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| Trademark, copyright, music law & digital media attorney Cheryl Hodgson of Hodgson Legal |
The best family law
attorneys know when to include outside experts on their team. When it
comes to intellectual property assets, family lawyers turn to attorney Cheryl
Hodgson of Hodgson Legal for her expert advice.
As part of our
collaboration geared towards helping family lawyers and their clients navigate
the arcane world of intellectual property assets, we invited Ms. Hodgson to
share three key drafting tips for family lawyers to consider in cases when the
marital assets include royalties:
1.
Audit
rights. Audit rights are a
vital component to any agreement that includes payment of royalties, whether or
not a dissolution is involved. Without the direct audit rights as well as the
right to participate in an audit of the source of the income stream, there is
no means by which to verify the accuracy of accountings from an ex-spouse, or
payments received by the ex-spouse. Moreover, without an audit to identify
an ex-spouse’s non-compliance with the marital settlement agreement (“MSA”), it
can be difficult or impossible to identify evidence to support legal action and
hold the ex-spouse accountable for failing to properly pay. Therefore, one
should always include a thoughtful audit clause in the MSA that grants access
to the contracts that create the income stream. Moreover, rights to piggyback on direct audit rights are imperative. (See this post for more audit clause drafting tips.)
2.
Earnings
Periods. The MSA should
address dates governing receipts and payments prior to the date of dissolution
since payments may be earned long before they are received. For example,
in the case of foreign performance royalties from the broadcast of music on
television and in film, earnings during the term of the marriage may not be
received or paid in the United States for a year or even longer.
3.
Transfers
of Title. A
court order detailing rights in the divided assets should be drafted in a
manner that is both clear, detailed, and binding upon third party payees of
royalties. Entertainment related companies are often loathe to make
changes in existing payment instructions without clear agreements, letters of
directions, and in many cases, a court order that clearly identifies the assets
and the parties covered.
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Don’t wait for the next
post in our ongoing collaboration – read more from Ms. Hodgson today on her own website. Better yet, for a personalized
consultation, call Ms. Hodgson today at 310-623-3515 and follow her on
Twitter @CherylHodgson.
