Dealing with Problems in Copyrights Bequeathed by an Author's Will

Bequeathing an interest in a copyright can involve a conflict between federal copyright law and state probate laws. The conflict may result in a situation in which it isn't clear whether the executor of the estate or the beneficiary of the specific bequest should deal with the property at various times. Specific terms in a will concerning a bequest of a copyright interest can avoid a possible dispute.

Assume the following: Well-published Mr. Author, by last will and testament, bequeaths the copyright interest in his most recent book to six people. He bequeaths a 30% interest in the copyright to Party A ' the executor and literary executor named in the will ' a 40% interest to Party B, and the interest in the other 30% equally to the C, D, E and F.

The will was duly probated and the executor issued Letters Testamentary. There is immediate and widespread interest by several publishing companies in publishing the book. Party B, having assisted Mr. Author, in a small way with the research on the book, through his lawyer, Attorney B, insists that he should be able to deal with his copyright interest while the estate is being administered. Attorney B and Party B note that a joint copyright owner cannot grant an exclusive right in the property without the consent of the other joint copyright owners.

All acknowledge that a joint copyright owner can grant non-exclusive rights in a copyright, but no respectable book publisher or filmmaker wants to buy non-exclusive rights in a story. Thus, preventing the sale of non-exclusive rights can be important in preserving the value of the copyright in a work, because the grant of a non-exclusive right would make it impossible to later make an exclusive grant that would have some value.

The executor, an astute businessman interested in what is best for the estate, engages Attorney A, one of the most prestigious entertainment attorneys in the country. The executor also engages a literary agent to find a publisher for the book and the estate signs a well-negotiated and valuable deal with a publishing company. Of course, the publishing deal grants the publisher exclusive rights.

After the contract is signed but before publication, Party B tells the publisher that he wrote parts of the book. This causes the publisher to insist on an indemnification for any claims of plagiarism before proceeding with publication. Attorney A resists this, arguing that an estate, unlike an individual, cannot agree to an indemnification. Despite harassing the executor, Party B in one of his communications, more or less approves of the book deal. So the executor, with the assistance of Attorney A, gets the book published.

The initial payment by the publishing company is made to the agent and Party B insists that he be paid 40%. The executor takes the position that the contract was with the estate and the payment received by the agent should therefore be turned over to the estate. The agent, faced with conflicting claims for the money, deposits it in an escrow account and awaits a settlement by the parties or a court.

Shortly after publication, there is interest in the Grand Performing Rights in the Book. A deal is being negotiated by Attorney A and the executor for the book to be used as the basic work for a Broadway musical stage production. As negotiations are carried on, Party B and Attorney B keep insisting that an exclusive deal cannot be made without the approval of Party B as a joint copyright owner. Because any grant of stage rights for a Broadway production would have to be an exclusive grant, peace must be made with Party B.

Party B has several complaints. He wants input into the terms of the play contract. He wants his share of any money received as an advance on the book paid directly to him at the time of the execution of the agreement. Although he sort of approved of the book deal, he is still angry that he wasn't consulted more about the editing of the book and the terms of the publication contract. To further complicate matters, there is federal copyright law as well as the law of the state in which the decedent lived that governs the administration of estates.

The executor ought to be in a position to preserve the value of the copyright that is bequeathed by will and is part of an estate. Preserving the value of a copyright may mean dealing with rights in the copyright expeditiously, as the value may decrease with time. Ideally, all of the parties to whom the copyright is bequeathed should agree to the terms of a sale of rights in the copyright. But if they can't, the executor is in a very tough position. Until the taxes and other obligations of the estate are paid, there is always the possibility that the proceeds from the sale of rights in the copyright may be needed to meet these obligations. To distribute the estate before payment of such bills would be irresponsible for the executor to do. Someone must administer the copyright or it would be chaos.

At first blush, one might understand why the legatee who receives an interest of a copyright would want to consider it different from other estate assets, one that the legatee can deal with immediately upon probate of the will. But on reflection, one wonders why a specific bequest of an interest in a copyright in a property should be treated any differently than a specific bequest of any other assets, such as cash, for example. The value of stocks and bonds fluctuate, sometimes with huge price swings over a very short period of time and require the proper attention of the executor. The value of real property also changes. The important obligation of the executor is to get proper, qualified assistance in dealing with assets that the executor is not personally trained to deal with. Stocks, bonds, real estate and the copyright are all subject to the claims of debtors of the estate.

Of course, the best way to handle legatees of specific bequests of parts of a copyright is for the executor, during administration of the estate, to obtain the approval of all of the owners of the copyright, of any dealings with the copyright. If this is not possible, the executor, who must deal with the copyright to preserve the assets of the estate, is faced with an impossible dilemma. A good executor will give consideration to the opinions of any copyright legatee who might have knowledge that is helpful in dealing with the copyright during the administration of the estate. To delay making a lucrative deal that could vanish if not acted on properly and immediately would be contrary to the executor's fiduciary duties. But to make the deal without the approval of the copyright legatees would be contrary to established copyright law.

Another issue is raised when an executor wants to use the proceeds received from publication of the book for expenses involved in the book promotion. In our hypothetical, Party B would like the cost of any expenses involved in the promotion of the book to be paid for by the residuary estate. However, the law on this is not clear-cut and as with the other issues raised in this kind of a matter, the problem should be avoided in the drafting of the Last Will and Testament.

Because of the potential conflict between copyright law and state probate law, a testator should clearly define in the will who should deal with the copyright during and after the administration of the estate, and where the payments for the expenses involved in promoting the subject of the copyright are going to come from.

