copyright estate planning

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.

Entertainment Law Update Podcast - The Top Cases and News of 2016


Listen to Dallas-area music lawyer Tamera Bennett and Los Angeles film lawyer Gordon Firemark discuss the latest entertainment law issues on the Entertainment Law Update Podcast.

Click the arrow below to listen to the Entertainment Law Update Podcast or subscribe in iTunes.

In Episode 80 of the Entertainment Law Update Podcast, Tamera and Gordon offer an unscientific take on the top copyright, trademark, film, TV and other entertainment law cases of the year. The round-up includes:

Please leave us listener feedback at the iTunes store. Your comments will help other folks find our podcast.

EntLaw Update does a phenomenal job of keeping you current on issues of interest to anyone working at the intersection of law and media. Hosts Gordon Firemark and Tamara Bennett are personable and engaging, presenting stories in well-organized fashion that often leaves room for humor. As an avid consumer of law podcasts, I have to say this one is my favorite — if you need a reminder that the law isn’t *always* boring, Entertainment Law Update is what the doctor ordered!
— Michael

This post contains affliate links. That means if you click a link I may receive a benefit.

Texas Music Lawyer Tamera Bennett Interviewed On Prince Estate Issues

Lesson Learned From Prince Make an Estate Plan attorney Tamera Bennett interviewed on KRLD. #princerip #rightofpublicity #estateplan #copyright

Dallas copyright and music attorney Tamera H. Bennett was interviewed today by KRLD Radio News Anchor Mitch Carr regarding what happens now to the assets in Prince's estate.

The death of music icon Prince shook the music world . . . but it's also causing headlines in the legal world. Prince's sister Teeka Nelson has gone to court to ask that someone be named to take over her brother's multimillion-dollar estate . . . and says there is NO WILL.

Click the arrow below to hear Mitch Carr and Tamera Bennett's conversation recorded on April 27, 2016.

Transcript of interview with Texas Music Lawyer Tamera Bennett on Prince Estate:

Mitch Carr -- The death of music icon Prince shook the music world . . . but it's also causing headlines in the legal world. Prince's sister Tyka Nelson has gone to court to ask that someone be named to take over her brother's multimillion-dollar estate . . . and says there is NO WILL.

Tamera Bennett -- So two different things were talking about.  Dying intestate means he died without a will.  

Mitch Carr -- Okay.

Tamera Bennett -- So he didn't have a written document saying this is how I wish for my assets to be disbursed upon my death.  So he dies intestate which means the state of Minnesota, just like every other state, has statutes that say who will get what upon his death.  It will go to his siblings.  And, under Minnesota law his half-siblings are treated as equal to his -- I believe he has one sister who is a full sibling.

Mitch Carr -- Right. I think what's important here is this can be a life lesson for all of us.

Tamera Bennett -- It sure can. Because we want to -- I think most of us want to control what happens to what we own whether it be small or large-- at the end of the day. And, even more than that do we really want to put our family into a position of having to figure out our wishes? And, sometimes these kind of disputes can not be fun.  So, I'm hopeful that their family will not have a lot of disputes. But, they might. We've seen it with other estates as they've passed away -- Ray Charles, James Brown.  And, in those cases they actually did do a plan.

Mitch Carr --  The fact that there can be fights either way, what does that tell us about how we should do our estate plan? How can we draw something up that won't end up in a legal battle?

Tamera Bennett --  There's nothing that's ever foolproof because it depends on the people who are left.

Mitch Carr -- Alright.

Tamera Bennett -- So, one of the recommendations we often have for people is to spell out why you're leaving them what you're leaving them. And, you don't fully disinherit people.

Mitch Carr -- The bottom line here from a legal aspect is do what you can but nothing's foolproof.

Tamera Bennett -- Exactly right and I think what's interesting partly about Prince is that there are some assets that he has that are very valuable that under Minnesota law it's going to be difficult to figure out who gets them. And one one of that is his right of publicity. So his name and likeness is obviously very valuable. In Texas we actually have a statute that says if -- pretty much -- if you're a famous person and you take value from your name or your likeness or you license that, for fifty years after your death, your heirs can benefit and control how your name and likeness is used. Minnesota doesn't have that law saying that it's inherited.

Mitch Carr -- It's unclear how much Prince's estate is worth. But during his career, he made hundreds of millions of dollars for record companies, concert venues and others . . . and he owned $27 million in property near Minneapolis.

Follow Tamera on Twitter @tamerabennett and Mitch on Twitter @mitchcarrnews.

The clip is used by permission of KRLD-CBS Dallas.

Divorced in Motown: Who Gets the Rights?

