Bristows' SnippITs - A step-in to the unknown: the challenges in exercising step-in rights

This post is part of the Bristows' SnippITs series, which pulls together the key practical takeaways from recent court decisions for the tech sector and beyond.

The recent High Court decision in Secret Mode Ltd v Victura Inc serves as a useful reminder that, whilst some big tech contracts commonly provide for step-in rights, exercising them can be extremely challenging.

Key takeaways

• Step-in rights are rarely invoked by a customer. Consideration should always be given to the associated time and negotiation capital used in trying to agree these provisions where divergence will often arise on the triggers, duration, cost allocation, and level of access (including impact on a supplier's other customers) and cooperation.
• Parties should consider how escrow arrangements may remove a principal barrier to practically invoking step-in rights.
• The exercise of a step-in right is a serious measure.  Parties should consider the interaction of the right to step-in with the dispute resolution procedure to avoid a situation (which was the case here) Where the parties incurred the costs of an interim application only for neither of them to obtain the relief they wanted and for the judge to advise that a mediation would be helpful.
• Where a party is considering whether to exercise its step-in right, the reality is that it will likely arise in the context of a dispute where parties both have claims against each other. This can make the step-in right difficult to exercise and require court intervention, as was the case here. This does not render the right futile though: it can provide useful leverage in a situation where the relationship can be salvaged because the prospect of handing over the “keys to the kingdom” is highly unappealing.

Background 

The case concerned the development and publication of Six Days in Fallujah, a first-person shooter video game, which is partially complete but has been available for “early access” since June 2023. In October 2025, the Developer entered into an Agreement with the Publisher, pursuant to which the Publisher agreed to provide up to $8 million of development funding to enable the game to be completed and around $3 million to publish and market the game to be provided on completion of certain Milestones. The next applicable Milestones were the subsequent versions of the game to be completed.

The Agreement contained a step-in right, by which the Publisher could assume full or partial control of the game’s continued development if it considered that a particular Milestone build was unsatisfactory and the Developer failed to address any deficiencies in accordance with the contractual resubmission process. The consequences of exercising the step-in right were significant:

• the Publisher could use internal or third-party resources to complete the game;
• the Developer had to cooperate with the Publisher by delivering up its source code and other assets; and
• the Publisher received a licence permitting it to continue developing and commercialising the game.

Following the Publisher’s rejection of a Milestone and the Developer’s subsequent resubmissions, including concerns about AI characters standing motionlessly, "stuck AI", the Publisher purported to exercise its step-in rights. The Developer’s position was that the step-in right never became effective on the basis the Developer had terminated the Agreement prior to the Publisher’s attempt to exercise the step-in right. Accordingly, the Developer refused to provide access to the source code and the parties issued claims against each other. 

This judgment concerned the subsequent applications made by both parties for interim injunctions against the other to grant them what the judge referred to as the ”keys to the kingdom’” control over development and publication of the game until trial.

The judgment

The court accepted that each party had the expertise to complete both the development and publication of the game.  However, in respect of the Developer’s application, the court concluded that the Developer lacked the financial resources to achieve publication as well as to meet any claims under the cross-undertaking required to obtain the interim injunction sought. 

In respect of the Publisher’s application, the court accepted there was a real risk that even a successful handover to the Publisher would lead to significant delay and could jeopardise the project’s prospects. Any replacement developer would need time to understand the existing codebase before meaningful progress could be made. The court was also reluctant to order the transfer of source code on an interim basis in the context of the Developer’s allegations that the Publisher had engineered the failed acceptance process in order to gain access to valuable proprietary technology. The judge was concerned that if this were the case, once the "keys to the kingdom" had been handed over, then it may be impossible to unwind the consequences. 

As a result, the court declined to order interim relief to either party. Instead, the judge advised the Developer to provide the Publisher with the latest version of the game (which the Developer had previously refused) and, if this version was as complete as the Developer advised, the judge considered that it might prompt the parties to reflect on their common interest in having the game completed. He added that a formal mediation may assist with this process. 

Practical challenges of step-in

For customers, the case is a reminder to think beyond the drafting exercise. Step-in rights are rarely used in practice and often consume disproportionate negotiation time. Even where the trigger events, licences, cooperation obligations and source code provisions are carefully documented, successfully invoking the mechanism may still be very difficult.

Where step-in rights are required to provide customers (or their regulators) with a level of comfort around business continuity, customers should also consider whether step-in rights are supported by practical measures such as:

• robust source code escrow arrangements;
• up-to-date technical documentation;
• defined transition and knowledge-transfer obligations; and
• identified replacement suppliers capable of taking over the services.

For suppliers, the case also highlights the importance of carefully drafted acceptance procedures. The judgment suggests the Publisher's ability to reject milestone deliverables depended heavily on its assessment of whether they were "satisfactory", with both sides ultimately debating the limits of contractual discretion and implied good-faith constraints.  It is clearly preferable to have clear, objective acceptance criteria to avoid this level of uncertainty.

• The lesson? A step-in clause may look reassuring in the contract. In reality, stepping in is often where the real challenge begins.