AI in a Game Studio: A Checklist for Contracts, Licensing, Data, and Liability

AI can accelerate game production and unlock new gameplay mechanics, but it also introduces legal risk that typically surfaces late—during release preparation, publishing negotiations, or investor due diligence. This article provides a practical checklist for contracts, licensing, data governance, and liability so your studio can scale AI safely across European markets. It was prepared by the legal specialists at ARROWS law firm who focus on software development and technology projects.

Why an AI checklist is no longer optional for European game studios

Game development is not “just code.” It is a pipeline of engine tech, plug-ins, art, audio, narrative, localisation, marketing assets, live ops, and often community content. AI cuts across all of it and blurs traditional boundaries: what was created by humans, what was generated by AI, what is licensed, what is reused, and what is actually safe to ship.

The real issue is rarely “AI itself.” The issue is that studios cannot quickly and credibly answer questions like:

• Who owns the final assets and the source files?
• Which licences apply across the entire pipeline (including AI tools)?
• What exactly is promised to publishers and platforms?
• How is player data processed, logged, retained, and shared?
• Who bears the loss if in-game AI creates a compliance or reputational incident?

ARROWS law firm supports game studios and technology companies on these exact problems. For cross-border work, we operate through ARROWS International, a network built over more than a decade. If you want a structured review tailored to your pipeline and markets, you can reach ARROWS law firm at office@arws.cz.

Contract checklist: what must be documented before AI creates operational chaos

Once AI enters production, generic “it will be fine” templates stop working. Studios need clarity on who can do what, what must be delivered, who owns the outputs, and who carries liability.

1) Employment contracts: AI changes the way know-how leaks

Make sure your internal documentation and employment framework clearly covers:

• transfer of rights for work created within employment duties (including iterative and intermediate outputs),
• confidentiality and trade-secret protection for code, builds, assets, prompts, and internal documentation,
• which AI tools are permitted and what is prohibited to input (e.g., proprietary code, unreleased concepts, player data),
• mandatory handover rules for source files and production-ready deliverables (not only exports).

This prevents the most expensive scenario: a key person leaves, the studio still has “a game,” but lacks true control over sources, pipelines, and legal ownership.

2) Freelancers and external studios: the highest dispute frequency sits here

External teams commonly work for multiple clients, use different AI tools, and operate under inconsistent licensing assumptions. This is where AI increases risk most.

Minimum checklist for third-party contributors:

• Rights transfer or licence grant broad enough for publishing, ports, DLC, merchandising, and international distribution.
• Mandatory delivery of source files (e.g., PSD/BLEND/DAW projects), not only final exports.
• Representations on lawful origin of outputs and a clear statement on tool usage where relevant.
• Restrictions on feeding internal materials into AI without explicit written approval.
• Liability allocation for third-party rights issues, at least at a commercially enforceable level.

Publishers and investors typically scrutinise this first. ARROWS law firm structures these frameworks so they are practical in production, defensible in negotiation, and workable across jurisdictions via ARROWS International. Contact: office@arws.cz.

microFAQ – Legal tips for AI-related contracting

1. Is one generic freelancer agreement enough if AI is used only “occasionally”? Usually not. Occasional AI use can still affect high-value assets (art, audio, narrative). Without clear rights and source delivery obligations, risk concentrates in the most expensive parts of the game.

2. Do contracts need to list specific AI tools by name? Not always. What matters is a usable rule set: permitted usage, prohibited inputs, evidence expectations, and enforceable handover obligations.

3. What is the most common blind spot? Source files and workflow continuity. Studios often receive “results” but lose the ability to patch, port, expand, or defend the origin of assets later.

Licensing checklist: the “licence chain” is where game projects break under pressure

Games are licence-chain products. The risk is rarely one licence—it is the combined effect of:

• engine licensing,
• middleware (audio/physics/networking/anti-cheat),
• plug-ins and marketplace assets,
• open-source libraries,
• AI tools used in production and/or runtime,
• music and voice rights.

The most common failure is not lack of licences. It is lack of a single, coherent view of what the game contains—and whether licences are compatible with your distribution model.

Build a licence inventory that can be produced in 30 minutes

A practical minimum pack:

• tool list with versions (engine, plug-ins, AI tools),
• asset list with origin (in-house / external / marketplace / AI-assisted),
• open-source components list with licences,
• key commercial restrictions (commercial use, territory, sublicensing, DLC/ports),
• publishing compatibility overview (what you can warrant, what you cannot).

This is useful not only for investors and publishers, but for internal operational control—licensing errors are often found late, when they cost the most.

ARROWS law firm helps studios map and clean licence chains, including cross-border distribution and multi-country teams through ARROWS International. Contact: office@arws.cz.

Open-source compliance: AI increases risk rather than reducing it

Open-source is standard. The issue is that AI can introduce code patterns or dependencies “quietly,” and the studio may not know:

• whether the licence fits commercial distribution,
• whether source disclosure obligations are triggered,
• whether compatibility issues arise with engine or partner requirements.

This becomes urgent during due diligence when the question is simple and unforgiving: “Can you legally sell this across Europe?”

Data checklist: AI in games often means “more personal data than expected”

Game studios are used to telemetry. AI can shift telemetry into:

• personalisation and profiling,
• recommendations and ranking,
• chat moderation and reporting,
• anti-cheat modelling,
• voice processing (or transcription),
• behavioural inference.

This is not just a “consent checkbox.” It is a compliance architecture question: why data is processed, how long it is stored, where it goes, and what the studio can prove.