Image Mathias Miranda CC2.0

Image Mathias Miranda CC2.0

Updated 12/31/2014 - Smokey Robinson and his former wife settle the lawsuit out of court. The parties told the judge, "Due to the complexity of the settlement issues involved in reducing the parties’ agreement to a long form, which issues include having to address different income streams, and possible future uses and disposition of the copyrights and income streams, the parties require additional time to finalize their settlement agreement. The agreement also requires input from family law and music transactional counsel, in addition to litigation counsel."

originally published in TEXAS LAWYER*

Family lawyers worry about a divorce client or the ex-spouse undoing a settlement agreement after the divorce and diverting money or property. Worry is well founded if a client or his/her soon-to-be-former spouse writes songs, books, scripts or otherwise creates things protected by copyright.

Here’s a question: How does a divorced spouse claim a property right that might vest 30 years after the divorce? On March 7, famed songwriter Smokey Robinson filed a declaratory judgment in the U.S. District Court for the Central District of California. He asked the court to find that he had the sole right to reclaim certain copyright assets and that those rights, once reclaimed, vest solely in him. He and Claudette Robinson divorced 25 years ago. She now claims she is entitled to certain revenues from what Smokey Robinson alleges is a new and unvested property right that did not exist during their marriage.

Federal copyright law and state community property law don’t often collide, but when they do, it makes for an interesting case. As set forth in 17 USC §101, a copyright is an original work fixed into a tangible medium of expression. The right vests in the author of the work at the moment of creation.

Federal copyright law and state community property law don’t often collide, but when they do, it makes for an interesting case.
— Tamera H. Bennett

Although California law governs the Robinson case, the analysis is similar under Texas law. In Alsenz v. Alsenz, decided in 2003 by Houston’s First Court of Appeals, Texas fell in line with other community property states. The First Court held that a copyright created during the marriage is community property, and any royalties earned during the marriage are also community property.

In a U.S. Court of Appeals for the Fifth Circuit ruling in Rodrigue v. Rodrigue (1999), which originated in Louisiana, the Fifth Circuit held that federal copyright law does not preempt state family law. Texas adopted this stance in regard to patent law in Alsenz and Sheshtawy v. Sheshtawy (2004). It is a natural extension of Alsenz for Texas courts to find copyright law does not preempt Texas state family law.

Smokey Robinson assigned the copyright in the songs that he wrote during the marriage to his music publisher. That assignment entitled the songwriter to certain royalties from revenue earned by the music publisher from the songs.

Extending the reasoning in Rodrigue to the facts as alleged in Robinson, the royalties earned during the marriage should be community property. Claudette Robinson’s counterclaim filed on May 2 alleges that, upon divorce, there were 453 song copyrights that Smokey Robinson could solely control, but he had a fiduciary duty to her in regard to those songs. And, she was entitled to 50 percent of the royalties from these songs post-divorce.

Upon divorce, a non-creating spouse may negotiate a settlement that entitles him/her to a future royalty revenue stream from the copyright work. The non-creating spouse assumes this revenue stream will last for the life of the copyright.

For songs written by Smokey Robinson and published prior to Jan. 1, 1978, the copyright expires 95 years from publication. For the songs he wrote and published after Jan. 1, 1978, the copyright expires 70 years after his death.

The legislative history to the U.S. Copyright Act states that authors had signed bad deals, leading to loss of revenue streams from their copyrights. To counteract this situation, lawmakers revised the act to allow authors to reclaim assigned copyrights and have a second bite at the apple to enter into better deals.

According to 17 U.S.C §§ 304 and 203, Smokey Robinson, as the author, has the sole right during his life to terminate copyright assignments to the music publishers and reclaim ownership of the copyright in the United States for the 453 songs.

The Copyright Act sets forth detailed requirements on when and how to file such notices to terminate the copyright assignments. According to filings recorded with the U.S. Copyright Office, Smokey Robinson has so far filed notices to terminate the copyright assignments for 16 of the 453 songs and the rights in the 16 songs vested in the songwriter. Eventually, he’ll be able to assign the remaining U.S. copyright term for each song in which the rights vests.

While any of Smokey Robinson’s assignment of rights doesn’t completely cut off the royalties to Claudette Robinson, it could have a substantial impact. She wouldn’t be entitled to royalties from any new revenue streams, as those new revenue streams tie to the new right that vested in Smokey Robinson. Claudette Robinson still would receive her portion of income from prior licenses issued, as well as foreign royalties as those rights are not impacted.