Bequeathing an interest in a copyright can involve a conflict between federal copyright law and state probate laws. The conflict may result in a situation in which it isn't clear whether the executor of the estate or the beneficiary of the specific bequest should deal with the property at various times. Specific terms in a will concerning a bequest of a copyright interest can avoid a possible dispute.

Assume the following: Well-published Mr. Author, by last will and testament, bequeaths the copyright interest in his most recent book to six people. He bequeaths a 30% interest in the copyright to Party A ' the executor and literary executor named in the will ' a 40% interest to Party B, and the interest in the other 30% equally to the C, D, E and F.

The will was duly probated and the executor issued Letters Testamentary. There is immediate and widespread interest by several publishing companies in publishing the book. Party B, having assisted Mr. Author, in a small way with the research on the book, through his lawyer, Attorney B, insists that he should be able to deal with his copyright interest while the estate is being administered. Attorney B and Party B note that a joint copyright owner cannot grant an exclusive right in the property without the consent of the other joint copyright owners.

All acknowledge that a joint copyright owner can grant non-exclusive rights in a copyright, but no respectable book publisher or filmmaker wants to buy non-exclusive rights in a story. Thus, preventing the sale of non-exclusive rights can be important in preserving the value of the copyright in a work, because the grant of a non-exclusive right would make it impossible to later make an exclusive grant that would have some value.

The executor, an astute businessman interested in what is best for the estate, engages Attorney A, one of the most prestigious entertainment attorneys in the country. The executor also engages a literary agent to find a publisher for the book and the estate signs a well-negotiated and valuable deal with a publishing company. Of course, the publishing deal grants the publisher exclusive rights.

After the contract is signed but before publication, Party B tells the publisher that he wrote parts of the book. This causes the publisher to insist on an indemnification for any claims of plagiarism before proceeding with publication. Attorney A resists this, arguing that an estate, unlike an individual, cannot agree to an indemnification. Despite harassing the executor, Party B in one of his communications, more or less approves of the book deal. So the executor, with the assistance of Attorney A, gets the book published.

The initial payment by the publishing company is made to the agent and Party B insists that he be paid 40%. The executor takes the position that the contract was with the estate and the payment received by the agent should therefore be turned over to the estate. The agent, faced with conflicting claims for the money, deposits it in an escrow account and awaits a settlement by the parties or a court.

Shortly after publication, there is interest in the Grand Performing Rights in the Book. A deal is being negotiated by Attorney A and the executor for the book to be used as the basic work for a Broadway musical stage production. As negotiations are carried on, Party B and Attorney B keep insisting that an exclusive deal cannot be made without the approval of Party B as a joint copyright owner. Because any grant of stage rights for a Broadway production would have to be an exclusive grant, peace must be made with Party B.

Party B has several complaints. He wants input into the terms of the play contract. He wants his share of any money received as an advance on the book paid directly to him at the time of the execution of the agreement. Although he sort of approved of the book deal, he is still angry that he wasn't consulted more about the editing of the book and the terms of the publication contract. To further complicate matters, there is federal copyright law as well as the law of the state in which the decedent lived that governs the administration of estates.

The executor ought to be in a position to preserve the value of the copyright that is bequeathed by will and is part of an estate. Preserving the value of a copyright may mean dealing with rights in the copyright expeditiously, as the value may decrease with time. Ideally, all of the parties to whom the copyright is bequeathed should agree to the terms of a sale of rights in the copyright. But if they can't, the executor is in a very tough position. Until the taxes and other obligations of the estate are paid, there is always the possibility that the proceeds from the sale of rights in the copyright may be needed to meet these obligations. To distribute the estate before payment of such bills would be irresponsible for the executor to do. Someone must administer the copyright or it would be chaos.

At first blush, one might understand why the legatee who receives an interest of a copyright would want to consider it different from other estate assets, one that the legatee can deal with immediately upon probate of the will. But on reflection, one wonders why a specific bequest of an interest in a copyright in a property should be treated any differently than a specific bequest of any other assets, such as cash, for example. The value of stocks and bonds fluctuate, sometimes with huge price swings over a very short period of time and require the proper attention of the executor. The value of real property also changes. The important obligation of the executor is to get proper, qualified assistance in dealing with assets that the executor is not personally trained to deal with. Stocks, bonds, real estate and the copyright are all subject to the claims of debtors of the estate.

Of course, the best way to handle legatees of specific bequests of parts of a copyright is for the executor, during administration of the estate, to obtain the approval of all of the owners of the copyright, of any dealings with the copyright. If this is not possible, the executor, who must deal with the copyright to preserve the assets of the estate, is faced with an impossible dilemma. A good executor will give consideration to the opinions of any copyright legatee who might have knowledge that is helpful in dealing with the copyright during the administration of the estate. To delay making a lucrative deal that could vanish if not acted on properly and immediately would be contrary to the executor's fiduciary duties. But to make the deal without the approval of the copyright legatees would be contrary to established copyright law.

Another issue is raised when an executor wants to use the proceeds received from publication of the book for expenses involved in the book promotion. In our hypothetical, Party B would like the cost of any expenses involved in the promotion of the book to be paid for by the residuary estate. However, the law on this is not clear-cut and as with the other issues raised in this kind of a matter, the problem should be avoided in the drafting of the Last Will and Testament.

Because of the potential conflict between copyright law and state probate law, a testator should clearly define in the will who should deal with the copyright during and after the administration of the estate, and where the payments for the expenses involved in promoting the subject of the copyright are going to come from.