The question you've probably been avoiding
Okay, no one likes to think about death. In fact, people avoid this topic so hard that 60% of American adults do not have a will.
Dying either without a will or with a poorly drafted/not well thought-out will can have intense consequences if you have a valuable intellectual property portfolio. Don’t believe me? Consider the story of Martha Graham.
Martha Graham’s influence on dance has been compared to that of Picasso’s, Stravinsky’s, and Frank Lloyd Wright’s on each of their respective fields. She was a prolific choreographer who created 181 ballets and forever changed the field by developing her own dance technique. In addition to her personal accomplishments, some of the most significant figures in modern dance were her pupils including Alvin Ailey, Twyla Tharp, Paul Taylor, and Merce Cunningham.
However, like too many great creatives, there was a huge legal battle after her death. The dispute? Who owned the copyright to her dances.
The Case That Shocked the Creative World
In 2002, a federal district court ruled that Martha Graham, preeminent choreographer of the 20th century, did not own the copyright in the majority of her works. The creative world was stunned.
How could this happen?
Martha Graham’s career spanned 70 years, but the legal structures underpinning her career changed overtime. At first, she ran a dance company as a sole proprietor. In the 1950s, however, she restructured. To make things more tax efficient, she founded a non-profit organization and then sold the school to the non-profit. (Non-profits have a variety of tax benefits that for-profit companies do not have). When she created the non-profit, she also put herself on payroll as an employee.
While this may have been a good tax decision, it had unintended copyright consequences. Under copyright law, work created by an employee within the scope of their employment is owned by the employer. The court therefore decided that Martha Graham had been an employee of her own non-profit since 1956, which meant that the dances she created during that time belonged to the non-profit, not her. Even though Graham did have a will at the time of her death in which she left all of her dances to her close friend, the court decided not to honor her will because the dances were not hers to give.
How can a business owner be sure that their wishes are honored when it comes to their intellectual property? Many of you reading this probably own patents, trademarks, and copyrights.
The first thing I would say is that intellectual property is a separate question from every other legal issue. Business owners can’t assume that if they ask for tax advice that their accountant or attorney is automatically going to consider the IP implications. In addition, those who have significant IP portfolios might want to seek an estate planning attorney with specific expertise in dealing with high-profile intellectual property.
Another thing business owners can do is prepare the relevant parties ahead of time. Wills with surprises usually don’t go over well and tend to lead to nasty lawsuits. Making one’s preferences and desires known ahead of time can greatly facilitate the process.
Lastly, important copyrights can be registered with the United States Copyright Office, which creates a public record of ownership. While this may be a tedious process for someone who owns hundreds of works, the registration is an extra layer of security, assurance, and protection.
Thanks for reading the Bevel Law Blog! While this information is hopefully helpful to you, nothing in this blog is intended to be legal advice. Always consult a lawyer before making any legal decisions based on topics in this blog.
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