Accounting for copyright interests in Connecticut divorces

On Behalf of | Jun 9, 2023 | Property Division

Norman Lear. Charles Edward Ives. Annie Leibovitz. Michael Bolton. Stephenie Meyer. Connecticut has no shortage of accomplished artists, writers, musicians, architects, playwrights, photographers, songwriters and other creatives. And when they produce artistic works, certain protections in copyright automatically flow to the creators.

Federal law – consistent with language in the U.S. Constitution – provides that copyright and ownership attach when original works become “tangible forms of expression.” After the creator’s initial grant of ownership, they may decide to register their published or unpublished copyright with the U.S. Copyright Office, a process that secures specific rights and advantages to the registering owner, such as in litigation. 17 USC sec. 101 et seq

Broadly, for works created since Jan. 1, 1978, a copyright lasts for the life of the author plus 70 years. Other copyright expiration calculations apply in other circumstances like when a company owns a copyright that an employee created for hire. Copyright ownership can also be joint, and can be transferred such as through assignment, inheritance or contract, or by “operation of law.”

When authors and artists, or anyone else with copyright interests, divorce, the court must analyze their copyrights and any currently or future generated income or royalties to determine whether either constitutes marital property subject to equitable division between the litigants.

Copyright disclosure and discovery

When a litigant files a petition to dissolve a marriage in Connecticut, they must provide a sworn financial affidavit disclosing all assets and income. The form uses broad language requires the litigant to disclose all possible assets, including intellectual property like copyrights and any related economic benefits or proceeds.

Despite the disclosure requirements, an experienced Connecticut family lawyer would likely continue to investigate whether the opposing litigant has interests in copyrights or other intellectual property through vigorous discovery. For example, did a litigant register any copyrights? Did they create a significant or potentially lucrative original work but keep it concealed? Does a litigant have business interests enriched by the company’s ownership rights in copyright? Did a litigant transfer copyright interests to a third party in anticipation of divorce? Is a litigant in negotiation for a potential contract for royalties, such as from book or recording sales?

Connecticut courts on copyrights and their generated economic gain

Connecticut cases are relatively sparse that are specifically about copyright interests in divorce. Our courts have held that they have the power to distribute “proceeds” from intellectual property – of which copyright is a subset – between divorcing spouses. See Lynch v. Lynch, 135 Conn.App. 40 (2012), citing our state Supreme Court in Gallo v. Gallo, 184 Conn. 36 (2012).

The caveat, however, is that the “proceeds or royalties [must be] neither “indefinite nor speculative.”

The Gallo court analyzed whether trial court’s order that one litigant receive 20% of royalties on the other’s textbooks for five years was too speculative. While the court does not mention the word “copyright,” royalties on a book would normally generate from a monetized copyright.

The court emphasized that because the author already had a contractual right to royalties at the time of divorce, not knowing the exact future dollar amount did not make it indefinite or speculative. The agreement was clear as to subject matter, royalties and length of time.

Beyond income from a copyright, can a copyright itself be a marital asset?

This question wades into complex and largely uncharted territory for Connecticut courts and has been a perplexing question in other states. The broad issue is that because federal copyright law gives a creator five main ownership powers in an original work, does that mean that a state court in divorce does not have power to distribute part of those ownership rights to the non-owning spouse because federal law pre-empts state law on the subject?

One theory is that the copyright transfer to a divorcing spouse might qualify as one by “operation of law” that federal law allows – even if the law that operates to do so is state divorce law.

Published cases in our state have not resolved this exact issue, and the leading cases from other states have been community property jurisdictions that automatically give one spouse half ownership when the other acquires property during marriage. See In re Marriage of Worth, 195 Cal.App.3d 768 (1987); Rodrigue v. Rodrigue, 218 F.3d 432 (2000).

By contrast, Connecticut has an “all property” approach to property division, meaning all property of either spouse is subject to division in divorce. It would seem to follow that under this approach, if one spouse owns a copyright, a Connecticut court could transfer ownership interest to the other or even create joint ownership (as opposed to definite licensing proceeds, royalties or other generated income that are already clearly distributable).

How our courts would decide whether federal copyright law on ownership trumps our state equitable division law is yet unknown.