Estate Planning for Intellectual Property

3D illustration of a folder, focus on a tab with the word infringement. Conceptual image of copyright law

Increasingly in the past several years, estate planning attorneys have come up against the need to plan for intellectual property when crafting an estate plan. Intellectual property consists of things such as patents, trademarks, copyrights, and trade secrets. The overarching goal of all of these is to allow the owner of the intellectual property (IP) to keep others from producing, using, or selling protected goods and services. Because intellectual property is intangible, estate planning for intellectual property poses some unique challenges.

The various different types of intellectual property are protected by somewhat different means. If you have invented a useful new tool, for instance, the process for protecting it with a patent is different than the process used by your author friend to copyright articles she has written. And if you want your invention, brand, writing, or other creation to continue to benefit your family or other beneficiaries after your death, it is essential to work with an attorney who can successfully plan for the transfer of your intellectual property rights.

Estate Planning and Intellectual Property Issues

When you set out to make your estate plan, you may be focused on tangible assets such as your home, vehicle and bank accounts. If you have intellectual property, however, it could be even more valuable, perhaps with the potential to create an income stream for your heirs for years.

Like other assets, intellectual property rights can be transferred by will or trust. If a holder of intellectual property doesn’t have an estate plan, intellectual property rights can be transferred by intestate succession, statutes that set forth how property passes after death when there is no will or trust.

Your estate planning attorney should discuss the nature of your assets with you, and try to determine whether intellectual property is among them. Some attorneys will have you fill out a questionnaire prior to working with you on your estate plan. The questionnaire may ask you about intellectual property such as patents, trademarks, copyrights, trade secrets, and even domain names. A thorough questionnaire will also ask you to identify any agreements with clauses related to intellectual property, including license agreements.

Protecting IP Assets in an Estate Plan

Once IP assets are identified, they should be itemized, and dates relevant to the preservation of rights should be highlighted. For instance, if fees to maintain a trademark are not timely paid, the trademark rights could expire, and other parties could use the mark, perhaps offering inferior goods that would damage the brand. A trademark could last indefinitely unless the owner fails to renew it under the rules of the U.S. Patent and Trademark Office (USPTO). Therefore, important deadlines and due dates should be clearly docketed to make sure an IP asset does not disappear. If there are any unregistered common law trademarks, they should be registered. Documents transferring trademark ownership should be filed with the USPTO, and the new owners should be made aware of what needs to be done to maintain the trademark, and how to monitor for trademark infringement.

Patents are probably the best known form of intellectual property. If an inventor dies before or during the process of applying for a patent, the personal representative of his or her estate may continue the application process (called “prosecuting” the application) through its conclusion. If an estate contains a patent, the attorney should document clearly the patent application number, who owns the patent and has the right to license it, who has the right to sue regarding the patent, and, critically, who is responsible for making maintenance payments to keep the patent alive.

Assets subject to copyright protection should be disclosed in estate planning documents along with related copyrights. Copyrights that are not mentioned pass as part of the residuary estate. If these copyrights represent a revenue stream, there may be tax apportionment issues from unintended transfers. Copyrights, unlike other forms of intellectual property, are also subject to termination rights. These rights give statutory heirs only the right to terminate an assignment of copyrights within a certain time frame.

The presence of intellectual property assets in your estate can be a great benefit to your heirs, but only if those assets are protected, and the heirs prepared to deal with them. Working with an experienced Ohio probate attorney who has experience with these unique assets will help to preserve the fruit of your achievement for your heirs and loved ones.

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