What Happens to Your Intellectual Property When You Die?

When people think about estate planning, they tend to think about the obvious things: the family home, bank accounts, investments and superannuation.

But what happens to your intellectual property when you die?

For a business owner, inventor, author, artist or other creative, intellectual property may be one of the most valuable things they leave behind. Copyright, trade marks, patents, designs, software, domain names, confidential information and business systems can all have commercial value — sometimes long after their creator has died.

A Victorian Supreme Court case involving the estate of a robotics inventor provides a striking example of what can happen when those assets are overlooked.

The robotics inventor whose intellectual property was thrown away

Re Estate of Vaughan; Dunn v Dunn-Vaughan [2024] VSC 7 and Re Estate of Vaughan; Dunn v Dunn-Vaughan (No 2) [2024] VSC 128 concerned the estate of Henry Vaughan, a robotics engineer and inventor.

Mr Vaughan had spent decades working in robotics through his business, System Dynamics. His work included unique and bespoke machinery developed for major industrial clients.

Following his death in 2019, one of his stepsons, Simon, became administrator of the estate.

Among the assets that needed to be dealt with were the contents of the System Dynamics factory. An auction was arranged and the physical contents of the factory ultimately realised relatively little.

But there was another category of asset sitting in the factory: intellectual property.

There were engineering drawings, designs, manufacturing drawings, operating manuals, maintenance manuals and other business documents associated with Mr Vaughan's work.

Some of those documents were discarded.

And that became an extremely expensive decision.

"But I searched IP Australia"

One of the particularly interesting aspects of the case from an IP perspective was the administrator's position that he had searched the IP Australia register and hadn't found intellectual property registered in Mr Vaughan's name.

There's a fundamental problem with that approach.

Copyright isn't registered with IP Australia.

In Australia, copyright generally arises automatically when qualifying original material is created and recorded in material form. There is no Australian copyright register you can search to determine whether somebody owns copyright.

Engineering drawings, technical drawings, software, manuals, photographs, written materials and many other things sitting in someone's office, workshop or computer files may therefore attract copyright protection without appearing on an IP register at all.

That's particularly important when administering the estate of an inventor, engineer, designer, author, photographer, software developer or other creator.

A search showing no registered IP doesn't mean there is no IP.

Copyright doesn't disappear when you die

There was another significant misconception at play.

The administrator had received informal advice from a friend that copyright ended when the creator died.

It doesn't.

Depending on the work and the circumstances, copyright can continue for many decades after its creator's death. For many types of copyright material, the usual Australian term is the life of the creator plus 70 years.

That means copyright can potentially continue generating value for beneficiaries long after the original creator is gone.

Think about an author whose books continue to sell, a photographer whose images continue to be licensed, a software developer whose code remains commercially useful, or an engineer whose drawings are needed to maintain specialised equipment.

Death doesn't necessarily end the commercial life of those assets.

The executor's duties mattered

This wasn't simply a case about misunderstanding copyright law. It was also about the obligations involved in administering an estate.

An executor or administrator is responsible for identifying, protecting and dealing appropriately with estate assets for the benefit of the beneficiaries.

That can be relatively straightforward when the asset is a bank account.

It becomes more difficult when the asset is a box of technical drawings sitting in an old factory.

But "I didn't realise it was valuable" isn't necessarily an answer.

In the Vaughan case, the Court found that intellectual property existed, that the administrator must have known that at least some IP-related material would have been present in the factory, and that he ought to have appreciated that it could have value.

The sensible course would have been to preserve the material and obtain appropriate advice about what it was and whether it had commercial value before disposing of it.

Instead, potentially valuable material had been lost.

A $419,000 lesson

The financial consequences were substantial.

The lost intellectual property was ultimately assessed at $300,000.

The administrator was required personally to pay that amount into the estate, together with interest of more than $119,000.

He was also removed as administrator.

It's an extraordinary example of why executors need to take unusual assets seriously — particularly when they're administering the estate of someone who operated a business or spent their life creating things.

You don't necessarily need to understand robotics, software development, publishing or industrial design yourself.

You do need to recognise when you don't understand an asset and obtain advice from someone who does.

What intellectual property might form part of an estate?

Intellectual property can be easy to overlook because it isn't always something you can physically point to.

Depending on the person and their business, an estate might involve:

• copyright in books, photographs, artwork, videos, software, plans, drawings or other original material;
• registered trade marks personally owned by the deceased;
• patents or registered designs;
• domain names and websites;
• licensing rights and royalty streams;
• technical documentation and business systems; and
• valuable confidential information or know-how.

Ownership also matters.

Some IP may belong personally to the deceased. Other IP may be owned by a company, trust or other entity.

If a company owns a trade mark, for example, the trade mark doesn't suddenly become an estate asset when a shareholder dies. The company continues to own it. The deceased's shares in the company may instead form part of the estate.

Understanding who actually owns the IP is therefore an important part of both IP management and estate planning.

Business owners should think about IP before there's an estate to administer

There is also a lesson here for business owners.

Your executor shouldn't have to become an IP detective after you die.

If you've created valuable intellectual property, consider whether your estate planning records clearly identify:

• what IP exists;
• who owns it;
• where the relevant documents and digital files are kept;
• whether there are licences or royalty arrangements;
• who has access to important accounts, systems and records;
• whether specialist knowledge will be needed to manage the IP; and
• who should ultimately receive or control those rights.

You should also consider how your estate plan interacts with your broader business succession arrangements.

If you operate through companies or trusts, simply putting something in your Will may not achieve the outcome you expect. Company succession, trust succession and arrangements such as corporate powers of attorney may also need to be considered.

Think carefully about who you appoint as executor

The Vaughan decisions also highlight another important estate planning question: who should actually administer your estate?

Being an executor isn't simply an honorary role.

It can involve managing investments, businesses, property and intellectual property, resolving competing beneficiary interests and making decisions about assets the executor may know very little about.

For an estate containing significant copyright or other specialist assets, it may be worth considering whether particular expertise will be needed and whether specialist arrangements should be made for those assets.

The important thing is to think about this while you're still able to provide the information and put the right arrangements in place.

IP is part of succession planning

We spend a lot of time helping businesses identify, protect and commercialise intellectual property during the life of a business.

But protecting IP should also involve asking what happens next.

A valuable copyright portfolio shouldn't become a pile of unidentified files on someone's computer. Engineering drawings shouldn't be mistaken for old paperwork. A trade mark shouldn't simply lapse because nobody knew it needed renewing.

The Vaughan case is an unusually vivid example, but the broader lesson is simple:

If intellectual property has value during your lifetime, it deserves a place in your estate and succession planning too.

For more practical discussions about intellectual property and business protection, listen to Elise Explains IP.

If you'd like help identifying and protecting the intellectual property in your business, you can also use the free IP Audit tool available on my website or book an IP Strategy Call to discuss your circumstances.

Disclaimer: This podcast and article are intended for general educational purposes only and do not constitute legal advice. You should obtain advice tailored to your circumstances before acting on any information discussed.