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Dr. Dre’s Name Tied Up in Messy Divorce, Along With Fortune (2)

Oct. 15, 2020, 10:01 AMUpdated: Oct. 16, 2020, 4:03 PM

Dr. Dre’s wife isn’t just aiming for half the rap mogul’s estate in their bitter divorce. In a sense, she says she owns half of his name, too.

Nicole Young’s accusations that Andre Young tried to hide assets by moving trademarks they allegedly jointly own, including registrations of his stage name Dr. Dre, to a limited liability corporation open a window on the legal implications of trademarks in marriage.

Marks on things ranging from the rights to “Star Trek” to rock stars’ songs have long made celebrity divorces messy, but case law on the various complexities can be sparse because of controlling prenuptial agreements, varying state laws and facts, and pre-ruling settlements.

“Part of the issue here is that joint ownership is so antithetical to the underlying theories that there’s just not a ton of case law on it,” trademark attorney Elizabeth Sbardellati of Greenberg Glusker Fields Claman & Machtinger LLP in Los Angeles said. “That’s just not how trademarks are intended to function.”

Trademarks are assets with value—and are therefore contestable “community property” when created during a marriage. They can be split—or at least revenue directly generated by them—which can be complicated in and of itself, especially when a mark is intertwined with someone’s identity.

Trademarks also have largely intangible value that’s difficult to calculate, so ownership disputes, such as when a band breaks up, make it difficult to determine unless there’s a contractual agreement or distinct revenue stream.

Nicole Young’s Sept. 18 complaint alleging fraudulent transfer of assets said Dr. Dre forced her out of the house April 2 and “quickly plotted secretly to transfer their assets away.” That allegedly included moving five “Dr. Dre” trademarks and one on “The Chronic”—the name of his 1992 solo album—to an LLC.

Nicole Young alleged in separate divorce proceedings in California that she was pressured into signing a prenuptial agreement, and that Dr. Dre ripped it up at one point during the 24-year marriage in regret.

Rights Die Hard

The agreement likely remains valid even if it was ripped up, barring a signed agreement canceling the original, family law attorney Donald Lockhart Schuck of Pryor Cashman LLP said. But absent any agreements, trademarks and other intellectual property—however intangible—can be marital assets split in a divorce, he said.

Most states, including New York, divide assets based on equitable distribution—basically, considering what’s fair. But California is a “community property state,” so that Young isn’t listed as a registrant or that Dr. Dre moved the marks to an LLC is irrelevant, Schuck said.

“If it was created during the marriage and there’s no prenuptial agreement, it’s divided 50-50 without listening to anyone’s argument of why or when,” he said.

While Young’s complaint names trademarks registered during the marriage, the “The Chronic” registration and three “Dr. Dre” registrations covering music, entertainment services, and merchandise claim earlier first use.

Trademark rights are created upon use, not registration, so Dr. Dre may have had common law rights for some of the goods and services for which his stage name is a registered mark, Sbardellati said.

“If the use predates the marriage, then there’s the potential that at least some of these trademarks would be considered separate property brought into the marriage” and not subject to a split, Sbardellati said. If marital assets, valuation could hinge on revenue streams from licensing, she said.

Nicole Young’s attorney, Bryan Freedman of Freedman & Taitelman LLP, said in an email that some common law rights were possible, but they don’t apply to the classes of goods and services in the registrations claiming earlier use. He said moving the marks showed he didn’t believe he owned the marks by himself.

“He used the marks in those areas during marriage for 24 years. Right when he was going to file he created a separate secret LLC and transferred the marks,” Freedman said. “Does that sound like someone who thought he owned them himself? Why would he transfer at that time if he was the sole owner?”

That Dr. Dre’s identity is also tied up in the trademarks also invokes a separate right of publicity and a complicating overlap of rights, Sbardellati said. Nicole Young’s interest in marks created during the marriage, if not overridden by a prenup, would likely come in the form of licensing revenue tied to particular marks, she said.

Sometimes an identity—and its value created during a marriage—can have value difficult to monetize.

A California state court in 2000 found that John McTiernan—who directed “Die Hard,” “Die Hard with a Vengeance,” and “The Hunt for Red October” —had $1.5 million of goodwill to be included in the community property to be divided. But an appeals court reversed that in a split decision, finding that goodwill is an asset of a business, distinct from an individual’s professional reputation.

Schuck said that while he’s “not big on prenuptial agreements” in general, intellectual property can create situations “where you can have a colossal mess on your hands.”

“Anyone who’s getting married or going through a divorce has to be thinking ‘I’ve got five manuscripts, or five marks, they have value,’ and it would be remiss for people to overlook them,” he said. “When people are getting married, you have to realize these things have value. Everything has a value, whether it’s your name or your sneakers.”

Revenue Tails

Trademark and copyright are rights created by federal law, which overrides state law. But there’s a difference between the right and who owns the money that flows from it, attorneys said.

One example can be found in the divorce case of the late rock star Tom Petty. Attorney Daniel L. Jaffe of Jaffe Family Law Group, who represented Petty, said that while the musician retained control over his music, his ex-wife retained rights to revenue flowing from what he created while they were married.

“We literally listed 300 songs that were marital property, but under fed copyright law Tom has the right to exploit and utilize them. The former spouse had right to one half of the proceeds,” Jaffe said.

That revenue tail can attach to works not created at the time of divorce. Artist George Rodrigue and his wife divorced in 1993, and he continued making paintings featuring his “Blue Dog,” a wide-eyed pup used, among other places, in multimillion-dollar ad campaigns.

The U.S. Court of Appeals for the Fifth Circuit in 2000 reversed a lower court ruling by finding his ex-wife had rights to revenue from derivatives of the character he created during their marriage.

That decision may have provided useful guidance when Eileen Roddenberry was hammering out a 1969 divorce agreement with “Star Trek” creator Gene Roddenberry.

A California appellate court in 1993 interpreted that agreement to not include future derivatives of Gene Roddenberry’ s copyrights that existed in 1969. His ex-wife was only entitled to royalties from three seasons of her ex-husband’s original TV series, as his creation famously re-emerged as a multibillion-dollar cultural icon.

“If only somebody had put in the settlement agreement, ‘not just the 80 episodes,’” Jaffe said. “It really creates problems for the divorce lawyer: How do you control these intellectual properties where money is generated years later?”

(Updated Oct. 15 story with additional comment in 21st paragraph. A previous version corrected to reflect that Nicole Young isn't an attorney.)

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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