software
Third party client made in Unreal Engine
<p>Suppose that I made an MMORPG which has interesting gameplay, but rather bad graphics.</p>

<p>One day, a fan of the game writes a client in Unreal Engine that lets them play the game with HD graphics (but they still need to buy subscription from me to connect to the server). Because of this, my game becomes more popular and I'm making twice as much money.</p>

<p>Epic's license for Unreal Engine asks for 5% royalties, but I never agreed to this licence, the person who made the third-party client did.</p>

<p>Do I have to pay royalties to Epic? If yes, is it just on the portion of profits from players that connect using the third-party client?</p>

<p>Technically, as I've read the unreal license agreement, the person who made the mod would owe Epic 5% royalties on all your sales related to the mod, even if they did not collect the sale price.</p>

<p>You cannot be a party to a license you did not agree to, but Epic has very strange royalty terms that seem unreasonable on the surface and I'm not sure they've tested that in court.</p>

<p>Here is <a href="https://www.unrealengine.com/en-US/eula/publishing" rel="nofollow noreferrer">what the license says</a>:</p>

<blockquote>
  <ol start="5">
  <li>Royalty</li>
  </ol>
  
  <p>You agree to pay Epic a royalty equal to 5% of all worldwide gross revenue actually attributable to each Product, <strong>regardless of whether that revenue is received by you or any other person or legal entity</strong>, as follows:</p>
  
  <p>a. Gross revenue resulting from any and all sales of a Product to end users through any and all media, including but not limited to digital and retail;<br/>
  b. Gross revenue resulting from any and all in-app purchases, downloadable content, microtransactions, subscriptions, sale, transfer, or exchange of content created by end users for use with a Product, or redemption of virtual currency, either within a Product or made externally but which directly affect the operation of the Product;<br/>
  c. Gross revenue from any Kickstarter or other crowdfunding campaign which is directly associated with Product access or in-Product benefit (e.g., in a multi-tiered campaign, if an amount is established in an early tier solely for Product access, your royalty obligation will apply to that amount for each backer with the same access, but not on additional amounts in higher tiers based on ancillary benefits);<br/>
  d. Your revenue from in-app advertising and affiliate programs;<br/>
  e. Revenue from advance payments for a Product (from a publisher or otherwise);<br/>
  f. Revenue received in connection with a Product’s inclusion in a streaming, subscription, or other game-delivery service (e.g., Apple Arcade, Microsoft GamePass, or any similar or successor services), including without limitation development funds and bonuses; and<br/>
  g. <strong>Revenue in any other form actually attributable to a Product</strong> (unless excluded below).</p>
</blockquote>

<p>So the first part says "regardless of whether that revenue is received by you or any other person or legal entity". So somebody else may have revenue attributable to the product (aka a 50% increase in sales due to this mod), and you owe it even if you are not collecting or receiving that money directly.</p>

<p>The last part (g) also says that revenue in any other form attributable to the product. Epic's license doesn't allow you to make a "front-end" to a paid product and release the front-end free, and collect money on the back-end. So if revenue is attributable to the product you develop, you owe royalties on the sales related to the product <strong>regardless of you collecting that income or not</strong>.</p>

<p>Notice how it doesn't say <em>"directly attributable to each Product..."</em>, it says <em>"<strong>actually</strong> attributable to each Product"</em>. This is the part I find a bit egregious and not sure it will hold up in court, however the terms of the license are written so that the developer of the Unreal product has to pay royalties even if they don't collect money from it themselves.</p>
