Q: Can a receiver be appointed to sell
copyrights or other intellectual property to satisfy a judgment?
A: Yes. A receiver in aid of execution is
an excellent way of liquidating intellectual property assets to satisfy a
judgment. Because these types of intellectual property assets are
intangibles, a writ of execution cannot be used. It is important, however,
to do it the correct way so that a buyer will be able to prove the chain
of title needed in any later infringement action. A method approved in
California is to obtain an order compelling the judgment debtor to assign
the copyright, patent, or other intellectual property to a receiver who
can then manage or sell it. Peterson v. Sheriff of S. F., 115 Cal. 211
(1896). This can be done by obtaining an order for the judgment debtor to
appear at a judgment debtor’s examination and, at the conclusion of the
examination, obtain an order under Cal. Civ. Proc. §708.205 (a) compelling
the judgment debtor to assign the intellectual property to the receiver.
If the judgment debtor refuses, the court can hold him or her in contempt
or can order the clerk or even the receiver to execute the assignment. See
Finnegan v. