Michigan Game Maker Sues State

July 28, 2010 -

Nathaniel McClure (pictured), CEO of the game development Scientifically Proven Entertainment, has launched a suit against the Michigan Film Office and the Michigan Department of Treasury claiming that the state has denied his application for tax credits.

The Detroit Free Press reports that McClure is incensed over rules that “make it impossible for all but the smallest video game developers to use Michigan's 42% video game tax credits.” McClure and his company, which employs 15 and also provides internships to Michigan State University students, are creating a game based on the Discovery Channel show Man vs. Wild.

Michigan Film Commissioner Janet Lockwood, however, informed McClure in a June 8th letter that Scientifically Proven was not eligible for the tax breaks because the company does not “own or control” the intellectual property rights to Man vs. Wild, Crave Entertainment does. Lockwood wrote, “An applicant with less than overall control over the project is not an 'eligible production company' eligible for the credit.”

McClure stated that Crave is on board to distribute and market the game upon completion, and added that he did not want to sue, but that state officials “have refused to meet with him.”

McClure’s attorney said that ownership of the IP rights was not required to receive the tax incentives, as the law states (per the paper), “… once companies receive approval for their tax-credit applications, any production expenses incurred in Michigan after that point, including the costs to acquire any intellectual-property rights, are eligible for the tax incentive.”

If things don’t work out, McClure is threatening to leave Michigan for another state.

On its website, Scientifically Proven notes that it is "utilizing the nation's best entertainment tax incentive to create compelling competitive content." Ironically, the state film commission also touted the company as a success story in its annual report.

Ah, bureaucracy.


Picture of McClure from the Detroit News


Comments

Re: Michigan Game Maker Sues State

Protip: Michigan has inane taxes even after this credit. Go to a state that doesn't hate buisness.

Re: Michigan Game Maker Sues State

Maybe if he makes a GTA-clone game without sexual material, then, until if/when SCOTUS backs up the California law and efforts are then made to add violence to the "obscene materila" lists of "Community Standards" (which is the REAL purpose of trying to get SCOTUS to support the CA law), he should be able to publish a computer/video game that MI will consider his application for tax incentives.

Nightwng2000

NW2K Software

http://www.facebook.com/nightwing2000

Nightwng2000 is now admin to the group "Parents For Education, Not Legislation" on MySpace as http://groups.myspace.com/pfenl

Nightwng2000 NW2K Software http://www.facebook.com/nightwing2000 Nightwng2000 is now admin to the group "Parents For Education, Not Legislation" on MySpace as http://groups.myspace.com/pfenl

Re: Michigan Game Maker Sues State

I am with McClure on this one.

According to the statute in question (found here: http://www.legislature.mi.gov/%28S%28tkbteu555nerevztdx3iam45%29%29/mile...) an eligible production company is defined as:

(d) "Eligible production company" or "company" means an entity in the business of producing qualified productions, but does not include an entity that is more than 30% owned, affiliated, or controlled by an entity or individual who is in default on a loan made by this state, a loan guaranteed by this state, or a loan made or guaranteed by any other state.

and a qualified production is defined as follows:

(k) "State certified qualified production" or "qualified production" means single media or multimedia entertainment content created in whole or in part in this state for distribution or exhibition to the general public in 2 or more states by any means and media in any digital media format, film, or video tape, including, but not limited to, a motion picture, a documentary, a television series, a television miniseries, a television special, interstitial television programming, long-form television, interactive television, music videos, interactive games, video games, commercials, internet programming, an internet video, a sound recording, a video, digital animation, or an interactive website. Qualified production also includes any trailer, pilot, video teaser, or demo created primarily to stimulate the sale, marketing, promotion, or exploitation of future investment in a production. Qualified production does not include any of the following:

(i) A production for which records are required to be maintained with respect to any performer in the production under 18 USC 2257.

(ii) A production that includes obscene matter or an obscene performance.

(iii) A production that primarily consists of televised news or current events.

(iv) A production that primarily consists of a live sporting event.

(v) A production that primarily consists of political advertising.

(vi) A radio program.

(vii) A weather show.

(viii) A financial market report.

(ix) A talk show.

(x) A game show.

(xi) A production that primarily markets a product or service other than a state certified qualified production.

(xii) An awards show or other gala event production.

(xiii) A production with the primary purpose of fund-raising.

(xiv) A production that primarily is for employee training or in-house corporate advertising or other similar production.

(l) "Sound recording" means a recording of music, poetry, or spoken-word performance, but does not include the audio portions spoken and recorded as part of a motion picture, video, theatrical production, television news coverage, or athletic event.

(m) "State certified qualified production" means a qualified production for which a postproduction certificate has been issued by the office under subsection (5).

No where in either section or any I did not list does it state the production company needs to own the IP rights. Even the film office's website FAQ does not state they need to. (found here: http://www.michiganfilmoffice.org/cm/files/film-Incentive-Combined-FAQs.pdf)

The FAQ does state the any cost associated with licensing an IP are not covered, but all development costs should be.

So, unless he was adding in licensing costs, which is highly unlikely considering he says that Crave is managing the IP rights, he should qualify.

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

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