When operating arcade machines featuring third-party intellectual property (IP), licensing is a critical legal requirement. Unauthorized use of copyrighted characters, logos, or game mechanics can lead to lawsuits or financial penalties. To avoid legal issues, arcade operators must secure proper licensing agreements from IP holders. These agreements typically outline usage rights, royalties, and territorial restrictions. Additionally, some IP owners may require quality control approvals to ensure their brand is represented appropriately. Understanding copyright law and negotiating clear terms with licensors is essential for legally compliant arcade operations. Always consult a legal expert to navigate the complexities of third-party IP licensing in the arcade industry.