions for what mods may be made, and how they may be used (for example: no mods sold commercially, no mods which disparage Bethesda or its products). Rockstar’s general EULA which they use for all of their games disallows any kind of modification for their games whatsoever by anybody but Rockstar. A clear EULA and legal notices are grounds for effective and transparent community management as well even outside the intellectual property sphere. As rights-holder, you get to decide how you want your intellectual property to be used but keeping what you own safe starts with a good EULA. So, get planning, and get typing!


First posted on July 29, 2020

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U.S. Tax Tips

Individuals and small businesses dealing with tax

Options and practical tips

Alexandre Leturgez-Coianiz (LL.M), Esq.

KBL Roche | Partner

February 2022

This quick overlook on taxation for individuals and small businesses will help if you are starting your business or file a more complex tax return for the first time.

I. Different Tax Return this year?

For many reasons due to life events, your tax situation might have changed and you don’t know how to handle your tax returns.

Whether you move to a different State or moved abroad, acquired a new real estate property, invested in cryptocurrencies, you will have to deal with additional tax reporting.


Federal and state reporting can be cumbersome, and we are here to help you foresee your tax liability and prepare your financial documents. We will take time to educate you on your tax situation to help you make your own decisions. Here to contact us.

II. Estimated tax

Payments and foresee SE tax; alternative S-Corp and paystub

One of the most important parts of tax planning for small businesses (LLC, partnership) or sole proprietor lies in estimated tax payments. It is both a tax compliance requirement from the IRS and state tax departments and a business and financial planning tool. The recommendation here for small business or sole proprietor is to do a quarterly assessment of your gross income and expenses to then compute your estimated tax for both federal and state if applicable.

Why is it important to pay your tax each quarter? The IRS and the States will charge penalties for underpayment of estimated tax. It represents extra savings you could invest back to grow your business.

A practical tip here is to understand that your net income as a sole proprietor or small business is subject to an additional 15.3% self-employment (“SE”) tax. It is a significant additional tax, and it must be foreseen, and money set aside to avoid bad surprises when the time to file your tax return comes.

It also applies to partners in a partnership receiving K-1s.

Don’t want to deal with the self-employment tax and want to be an employee? If you are conduction business with an LLC, you might consider a tax election to be taxed as an S Corporation and run payroll for yourself. You will still pay the 15.3% tax shared equally between you and your LLC on payroll and the net profits of the S Corp will be considered as income to you, but no extra self-employment tax – as long as your salary is reasonable (you don’t want to defraud the IRS and wait to cash out the net profit of your company without paying the self-employment tax – it’s all about balancing your account).

If you want to discuss more about your options, you can contact us.

III. Tax deadlines

Federal and state and local; Partnerships have a different deadline!! Why? K-1

Every year, the most important tax deadline at the Federal level is April 15th. States are generally following the same deadline mainly because most states use the Federal adjusted gross income for income tax reporting purposes. If for any reasons you are not able to file your return by then, you can request an extension of time to file (usually 6 months).

Deadlines for the estimated tax are April 15th, June 15th, September 15th, and January 15th. They are the same for Federal, New York State and New York City.

Generally, when a tax deadline falls on a Saturday, Sunday, or a Holiday, it is pushed forward to the next business day. This year, Tax Day will be on April 18, 2022.

For New York, if you have an LLC, your will also file form IT-104-LL on March 15th.

Partnerships will file their tax return on March 15th, to be able to send out K-1 forms to the partners.

Do not wait to start preparing your tax documents and tax returns. If you need help, please contact us.

IV. Information returns

How and why — W-9!!

Businesses and sole proprietors: if you paid contractors or third parties more than $600 in aggregate during the year you will likely need to send them 1099 forms. Before making payments, request a form W-9 form from your payee, that will tell you if you must report the payments you’ve made on a form 1099. W-9 forms are your back up; hence it is important to document it and keep it in your archives.

The IRS released a new form 1099-NEC which stands for non-employee compensation and has a tight deadline on January 31st. The other forms 1099 such as 1099-MISC are due in paper version on January 31st, and electronic filing by March 31st.

Form 1099s can easily be filed online.

V. Sales tax and Use tax – New York perspectives only

Do you charge your clients? Do you have to pay use tax?

The sales tax is a tax due on tangible property and some services due by the end user/consumer. In New York State (NYC area) the sales tax is 8.875%. There is a wide range of categories, rules, and regulations and this is not the subject of this note.

As a business owner, you might be liable for collecting sales tax on the goods or services you are selling.

You might also be liable for use tax. What is use tax? It is the counterpart of the sales tax. While sales tax is collected by a business from the customer on behalf of the state, the use tax is self-assessed and paid by the consumer who bought a taxable good or service where the sales tax was not collected at the time of the transaction. New York State runs use tax audits on businesses. The statute of limitations is 3 years from the date of the return. More information here: https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/use_tax_for_businesses.htm

VI. EIN or no EIN? That is the question

Why do we recommend it? Protect your SSN, easier to get business banking services

You might run your business as a sole proprietor or a sole member LLC. In that case, you don’t have to sign up for a business tax id (Employer Identification Number or EIN) with the IRS. However, there are many perks of applying for an EIN. You will not have to share your Social Security Number with third parties, and therefore, will diminish the risks of identity theft. You will have a better credibility with third party service providers and will have access to a business bank account along to business loans applications. You will also have a better line of credit as a business. Most of all, the EIN will be a must to hire employees and run payroll. How to apply? Fill out form SS-4 with the IRS (https://www.irs.gov/forms-pubs/about-form-ss-4).

The IRS decided to extend the 2021 tax deadline for the 2020 individual tax returns from April 15, 2021 to May 17, 2021. Penalties and


interest will start May 18, 2021.

If you are owed a refund, we recommend you file your return as soon as possible. Refund can take up to 21 days if you file electronically. We can help!

The extension of the tax deadline is for Federal only. Each State will decide to follow the Federal tax deadline. You should consult your state tax department or your tax advisor for more information.

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