It is unclear how Claudette Robinson will succeed in arguing that the U.S. Copyright Act allows any portion of this new right to vest in her, the divorced spouse. Smokey Robinson must take an affirmative action to terminate the copyright grants. If the songwriter dies before it’s time to take this affirmative action, only then may his then surviving spouse and surviving children (and possibly grandchildren) file the notices of termination.

Also, 17 U.S.C. §203 (b)(4) specifically states that “a further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is made after the effective date of the termination.” Even if Smokey Robinson had made a grant of any potential reclaimed copyright term to Claudette Robinson as part of their divorce, the grant would have been invalid and unenforceable.

If the divorce settlement agreement, as alleged by Claudette Robinson, requires her former husband to act as a fiduciary to her, must he do everything he can to protect the 50 percent royalty to which she is entitled? Perhaps contract law, not copyright law, secures her a portion of royalties from this new vested right.

Just maybe, the deal has not been undone at all.

Tamera H. Bennett is a trademark, copyright and entertainment attorney and mediator practicing law in Texas and Tennessee as president at Bennett Law Office, PC in Lewisville.

*Reprinted with permission from the July 7, 2014 print edition of Texas Lawyer. © 2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.  Read more

Calculating Copyright Grant Terminations

One of the great benefits of our U.S. Copyright law is the ability for creators, authors, songwriters to terminate their assignment of copyright or certain grants/licenses that may have been made related to their copyright.

The copyright grant termination process can often be tedious as there are specific rules created by Congress as to how, when and who has the right to send the notice of termination of the copyright grant.

Our friends and colleagues at Wixen Music made calculating the dates a little easier with their handy online reversion and termination calculator found here.

Music lawyer Tamera Bennett wrote an overview of the process found here.   Click here to see more of Tamera's blog posts on termination of copyright grants.

Copyright Grant Termination Can Undo Songwriter Estate Plan Part 1

Ray Charles planned ahead and gave each of his 12 children $500,000 in trust as their inheritance and required a release of any future claims against his estate.  What he didn't plan on was his heirs (children) exercising their ability under the U.S. Copyright Act to file notice of termination of the copyright assignments for Charles' songs and reclaim those revenue streams.  Charles left the bulk of his estate, including his copyright assets, to The Ray Charles Foundation for the benefit of hearing and seeing impaired persons. There are two schemes for termination of copyright grants under the U.S. Copyright law and they arise from works created and published pre or post January 1, 1978.  Ray Charles' wrote songs and signed copyright assignments falling into both categories, which makes this a very rich fact pattern.  The specific timing requirements for the notices are covered in detail here.

In a legal opinion focused primarily on the applicability of California's Anti-Slapp statute, you'll find some great nuggets on the intersection of estate planning and copyright law.

1.  A copyright grant termination notice is not "a claim against the estate" if probate on the estate has closed.   Which raises the questions: what if probate is still pending? or probate never occurred and the window of time under state law probate proceedings has past? or filing a notice of termination would be timely while probate is pending? or the heirs must file the termination notices before the probate proceedings end to fall with the notice window?

2.  If copyrights were created as "Works for Hire" then the copyrights were never part of the author's estate and filing the notice of termination could not be a claim against the estate.  Of course, no heir wants to argue "work for hire" because anything created as a work for hire does not have a right of termination.

3.  A termination right is inalienable because under the statute, "termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or a future grant."  Does this mean there is no way for an author to control post-death what happens to his/her copyrights?

The opinion in this case was rendered in early 2013.  While notice of an appeal was filed, there has been no additional recorded court activity.  I suspect The Ray Charles Foundation and the heirs are entering into some form of negotiation.  Which leads to Part 2 of this post (coming soon) which addresses why The Ray Charles Foundation needs the Charles' heirs to maximize the value of the Foundation.

I've written numerous times about heirs reversing an estate plan via their statutory rights granted under the U.S. Copyright Act in relationship to Renewal of Copyright and Termination of Copyright Grants.  Read more here, here, and here.

Applicable code sections: 17 U.S.C. 203, 304.

Case cite: The Ray Charles Foundation v. Robinson, 2:12-cv-02725-ABC-FFM, (USDC Cal. 2013).

Copyright Renewal Vests in Sony not Roger Miller's Heirs

For works published or copyrighted prior to January 1, 1978, the sixth circuit court of appeals made a landmark decision holding the copyright renewal term vests in the music publisher when the author dies during the twenty-eighth year after copyright was secured -- the last year of the fist copyright term. The history of the case can be found here and here.  Miller's heirs have been in a litigation with Sony Music Publishing for years over who owns the songs that Miller wrote in 1964.  Miller died in 1992, the 28th year after writing songs such as “King of the Road” and “Dang Me.”

