Protecting Intellectual Property in Estate Planning- Part I
[This is the first of a two-part overview: Part I reviews intellectual property to include in your estate plan; Part II will cover the duties of a Trustee or Executor to preserve valuable intellectual property when administering a trust or estate.]
It is important to include your intellectual property in completing your estate plan. This quick overview will help you understand the basics of intellectual property, and why it should be part of your long-term planning. The United States Patent and Trademark Office offers this simple definition of intellectual property:
“Creations of the mind – creative works or ideas embodied in a form that can be shared or can enable others to recreate, emulate, or manufacture them.”
Such “creations” can be protected under patents, trademarks, copyrights, or as trade secrets. By identifying them in your estate plan, you can protect your work and allow your family or other beneficiaries to own your work or benefit from it even after your demise.
Patents are granted to protect actual inventions, as opposed to mere ideas. They give the inventor exclusive right to prevent anyone else from making, using, selling, or importing the invention into the United States. Your Trust or Will can identify who owns the patent, who has the right to license it, and who is responsible for maintaining it. Patents can be transferred, in writing, but you or your estate fiduciary must file documents with the USPTO to record the transfer.
Trademarks are the means by which you distinguish and protect your goods and services. They include brand names, slogans, and logos (but not the ideas or goods they represent.) Their value is calculated in how well they distinguish your product or services from those offered by competitors. They may be registered with the state (for California click here) or federal government, or protected by common law. The estate plan may detail how you want trademarks used by your business, or the permitted future use of a person’s name or likeness.
Copyrights do not protect ideas, but do protect creators’ rights with regard to how those ideas are expressed in literary, music, fine art, audiovisual, dramatic, and architectural works. Works created in or after 1978 give creators rights for life plus 70 years. (However, works done for hire by an employee or under contract are protected for 95 years from their first publication or 120 years from their creation.) Works created before 1978 were protected until 2002 if never published, or until 2047 if published after 1978. Laws governing copyrights, their ownership and transfer, are complex. An estate plan should include specific instructions to the executor or trustee regarding the creators’ intentions for transfer or other disposition.
Trade Secrets are defined by the USPTO as “information that companies keep secret to give them an advantage over their competitors.” They can include formulas, patterns, compilations, programs, devices, methods, techniques, or processes. Most states have adopted a Uniform Trade Secrets Act for this protection. The U.S. is also a member of the Word Trade Organization, and part of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights. This requires member nations to protect trade secrets. Transfer of a business may specifically include its trade secrets.
Consult with expert legal counsel as you devise plans to protect any intellectual property. For example, just transferring ownership of a book, painting, or other property to a family member does not include the transfer of your copyright. You must also expressly transfer your copyright to protect it fully.
The valuation of intellectual property presents even more complex challenges. For example, it’s one thing to measure the value of an invention, through costs, historic sales, market values, and projected income, among many other factors. Value may be even more difficult to assign to a work of art. A modest investment in expert analysis or an appraisal will provide assurance that your asserted value has legal foundation and will hold up, especially if there are any future legal challenges.
Finally, when including intellectual property in your estate planning, be certain to include necessary documentation, such as reference to official registrations, and your wishes as to what family members or others are to receive from any continuing future value.
Please call my office for any assistance we can provide.