rightofpublicity

Music, Estates, Taxes and the IRS - Latest On Michael Jackson and Prince

music estates taxas irs #michaeljackson #prince #createprotect music lawyer tamera benentt dallas texas

The Value of Michael Jackson's Right of Publicity

What's the value of a name? That is the question the IRS is asking in a dispute over the post-death value of Michael Jackson's name and likeness.  Under California law, where Michael Jackson resided at the time of his death in 2009, his right of publicity lasts for 70 years after his death. That means his estate can continue to make money from licensing the rights to use Michael Jackson's name, likeness, and voice.

The IRS Court will need to determine the value of Jackson's right of publicity at the date of his death.  The rub is that the family says the value was almost zero at the date of his death because Jackson was taking minimal steps to promote his name and likeness. Post-death, the family ramped up efforts to maximize revenues and did a great job promoting and licensing the name and likeness rights of Jackson. The IRS claims they are entitled to the increase in value, not just the purported value at death.  The asserted value at death was $2,105. The IRS claims the value is closer to $434 million.

The valuation does not take into account revenues from song or sound recording copyrights owned or licensed by Jackson.

Hindsight might be 20/20.  Music attorney Tamera Bennett was interviewed in 2009 on the value of the Jackson estate and stated, "Michael Jackson’s most valuable asset is his name and likeness, ie, his right of publicity. This right is descendible under California law. For estate tax purposes the value of his right of publicity is speculated to exceed the liquid assets of his estate."

Prince's Estate Tax Payment Could Have Been Reduced

Prince died in April 2016 without a will, trust, or other estate or tax planning documents in place. In a worst case scenario, Prince’s estate is subject to a federal tax of 40 percent and Minnesota’s state tax of 16 percent. In January 2017, Prince's estate had to make its first estate tax payment to the IRS. It's estimated the estate will owe $100 million in taxes.

Like the Jackson estate, the Prince estate is working to maximize revenues from the music assets. Deals were struck to have Prince's music catalog available on all major streaming services in February. Most likely a choice Prince would have personally hated based on the limited streaming deals he did during his lifetime. Additionally, Universal acquired rights to Prince's "vault" of back catalog recordings that have not been released.

Music attorney Tamera Bennett discussed the Prince estate issue with KRLD radio news manager Mitch Carr in the days following Prince's death. You can listen to the interview by clicking here.

Duck Dynasty - What Contract Clause Did Phil Violate? The Morals Clause?

This post is not about agreeing, disagreeing, supporting, or not supporting the comments made by Duck Dynasty Patriarch Phil Robertson.  As an entertainment lawyer, this post is to raise conversations with lawyers and industry professionals on what contractually grounds give A&E the ability to terminate Phil from the Duck Dynasty show. Phil made public statements regarding his personal beliefs that did not sit well with A&E.  While I do not have a connection to A&E or Duck Dynasty, I do have sample contractual language that may be similar to Phil's agreement.  Interestingly enough, the language I suspect A&E used to terminate Phil is found in what we entertainment lawyers call a "Morals Clause."  This is the clause that was used by GILLETTE and other endorsers of Tiger Woods to terminate his endorsement deals when facts about his personal life came to light.

A Morals Clause allows the studio/production company/endorser to terminate a contract when the actor or athlete commits conduct that "casts disrepute on the studio or industry."

If the Network or Producer becomes aware that Artist has previously committed any such acts or has engaged in behavior that the Network or Producer reasonably determines brings or may bring Artist, Producer, the Network or the Network's sponsors into widespread public disrepute, scandal or ridicule or which reflects or may reflect unfavorably upon Artist, Producer, the Network or a sponsor, then Producer shall be entitled to terminate this Agreement forthwith by giving Artist notice of termination in writing at any time after the Network or Producer acquires knowledge of such act or conduct.

Termination under the Morals Clause usually occurs when there has been an allegation of criminal or civil charges against the artist or athlete.  Or, in the case of Tiger Woods, many allegations of marital infidelity.

Does A&E have an implied covenant of good faith and fair dealing not to act arbitrarily, irrationally or unreasonably in exercising discretion to execute its termination rights under the morals clause of the contract?  At least one court held recently that invoking a Morals Clause because of a Tweet made by an athlete the brand endorsed was not enough to trigger termination.

Lawyers and industry professionals, please leave your thoughts and comments.  I may delete comments that do not add to the legal conversation.

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