It takes a family with assets to pursue litigation to trial, appeal and back again.  The Miller estate has helped to clarify, at least in the sixth circuit, an unanswered question in copyright law.

Read the opinion here.

Y.M.C.A. -- Spells Copyright Termination

Victor Willis, the former lead singer of the group The Village People and the songwriter or co-writer on 32 songs performed by the group, is in a legal battle with the music publishers that currently own the copyright in the songsto terminate the agreements granting ownership of the song copyrights to the music publisher. Pursuant to section 203 of the 1976 Copyright Act authors (or certain heirs) may terminatecopyright assignments and reclaim copyrights 35 years after the work is first published.  There are strict statutory guidelines that must be followed and they are outlined in more detail in the article here.

The music publishers that own the songs made famous by The Village People have asked a judge to find the songs were created by Willis as "works for hire."  Under the Copyright Act works created as "works for hire" are not subject to the termination provision because the employer, in this case the music publisher, would by law be deemed the author of the work.  But, songs are not specifically enumerated as a category of "works for hire," so the music publishers would be required to prove that Willis was their employee in order for this argument to fly.

While the article from The Hollywood Reporter Esq. blog and The New York Times lay out the facts and the basics on termination law, they do not mention what might be the music publisher's best argument to defeat the claim:  17 USC § 203(A)(1) requires that when a work, in this fact pattern a song, has more than one author, a termination of the grant may be effected by a majority of the authors who executed the original agreement conveying the rights to the copyright.  "Y.M.C.A" has four songwriters.  Three of the four songwriters must properly serve notice on the music publisher to meet the first hurdle in even attempting to terminate the grant. While the other co-writers may have filed their termination notices, this fact does not seem to be surfacing in the news reports.

Music lawyer Tamera Bennett and film lawyer Gordon Firemark discuss this case in detail in Episode 23 of the Entertainment Law Update Podcast.

UPDATE - The court clarified that the "majority of authors" requirement applies to each individual agreement conveying rights in the copyright. So, if there are three songwriters and each of them signs an individual agreement assigning their individual copyright share to a song, you don't need two to make a majority. Just the one songwriter that signed his one agreement, can then terminate his own individual grant.

Estate Updates On Bobby Fischer and James Brown

Where there's money ... there will be battles.... Bobby Fischer's Estate: An Icelandic Court's ruling may have ended the running dispute as to who is the actual heir to renowned chess player Bobby Fischer.  I blogged here about the dispute between the person claiming to be his child and the women claiming to be his wife.  DNA testing ruled out the child as an heir.  The court ruled in March 2011 that documentation was sufficient to prove a women from Japan was his wife at his death at would inherit his 2 Million dollar estate.

James Brown's Estate: There really is no end in sight for the dispute between the heirs over the James Brown Estate. I blogged here on the ongoing dispute between Brown's heirs and Brown's alleged heirs regarding his estate plan that included the bulk of his estate going to a charitable trust.  An action has now been filed to overturn a 2009 Settlement Agreement that allocated a portion of his estate to heirs that were not specifically named in his will. By the court's action in approving the 2009 Settlement Agreement, the corpus of the charitable trust was substantially reduced.

Protecting An Artist's Legacy Through Estate Planning: Dallas Bar CLE

In the US alone, thousands of copyright creators and/or copyright owners die each year.  How many of these folks create a comprehensive estate plan, or even a basic will or simple trust?  The goal of estate planning is to minimize the potential for probate litigation, make life easier for those left behind, and to preserve an artist's legacy. All to often we see cases where artists simply failed to plan for the protection and/or distribution of their estate.  Perhaps even more heart-breaking and legally interesting are the cases where the plan failed and the heirs, with the assistance of the court, were able to override the estate plan.

Austin based music and estate planning lawyer Ken Pajak and Dallas based music publishing lawyer Tamera H. Bennett presented "Protecting An Artist's Legacy Through Estate Planning:  Probate and Post -Death Administration of an Artist's Rights to the Sports and Entertainment Law Section of the Dallas Bar Association on May 25, 2011.

To review the article and handouts prepared by Ken Pajak and Tamera Bennett for the "Protecting An Artist's Legacy Through Estate Planning" presentation click here and here.

For quick links to the topics and cases of interest discussed at the CLE and in the article click here.

By clicking on the names you can read more on the estates of Bobby Fischer, Jack Kerouac, Darrell "Wayne" Perry, and James Brown.

Music Lawyer Tamera Bennett Talks Eminem, Rick James and Allman Brothers

This article is featured in Billboard and is reprinted with permission. Rick James Estate's Class-Action Suit Against Universal: An Entertainment Attorney Weighs In

April 08, 2011
By Tamera H. Bennett

The Rick James estate filed a class action lawsuit against Universal Music Group and it's raising expectations that more artists may enter the license-vs.-sale battle over digital downloads.

