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Why Your Estate Planning Must Include Intellectual Property

If you’re an author, musician, painter or anyone who engages in creative activity for profit, then your California estate planning should include disposition of any intellectual property rights attached to your works. While most copyrights, patents and trademarks are governed by federal law, they remain intangible personal property subject to the jurisdiction of California probate. Therefore, it’s important to understand the scope of your intellectual property rights and how they can affect the value of your estate.

Distinguishing Copyrights, Patents, Trademarks & Publicity Rights

Copyrights are the most common form of intellectual property recognized in the United States. For most works created on or after January 1, 1978, copyright exists from the moment of creation and lasts until 70 years after the author’s death. So if a person dies in 2013, any post-1978 copyrights she holds as author will not expire until 2083. It is not necessary to formally register a copyright, but doing so creates a public record that can be helpful if there is subsequent litigation. All copyrights are registered with the United States Copyright Office, a department of the Library of Congress.

Copyright only applies to original works of authorship, such as books, movies, songs, computer programs, plays and even architectural designs. It does not apply to mere facts, ideas or names. Nor does it apply to methods of production, which may be covered under patents. Similarly, while copyright applies to the original content of your website, it would not apply to your domain name, which might be protected by a trademark.

Unlike copyright, a patent is not automatic and must be recognized by the federal government. Patents apply to the invention of “new and useful” manufacturing processes, industrial designs or plants. If granted, a patent lasts only 20 years from the date of the original patent application. Trademarks (or service marks) include words, names and symbols used to identify a commercial product or business. Both the United States Patent and Trademark Office and the California Secretary of State maintain registries of trademarks. Trademarks generally do not expire so long as they remain in active use.

Finally, California law also recognizes a form of intellectual property known as “publicity rights.” This includes the use of a person’s name, voice, signature, photograph or likeness for commercial purposes. Like copyright, a person’s publicity rights last until 70 years after his or her death (assuming they have commercial value). If, however, there is any conflict between publicity rights and copyright-say, the use of a copyrighted song that includes a person’s voice-the latter controls as it is federal law.

Treating IP Like Any Other Property

All intellectual property may be disposed of in a trust or last will and testament like any other type of personal property. If your intellectual property has commercial value-i.e., you own the copyright to a book or song earning substantial royalties-then your estate may need to do an appraisal for federal estate and gift tax purposes. You may also consider the value of intellectual property in determining the most equitable distribution of your estate among chosen beneficiaries.

It’s important to distinguish intellectual property rights from ownership of the physical works. For example, let’s say you’re a professional artist. You might leave the original of a favorite painting to a relative. But the copyright to the painting-that is, the right to authorize the sale of replicas of the original-might be left to another relative or business partner. Your estate planning should make clear your intent regarding intellectual property rights. If you have any questions about how your intellectual property may impact your estate planning, please contact the Law Office of Scott C. Soady at 1-858-618-5510.

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