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URGENT: Need Clarification On Royalty Fee For a Freelance Developer

From the FAQ -

''Are any revenue sources royalty-free? Yes! The following revenue sources are royalty-free:

  • Ancillary products, including t-shirts, CDs, plushies, action figures and books. The exception is items with embedded data or information, such as QR codes, that affect the operation of the product.

  • Consulting and work-for-hire services using the engine. This applies to architects using the engine to create visualizations as well as consultants receiving a development fee.

  • Non-interactive linear media, including movies, animated films and cartoons distributed as video.

  • Amusement park rides and live installations.

  • Truly free games and apps (with no associated revenue).

I Need Clarification on this specific subject -

  1. Does the Royalty Fee still applies if I create a custom game using the Engine according to the requirements of a Client on a outsource/freelance website and inform the client about the license/royalty agreement of Unreal Engine and get paid a fixed amount for working on the project and transfer the project to the client, Do I still owe Epic any royalty from the revenue that may or may not be generated by said project in the future by the client ?

  2. Please clarify if these statements are correct - Any work done using the Engine for a Client and transferring the project files to the client and getting paid a fixed amount is not considered selling a product but rather a service and this kind of services are exempt from royalties since they are considered 'Work For Hire' and any royalty due on the revenue that may be generated using the said project should be the sole responsibility of the client since the freelance contractor only sold his/her services rather than a product.

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asked Feb 21 '18 at 08:28 AM in Legal & Licensing

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Na01Major
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  1. If a client hires you to make a game, and it's a custom one-off bit of work, your consulting fees are royalty free. But the game is still a Product under the EULA. You should require that your client become a UE4 licensee, because otherwise the royalty obligation falls to you.

  2. Assuming that work is custom/unique for a single client, yes that's a work for hire and there is no royalty on the consulting fees. Yes, the royalty obligation should rest on the client, but you need to make sure that they are a licensee.

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answered Feb 21 '18 at 03:11 PM

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atypic STAFF
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avatar image Na01Major Feb 21 '18 at 04:51 PM

Thanks for the fast reply,

''You should require that your client become a UE4 licensee''

How do I go about doing this ? Is it enough to inform the client about the license, sending them a link to the EULA page and asking them to become a licensee once they decide to release the game ? Or do I require them to sign some kind of written agreement ?

Often times there are hundreds of clients who require a quick mock up/demo/prototype of their game/visualization and they are not sure whether and when they may or may not modify the project further and/or release them free or sell them for revenue. Do I require in all case for the client to sign a contract or just sending them the link to EULA and informing them about the license is sufficient ?

avatar image atypic STAFF Feb 21 '18 at 05:33 PM

Presumably you'll have a contract with them already to cover the work.

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