Key Estate Planning Considerations for Individuals with IP (Part I: Introduction & Copyrights)

This is the first entry in a three-part blog series about the interaction between estates law and intellectual property law. Part I will introduce Ontario’s succession law regime, and provide an analysis of succession law vis-à-vis copyright law. Part II will apply this analysis to trademark law. Finally, Part III will examine this area in relation to patent law, as well as provide some concluding thoughts and considerations.

In the world of will-making, when we think about how the assets of the will-maker (usually referred to as the “testator”) are going to be distributed, we often think about what’s going to happen to their real estate, their vehicles, their jewellery or their other personal belongings. While it is natural for us to first turn our mind to property that is physical or tangible, it is important to ensure that we turn our focus to intangible property as well, as such property often requires more attention and direction.

One form of property that undoubtedly fits this definition is intellectual property. In making provision for one’s friends and family in their will, it is important to consider the financial and sociocultural impact of any intellectual property they may own, and manage such property accordingly. In this blog post, we will go over some key legal considerations, under Ontario and federal law, for the transfer of copyrights, trademarks and patents upon an individual’s death.

Ontario’s Succession Law Regime

First, it is important to understand the legal structure for the transfer of one’s property upon their death. The main Ontario statute that addresses this is the Succession Law Reform Act (SLRA). This statute deals with situations both when an individual dies “testate”, or with a will, and “intestate”, or without a will.

Section 2 of the SLRA codifies the common law principle that upon their death, an individual can devise, bequeath or dispose of all property to which they are entitled at the time of their death. While the SLRA does not provide a full definition for the term “property”, section 2 does clarify that the term is broad enough to include contingent, executory or other future interests in property. The upshot is that intellectual property is property for the purposes of the SLRA and the administration of an individual’s estate. There is nothing in the SLRA or the common law that excludes intellectual property as being property that would otherwise form part of an individual’s estate.

The SLRA also addresses matters related to the making of wills: they are only valid when they are in writing and signed at the end by the testator and two witnesses who should not be beneficiaries of the will. A major exception to the witness requirement is the holograph will, which is valid if it is wholly in the handwriting of (and signed by) the testator. That being said, it is not generally recommended to rely on a holograph will to dispose of property upon death.

It is equally important to consider what happens if an individual dies intestate, or, in other words, dies without a will. Part II of the SLRA establishes Ontario’s intestacy regime. Specifically, it outlines how the property of an individual who dies without a will is apportioned between—assuming they exist and are alive upon the individual’s death—their spouse, their children and potentially their other relatives (depending on who survives).

Notably, however, Part II of the SLRAuses the phrase “intestate in respect of property”. The reason for this is that a testator could in theory make provisions for some, but not all, of their property in their will, and thus die “testate” in respect of some property and “intestate” in respect of other property. Usually, the testator remedies this when they include a provision in their will that deals with the “residue” of their estate (all of their remaining property that they have not distributed elsewhere in their will, or by beneficiary designations or joint ownership arrangements outside their will).

While intellectual property would be covered under a “residue” clause in a testator’s will, when considering the unique nature of intellectual property relative to other forms of property, it may be more appropriate for a testator to specifically identify the intellectual property they own in their will, and provide detailed instructions on how this property is to be managed upon their death.

Turning then to specific types of intellectual property, we address copyrights below.

Copyrights

According to the Canadian Intellectual Property Office (CIPO):

A copyright is the sole right to produce or reproduce a work or a substantial part of it in any form. It includes the right to perform the work or any substantial part of it or, in the case of a lecture, to deliver it. If the work is unpublished, copyright includes the right to publish the work or any substantial part of it.

A “work” includes:

  • literary works (books, pamphlets, computer programs);
  • dramatic works (films, plays, scripts);
  • musical works (whether with or without words);
  • artistic works (paintings, maps, photographs, sculptures);
  • performances (whether artistic, dramatic or musical, and whether recorded or unrecorded);
  • sound recordings; and
  • other media such as video games, communication signals etc.

It is no secret that some works, when published, can become immensely commercially successful, and thus the owner of the copyright to any such work can obtain significant financial benefits through licensing that copyright. For the purposes of estates law, however, we are concerned with the entire copyright, and not just the licensing capabilities.

A key provision of the Copyright Act (the federal statute that governs all copyrights) that pertains to estates law is subsection 14(1), which states that where the author of a work is the first owner of the copyright, no assignment of the copyright is valid beyond 25 years after that author’s death, other than by will. At the 25th anniversary of the author’s death, the interest of the copyright reverts to the legal representatives of the author as part of their estate, and any agreement purporting to dispose of that reversionary interest is void.

The Copyright Act defines “legal representatives” to include heirs, executors, administrators, successors and assigns, agents, and attorneys. In the estates context, the executor (or, less commonly, the administrator) is the individual (although there can be more than one) who is responsible for administering the testator’s property as dictated by their will. Thus, subsection 14(1) of the Copyright Act imposes a significant limitation on the assignability of a copyright; a testator who assigns their copyright for an indefinite duration during the course of their life (again, other than by will) may thus wish to ensure that they have made arrangements so that there will be an available executor to manage the copyright when it reverts back to their estate after twenty-five years. A slight exception to this rule is subsection 14(2), which states that subsection 14(1) does not apply to assignments of copyrights as part of a collective work (which included “any work written in distinct parts by different authors, or in which works or parts of works of different authors are incorporated”).

Note that a key operating concept of subsection 14(1) is the notion of the “first owner” of the copyright. According to subsection 13(1) of the Copyright Act, the author of a work is presumptively the first owner of its copyright. However, as per subsection 13(3), where the author of a work was in the employment of some other person and the work was made during the course of their employment, the author’s employer will, in the absence of any agreement to the contrary, be the first owner (with certain exceptions for contributors to newspapers and magazines). Thus, subsection 14(1) would not apply to an employer who becomes the first author under subsection 13(1).

Importantly, note that Section 6 of the Copyright Act imposes an ultimate term for copyrights: 50 years after the end of the calendar year in which the author dies. This term exists despite any assignment of the copyright via will. Even if the subsection 13(3) exemption applies and a corporation is the first owner of the copyright, the employee is still the author of the work for the purposes of the Copyright Act. As such, individuals should account for the fact that a copyright cannot be indefinite after their death, when deciding how to distribute it via their will.

Additionally, note that a copyright does not actually have to be registered with CIPO as set out, for example, in Andrews v. McHale, 2016 FC 624. However, the benefit of registering a copyright is that it provides evidence of ownership. Thus, individuals looking to assign their copyrights through their wills should register such copyrights, as protecting the copyright from infringement can be more difficult without such registration.

In summary, an individual’s copyright will be enforceable for 50 years after the end of the calendar year in which they die. If their copyright was not previously assigned to someone, they can assign the copyright, through their will, for the entire term (or such shorter period as they desire). If they previously assigned the copyright outside of their will (i.e. some sort of licensing agreement), that copyright will only be enforceable for 25 years. Thus, if a testator intends for a licensing agreement that they made during their lifetime to persist for more than 25 years after their death, they should incorporate that agreement into their will. Of course, 25 years is already a lengthy amount of time; alternately, they could leave the decision of whether or not to continue such an agreement up to the discretion of their executor.

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Demetre Vasilounis

About Demetre Vasilounis

Demetre Vasilounis assists clients with a variety of wealth management and estate and family planning issues. Demetre regularly drafts wills, powers of attorney, domestic contracts, deeds of trust, and other documents relevant to succession planning. Demetre’s practice has a specific focus on the management of digital assets, including online accounts, cryptocurrency, and various forms of intellectual property.