When planning your estate, you will probably give serious thought and consideration as to how you want your home, cars, jewelry, money and other valuable personal property transferred after your death. You may work closely with an attorney to draft sophisticated estate planning documents to ensure that your exact wishes will be carried out. However, throughout this important exercise, one type of personal property is very often overlooked - intellectual property rights.
Intellectual property rights can be very valuable and often continue beyond the owner's lifetime. Therefore, like any other valuable personal property, intellectual property rights should be considered when planning your estate.
Intellectual property estate planning is a complex and nuanced area of law. In this article, we will highlight a few estate planning issues that apply to United States trademarks and copyrights. This discussion assumes that the trademarks and copyrights at issue were created after January 1, 1978, and are owned by the original creator. If your circumstances vary, please consult our office for details about the applicable law.
The first step in intellectual property estate planning is determining what intellectual property you own.
Copyrights -- If you have ever written an article or a book, or own a web site, you may own copyrights. Copyrights protect original works of authorship that are fixed in a tangible medium of expression, such as books, articles, web site content and computer programs.
Copyright automatically attaches to such works at the moment they are created, and those rights can be strengthened through registration with the United States Copyright Office. Copyright protection lasts for the life of the author plus 70 years after the author's death.
Trademarks -- Trademarks are words, slogans, and logos that identify the source of products or services and distinguish them from other products or services in the marketplace. Trademark rights in the United States are acquired through use of the trademark in commerce, and can be strengthened through registration with the United States Patent and Trademark Office. Assuming a trademark is consistently used in commerce, trademark protection can last indefinitely.
The next step in intellectual property estate planning is identifying how you want your intellectual property transferred and developing a strategy that will best accomplish your goals.
If you do not have a will, state law will decide how your probate assets are divided, including trademarks and copyrights. This predetermined division may not reflect your wishes and often produces undesirable results.
If you have a will, but it does not address the unique nature of trademarks and copyrights, those rights may be transferred in an unexpected way. For example, it is common for wills to include bequests of "tangible personal property" to identified people, with all other assets going into a residuary estate to be divided among the beneficiaries. Intellectual property rights are intangible. Therefore, unless your will specifically addresses intellectual property rights, those rights may become a part of your residuary estate to be divided among numerous beneficiaries. This division of intellectual property rights among several parties often weakens those rights, and may make it impractical for those rights to be maintained or commercially exploited.
As alternatives, you should consider transferring your intellectual property during your lifetime, or at your death through carefully drafted estate planning documents. Each approach has practical and tax considerations that should be fully explored.
If you transfer your intellectual property rights at death, your estate planning documents should specifically address your intellectual property. You may also consider choosing a separate executor that is well-versed in intellectual property law to manage those rights. If you transfer your intellectual property rights during your lifetime, such transfers can be accomplished through assignments and/or gifts. In all cases, transfers of intellectual property should be formally recorded in the Trademark and Copyright Offices.
Copyright law grants copyright owners a unique termination right that should be considered during estate planning. Copyright owners are free to grant some or all of their rights in a copyright to third parties. Owners that grant their rights have an automatic right to terminate that grant, thereby reclaiming those rights. This right of termination must be exercised between 35 and 40 years from the grant of rights or date of publication, whichever occurs first. The law requires a specific notice to be served on the party whose rights are being terminated and recorded in the Copyright Office, during a specific window of time.
If this termination right vests after your death, it may be exercised by (in order of priority) your surviving spouse, your children, your grandchildren, or the executor of your estate. However, copyrights transferred through a will cannot be terminated in this way.
Therefore, if you do not want your immediate relatives to be able to revoke the copyright transfers you made, you should consider making those transfers through a will. Conversely, if you want your immediate relatives to have the opportunity to reclaim rights that you transferred, you should not make those transfers through a will.
Of course, it is also important that the beneficiaries of your intellectual property rights are fully informed of their rights, as well as their obligations, so that they are able to continue to maintain and maximize your assets.
An attorney at The Law Offices of Marc J. Lane can help you identify your intellectual property, and develop an estate planning strategy. For further information, please contact Marc Lane in confidence via email at [email protected] or via telephone at (312) 372-1040.
Cori A. Mathis is an Associate Attorney with The Law Offices of Marc J. Lane, a Professional Corporation. Ms. Mathis is a graduate of De Paul University College of Law (J.D.) and the University of Illinois (B.A.S.). Ms. Mathis was selected as a 2008 Illinois "Rising Star" by Super Lawyer magazine.
For further information, please contact:
Marc J. Lane
The Law Offices of Marc J. Lane, A Professional Corporation
180 North La Salle Street
Chicago, Illinois 60601-2701
Nationwide: (800) 372-1040
Facsimile (312) 346-1040
Email: [email protected]
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