Minimum data governance checklist for AI workflows

Keep this documented and operational:

• what data categories you process (telemetry, chat, voice, payments, identifiers),
• which are personal data and why,
• lawful basis (service necessity vs. optimisation/marketing),
• retention periods and access control,
• third parties (analytics, AI providers, cloud) and their roles,
• cross-border transfers (EEA vs. outside the EEA),
• incident handling (breach response and complaint workflow).

A hard reality: AI projects almost always have hidden exceptions and data flows that only appear in production.

ARROWS law firm supports these setups for European deployments and cross-border projects via ARROWS International. Contact: office@arws.cz.

microFAQ – Legal tips for AI and player data

1. If we only collect telemetry without names, are we safe? Not automatically. Device identifiers, behaviour patterns, and persistent IDs can still qualify as personal data—especially when used for personalisation.

2. Is it a problem if an AI provider logs prompts and outputs? It can be, if logs contain player data or internal content. Without clear retention and access controls, this creates unnecessary exposure.

3. What is the most frequent mistake? Mixing “data needed to run the game” with “data used for optimisation/marketing” without separate logic, governance, and transparency.

Liability checklist: who pays when AI creates a real-world problem

In games, liability shows up fast—review bombing, refunds, platform interventions, partner claims. AI adds unpredictability and “live” content generation, which changes the risk profile.

1) Liability towards players: refunds, complaints, harmful content

Ensure you have:

• clear descriptions of what is part of the service vs. optional AI features,
• a workable process for reporting and removal/moderation,
• enforceable and reasonable user terms (avoid over-promising),
• incident communication discipline.

2) Platform liability: takedowns and distribution restrictions

Platforms typically react to:

• prohibited or harmful content,
• rule violations (including moderation failures),
• instability that triggers widespread refunds,
• rating inconsistencies and safety concerns.

If AI generates or influences content, you need proof of “reasonable controls” in place.

3) Publisher and partner liability: SLAs, warranties, and penalties

In B2B relationships, outcomes depend on:

• what warranties you gave,
• whether liability caps exist and are enforceable,
• carve-outs (intent, gross negligence, IP claims, data breaches),
• definitions of “defect” and “incident,”
• vendor risk allocation (AI API outages, pricing changes, TOS changes).

ARROWS law firm structures these liability chains so they are commercially acceptable and legally defensible in multi-market settings through ARROWS International. Contact: office@arws.cz.

A practical “AI compliance pack” for game studios operating in Europe

For studios that want to scale AI safely across the EU/EEA, a realistic baseline package includes:

• internal AI usage rules (what may/may not enter prompts),
• a licence inventory and asset-origin register,
• updated contractor templates with AI clauses,
• data-flow mapping and logging/retention rules,
• incident playbooks for harmful content and data leakage,
• publishing-ready documentation (warranties, exceptions, evidence).

This is not legal theory. It is a way to avoid a release being blocked by a legal issue that could have been solved early in two working days.

ARROWS law firm delivers this work in practice, and where projects span multiple jurisdictions we coordinate support through ARROWS International. Contact: office@arws.cz.

Executive summary for management

• AI increases legal exposure primarily around assets (art, audio, narrative) and runtime features (NPC dialogue, content generation), because origin and control are harder to evidence.
• Publishing and investment processes increasingly depend on proving a clean licence chain, enforceable rights transfers from suppliers, and realistic liability allocation.
• AI-driven player data processing often goes beyond telemetry into profiling and personalisation, requiring documented governance, vendor control, and incident readiness.
• Without internal AI rules and consistent contractor templates, studios create operational risk that surfaces at the worst possible moment (release, platform issue, or deal negotiation).
• ARROWS law firm, operating cross-border through ARROWS International, structures contracts, licensing, governance, and liability so studios can scale safely across European markets (contact: office@arws.cz).

Conclusion

AI in a game studio is a competitive advantage, but legally it is a contracts–licensing–data–liability topic that determines whether a game is safely publishable and commercially scalable across Europe. The most expensive failures rarely come from “bad AI.” They come from missing control: unclear rights, fragmented licensing, weak supplier governance, and lack of incident readiness for generative features.

ARROWS law firm handles this agenda regularly for technology and creative clients and can coordinate multi-country work through ARROWS International. I

FAQ – Game Studio: A Checklist for Contracts, Licensing, Data, and Liability

1. Is it worth addressing AI legal risk already at prototype stage? Yes. Contracts, licensing, and governance are cheapest to fix early and most expensive when publishing or investment deadlines are near. 
2. What is the most common AI-related issue with external contributors? Unclear rights transfer and missing source files, combined with inconsistent tool usage and poor evidence of origin. If you face this, contact ARROWS law firm at office@arws.cz.
3. When can AI in a game trigger platform intervention? Most often when runtime content becomes harmful or moderation fails, or when instability leads to excessive refunds and complaints.
4. Do we need a licence map even if we do not work with a publisher? Yes. A licence-chain issue can surface through a dispute, a takedown request, or an investment opportunity. If you want a structured licence-chain review, contact ARROWS law firm at office@arws.cz.
5. What is the highest GDPR risk with AI in games? Logs, profiling/personalisation, and vendor data flows that expand beyond what the studio intended.
6. How can we reduce liability exposure for AI features? Combine governance (filters, moderation, logging, incident workflows) with contract structuring (SLA, caps, carve-outs, vendor risk allocation). If you want this set up cleanly, contact ARROWS law firm at office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic orientation in the topic. Although we strive for maximum accuracy, legal regulations and their interpretation evolve over time. To verify the current rules and their application to your specific situation, it is necessary to contact ARROWS law firm (office@arws.cz). We accept no liability for damages or complications arising from independent use of the information in this article without prior individual legal consultation and professional assessment. Each case requires a tailored solution.