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Category: Estate Planning

INTELLECTUAL PROPERTY AND BUSINESS ASSETS

A Basic Review of Intellectual Property Use by Businesses

Often when a business evaluates their assets, their primary analysis concentrates on bank accounts, inventory, real property, receivables, and similar assets.   These types of assets are often easy calculated and characterized.   However, most businesses also possess more intangible assets that may be more difficult to value, but have significant value nonetheless.   In fact, these assets may have more value than the easily-calculated bank accounts or real property.  One of these areas of assets is intellectual property.   In this article, I will provide the top three areas of intellectual property, how they are typically defined, and what protection they may receive.

Patents

Patents are typically divided into two categories.   The first category is a utility patent.  Utility patents cover methods, processes, devices, machines, manufactured items, or chemical compounds.   For a business, these patents protect what has been invented and created by the business for practical application and use.   Most “inventions” people typically envision (i.e, the toaster, air conditioning equipment, or pharmaceutical product) are what is protected.  These include those inventions that revolutionized society to others that went nowhere.

The second category is referred to as design patents.   Design patents protect the ornamental design of a functional item.  In this situation, it is the design that is different and not the function and use of the product.   A good example of a design patent is the one issued for the Coca-Cola bottle.   There are many glass bottles that serve the purpose and are utilized to hold soda.   What makes the Coca-Cola bottle different is the special contour shape and curves that make it unique from any other soda bottle and can be protected by its patent.

To obtain patent protection, the inventor must file a patent application with the U.S. Patent and Trademark Office (the “PTO”).   If the PTO determines that that invention is patentable, the inventor will be awarded U.S. patent, with a unique patent number, giving the holder unique use and rights to what is protected.  Patents can be bought, sold, traded, or inherited.  This is accomplished by the original patent holder assigning their rights in writing to another person or entity.   This assignment is then recorded with the PTO.

Trademarks

Trademark rights protect words, names, symbols, devices, or any combination thereof.  See 15 U.S.C. § 1127.   There are three general categories of trademarks:

  1. Trademarks: These are marks that assist a consumer to be able to differentiate between one protect in the marketplace from another. Famous trademarks that are often observed daily are the BMW propeller emblem, the Nike swoosh, and the multicolor apple for Apple Computers.
  2. Service Marks: These marks do not advertise a tangible product.   Instead, they are utilized to advertise a service or event.   For example, the Amazon logo with the swooping arrow and name advertises their internet shipping and retail business.
  1. Trade Dress: These are distinctive identifying features that form a trademark or service mark.  For example, trade dress may be the unique store design of a company.   You often see this in food and beverage establishments that always have the same layout, colors, floor design, and employee uniforms.    For example, an In-N-Out Burger location, 7-11 store, and McDonalds restaurant building appear almost identical no matter the city, state, or foreign location in which you may be.

Trademarks can also be registered through the PTO.   These rights can be assigned to another entity during the lifetime of the holder of the mark.   Any assignment or change of ownership needs to be recorded with the PTO.

Copyrights

Copyrights protect original literary works, music (both music and lyrics), dramas, choreography, graphics, photographs, movies and other audiovisual works, sound recordings, paintings, and sculptures.   See 17 U.S.C. §§102-103.   The Copyright Act identifies the creators of these works under the general term “authors.” 

Although authors do not need to register their works with the U.S. Copyright Office, doing so can strengthen their rights.  It can also be a factor in a determination of ownership and creation if there is a dispute between two authors of the same material.   Like patents and trademarks, copyrights can be sold, transferred, licensed, and provided as part of an author’s estate or business succession plan.

Most intellectual property assets of a business fall into one of these three areas.   In subsequent articles, I will discuss the steps that should occur to protect these assets and how they can be valued.

© 2017 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

TIME MOVES FORWARD

Remembering a Key Probate Deadline After a Death Has Occurred

 

During the course of the estate planning portion of my legal practice, I have often observed individuals delaying implementation of an estate plan after a friend or relative has passed away.   It is understandable that as part of the grieving process a person may want to take some time to morn, prepare emotionally for the process, and to organize the needed documents.   However, one cannot delay the process indefinitely.   Significant delay not only can complicate the legal process, but can potentially place those assigned to areas of responsibility into legal jeopardy as well.   In this article, I will discuss two areas where I have often observed a delay causing issues.

One area where I often observe a time issue occurring is in the filing of Probate.   For most low-value estates, or when there is a Will in place where one spouse has passed away and the surviving spouse remains, the need for a formal Probate is unnecessary.   Instead, in Arizona, only Informal Probate is required.   As the name implies, Informal Probate is a simpler probate process, which primarily involves the submittal of the proper pre-printed paperwork to the Court with no need for a hearing or more formal legal proceedings.   Oftentimes, the surviving spouse, close relative, or designated personal representative in the Will can manage this process on his/her own without the need of any attorney representation or involvement.