But the clock could be ticking for heritage artists interested in pursuing action against their former record labels.

In its suit against UMG, the James estate is seeking damages for what it alleges are unpaid royalties for the sale of music through digital downloads and ringtones. The filing came just days after the U.S. Supreme Court declined to review an appellate court decision granting F.B.T. Productions a greater share of royalties from UMG's sale of Eminem's music through digital downloads and ringtones.

The Allman Brothers Band recently settled a proposed class action case against Sony Music Entertainment on the same issue: Is a digital download a license or a sale? In accordance with the Eminem decision in the Ninth Circuit Court of Appeals, a digital download is a license, and an artist is typically entitled to 50% of what the record label was paid for the license, versus a lesser percentage that would be due for the sale of a record.

With record labels using standard agreements from the mid-'60s to the mid-2000s, the James estate is banking on having its case certified as a class action and bringing aboard thousands of plaintiffs who had record or production deals with UMG or affiliated record labels from Jan. 1, 1965, to April 30, 2004.

What the James estate may not be counting on is another fairly standard provision in these recording contracts: the "incontestability provision." Most artist contracts signed during the proposed class window include language such as this: "All royalty statements rendered by the label to the artist shall be binding upon the artist and not subject to any objection by the artist for any reason unless specific objection in writing, stating the basis thereof, is given to the label within one year from the date the statement is rendered."

A similar incontestability provision was included in the 1985 Allman Brothers recording agreement (originally signed with PolyGram Records) that's part of the band's current litigation against UMG pending in federal district court in New York. The court held in 2008 that the clause was valid and enforceable and denied the challenge to certain royalty statements because there wasn't a timely objection to the statements in accordance with the contract.

Whether there is a one-, two-, three- or even a four-year window of time to object to a royalty statement, heritage artists who intend to challenge the royalty rate they've been paid for digital downloads may be barred from collecting years of unpaid revenue unless they act immediately.

Joining the James estate's class action may sound appealing, but waiting for the case to be certified as a class action might be too late for some heritage acts. Even though there are common questions of law and fact among the proposed class members, the court may deny a class certification. Keep in mind that the Allmans' case against Sony settled almost five years after being filed, but before the class was ever certified.

Heritage artists should review closely their agreements to determine if they have to take any additional action to preserve their rights. Launching a full-blown audit may not be financially viable for many heritage artists, but at a minimum they should immediately begin objecting in writing to the royalty rate paid for digital downloads. For those who have the financial resources, artists should comply with the contract objection provision, send notice of an audit and perhaps even send a tolling agreement to the label to freeze the contract-imposed limitations period. The Allman Brothers tried the tolling provision route first with UMG, but the major refused to freeze the limitations period, prompting the band to file suit.

Although UMG has repeatedly discounted the Eminem decision as only applying to the particular facts of that case, it's anticipated that the Ninth Circuit decision will spur many heritage artists to start the litigation process to preserve their rights. Tactically speaking, individual suits may be more effective than a class action because the labels' efforts will be divided in defending the suits. Artists might want to investigate filing suit in the Northern District of California, where the James estate filed its case.

If the rules of civil procedure are met, the court may consider a "joinder" of cases in lieu of a class action, potentially giving named plaintiffs more control over the terms of a settlement than under a class action. In the event of a joinder, only plaintiffs named in the lawsuit may recover damages.

Either way, time is of the essence. Heritage artists interested in pursuing a higher royalty rate on digital downloads should act quickly as windows of opportunity are closing each year.

Tamera H. Bennett is an entertainment and intellectual property attorney based in Lewisville, Texas.

Failure to Plan: The Estate of Bobby Fischer

Estate of Bobby Fischer

As part of the materials for the 20th Annual Entertainment Law Institute held in Austin, Texas, I summarized several recent "estate" cases. The Bobby Fischer case is one that clearly falls under the category of "Failed to Plan."

Robert James "Bobby" Fischer died in Iceland from kidney disease on January 17, 2008 at the age of 64 without even a simple will. Now the Icelandic courts are trying to determine his heirs between a Japanese woman who claims she was his wife, a Filipino woman who claims she is the mother of his only child, two estranged nephews, and the U.S Government. In August 2010 it was reported that after exhuming his body, DNA testing shows that Fischer is not the father of the Filipino child.

Read more from the New York Times.

Other estates we discussed during the CLE included Jack Kerouac, Darrell Wayne Perry, James Brown, and Roger Miller.