Your money, home, and vehicles are not the only things you should include in your estate plan. Your intellectual property and any income it generates should also be addressed. You do not have to be a famous author, painter, or inventor to have valuable intellectual property that could provide a stream of income for your family members or loved ones after you pass away.
What Is Intellectual Property?
Intellectual property is a work or invention that is the result of the human creativity and intellect and can be legally protected, e.g., by copyrights, patents, and trademarks. It is protected by federal (and sometimes state) law and can have great economical value.
Take Steps to Protect Your Intellectual Property
Different steps are necessary to legally protect different types of intellectual property. Here is a summary of how to protect some of the most common types:
● Copyright protection is available for “original works of authorship” such as books, movies, songs, computer software, photographs, and architectural works. These works do not have to be published to be protected, but they generally have more commercial value after publication. Copyright exists from the moment you create an original work, but in order to enforce it in a lawsuit for infringement, you must register it with the U.S. Copyright Office. In addition, you should use the copyright symbol (©) to provide public notice that the copyright is protected. In general, copyrights last for 70 years following the death of the author.
● Patents are available to any person who invents or discovers “any new and useful process, machine, manufacture, or composition of matter” or makes any improvement of them. There are different types of patents available for different types of inventions. Your invention must not have been previously publicly disclosed to be eligible for patent protection. Before you file an application for a patent, you should do a comprehensive patent search. Performing a patent search can be an involved process, and it is advisable to obtain the help of an attorney or agent to conduct the search. An attorney can also help with the preparation and filing of your patent application with the United States Patent and Trademark Office to ensure that the patent you obtain will provide sufficient protection for your invention. Once the patent is granted, it lasts 14 to 20 years (depending on the type of patent) from the date the application is filed. Periodic fees are required to maintain it.
● Trademarks are typically brand names and logos used to identify and distinguish the goods and services of one source from those of others. Although merely using your mark will enable you to legally protect it under the common law, this legal protection is only available in your immediate locality. State trademark law will provide protection throughout your state. However, if you eventually want to expand to a different state, it is important to register your trademark with the United States Patent and Trademark Office. This will provide your trademark with national protection. Before you register your trademark, it is necessary to perform a comprehensive trademark search to ensure that the mark you wish to use—or one that could be confusingly similar to yours—is not already in use. Use the trademark symbol (®) to provide public notice that it is federally registered and protected. The initial term of a federal trademark is 10 years, and it can be renewed (for a fee) indefinitely for additional 10-year terms. A federally registered trademark is enforceable as long as the trademark is used in commerce and defended against infringement.
Include Your Intellectual Property in Your Estate Planning
It is important to include your intellectual property in your estate plan and to maximize its value. Before we create or update your estate plan, be sure to provide us with a list of all of your intellectual property, as well as any related agreements, assignments, or licenses.
Special issues with copyright.
● If you own a copyright, you should specifically state both the title of the original work, i.e., the book, painting, etc., and the details of your copyright in your will or trust. If your copyright is not specifically mentioned in your will or trust, it will be transferred to your heirs by a residuary clause, which disposes of all property not specifically dealt with elsewhere in your will. As a result, one person could end up with the book or painting and others with the copyright. In addition, depending upon how valuable the copyright is, the heirs who inherit it could have a heavier tax burden.
● Because the future value of a copyright is impossible for the creator of a work to know, copyright law gives the creator the right to terminate most transfers or licenses of the copyright at a future date, providing the creator with an opportunity to market the work once its fair value is known. This termination right, which passes under copyright law to the creator’s surviving spouse and children when he or she dies, cannot be waived or transferred to anyone else during the creator’s life. If the creator transfers the copyright, e.g., to a trust, the statutory heirs (the people the state statute says will have the termination right) could undo the creator’s intent. The only exception is a transfer of the copyright by a will, which cannot be terminated by the statutory heirs. Although establishing a trust is preferable for many types of property to avoid probate, a will should typically be used to transfer copyrights to the beneficiaries if you wish to avoid the possible termination of the transfer by the statutory heirs.
Unlike copyrights, there is no termination right for patents, which can be freely transferred by a will or to a trust for the benefit of the loved ones you chose. Transferring ownership to a trust is often a good choice to avoid the expense, time, and lack of privacy of the probate proceedings required for transfers using a will. Your patents should be clearly identified in your estate planning documents, which should state the owner of the patent, the patent number, those who have the right to license the patent, and the parties who are responsible for paying the fees required to maintain the patent. In addition, the United States Patent and Trademark Office should be provided documentation showing the transfer to the new owner.
Similar to a patent, a registered trademark can be transferred by either a will or by establishing a trust to benefit your loved ones. As is the case with patents, a trust is often the better choice. Documentation should be sent to the United States Patent and Trademark Office to record the transfer of the trademark registration to the new owner. It is important for the executor or the trustee or any individual who inherits a registered trademark to continue to defend it against infringement and use the mark to maintain the legal protection provided by trademark law. In addition, the executor, trustee, or new owner should continue to renew the trademarks and pay the required fees.
Intellectual property that has been transferred or licensed to another party often generates royalties or other income that become part of your estate. Alternatively, those payments could be directed to a living trust or a trust established at your death. When you pass away, any publishers or other agencies should be notified to direct the payments to the trust or to the loved ones who have inherited the right to receive those royalties. It may also be helpful to name an executor or trustee with expertise in managing intellectual property and the income it generates for the benefit of your loved ones to ensure its value is maximized.
Give Us a Call
Estate planning for intellectual property can be quite complicated. As experience estate planning attorneys, we can help ensure that the products of your creativity are properly protected and passed on to your family and loved ones in the way you intend. Give us a call today to set up a consultation to ensure that your estate planning goals for your intellectual property are achieved.