However, there is a limit in the amount of time where Informal Probate can proceed.   In Arizona, Probate must be commenced within two years after a decedent’s death.  A.R.S. § 14-3108.   If the informal probate process does not occur during this two-year period, Informal Probate is not allowed and certain procedural steps must be complied with to allow formal Probate to occur.   When this delay happens, what was once a relatively simple and inexpensive process often accomplished without an attorney becomes a situation where attorney intervention is necessary and additional procedural steps are required in order to proceed.    Along with the initial intervention, additional pleadings, reporting requirements, hearings, and other statutory-mandates of formal Probate now apply.   What could have been an inexpensive Informal Probate process now involves potentially several additional thousands of dollars of fees, costs, and expenses.

When one is assigned responsibility in the estate plan, such as the designated Personal Representative, failure to timely file Probate may cause additional problems as well.   Beneficiaries of the estate may have issue with the unnecessary time, costs, fees, and expenses caused by the delay of the Personal Representative that has now negatively affected their financial share or, at a minimum, added time for that share to be distributed.   As a result, Personal Representatives may find themselves facing allegations of failure to perform their duties and improper management of the estate.

It is understandable that one may not be emotionally or procedurally prepared to immediately initiate the Probate process.   However, continuing to delay the inevitable will ultimately cause future problems and additional expenses.

© 2017 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.

Revising Your Estate Plan With The Times

 

The Only Constant in Life is Change

As I often mention during the meeting where a client signs their estate plan documents,  an estate plan is “not designed to be set in stone forever.”   The majority of estate plans and their respective documents are designed to evolve as the individual’s life changes.   Without this ability to amend or revise, an estate plan often becomes outdated and practically useless.

On several occasions, I have met with adult children attempting to resolve their parents’ estate.   The children are grown often with children and sometimes grandchildren of their own.  The children were constantly told by their parents that “we have a Will in place” or “you don’t need to worry because the Trust will take care of everything.”   Once the parents have passed, the children discover a Will or Trust that is so completely out of date, it is practically useless.   In some circumstances, I have reviewed Wills and Trusts that were created in the early 1970s and never revised once.   On occasion, I have reviewed estate plan documents from as far back as the 1950s.   These documents address children who are now adults with children/grandchildren of their own as if they are minors, individuals with assignments of responsibility who have long ago passed away, and outdated directives referencing laws and statutes that have been revised several times after the documents creation.

At a minimum, an outdated estate plan causes logistical problems for the children/beneficiaries as they attempt to unravel what should occur.   Unfortunately, it also leads forcing the estate into the probate court system.   In the worst situations, the outdated documents cause confusion between individuals.  When confusion happens disputes inevitably occur.   This leads to the accrual of thousands of dollars in legal fees, costs, and expenses.   What should have been a simple process now becomes complicated, time consuming, subject to delay, and expensive.

In order to avoid any issue and the resulting confusion and disputes that can develop, regular review and updating of an estate plan is essential.   In order to assist in the process, I have the following suggestions.

Review your estate plan when a major life event occurs.   Major life events have the ability to quickly make an estate plan obsolete.   These major life events can include the following:

  1. Addition of new beneficiaries. This may include the birth of a child, grandchild, or when an adoption occurs.   In order to avoid any confusion or dispute from occurring I recommend that you specifically designate who is to be a beneficiary and who is not.
  2. Death of individuals. Often mentioned in estate plans are individuals who are either beneficiaries or fiduciaries with responsibilities to carry out.   If one of these individuals has passed away, an estate plan should be modified to replace him or her with a living individual.
  3. Divorce. Oftentimes, estate plans will list a married couple as holding joint responsibility.   This often is seen while addressing guardians of underage children.   If a divorce of the couple occurs, revisions would be needed to specify which of the individuals should have this responsibility or another individual/couple should be named.
  4. Children becoming adults. Often an estate plan should evolve to take into consideration children who are now adults and should be given greater responsibility.    

When these events occur, it should trigger a red flag for a review and revisions of an estate plan.

Even if a major life event has not occurred, I always recommend that a review of an estate plan occur at least once a year.   That way, the individual will be able to locate and revise minor changes in circumstances that still have the ability to significantly impact the estate plan.   For example, in a review of the documents one might discover that the address or telephone number of individuals has changed.    This contact information is very important to have up to date in the Powers of Attorney if an emergency situation has occurred where the first course of action will be to attempt to contact the individual by telephone.

In order to facilitate this once-a-year review, I recommend picking a date that is easier to remember as “review the estate plan” day.   For example, some clients pick a non-major holiday or date (such as, St. Patrick’s Day, April Fool’s Day, or Flag Day) to help them to remember to review their estate plan documents.

Whether a major or minor change to an estate plan, the amendment process is typically far simpler than establishing the estate plan.  My firm is certainly willing to assist you.   For my clients, they often contact my firm by e-mail or telephone, we work though the revisions that need to occur, and they only come to the office once to sign the documents.   Most revisions are then placed with the current estate plan or replace the out-of-date document.

As mentioned above, the “only constant in life is change.”   Make certain that your estate plan evolves as your life does.

© 2017 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.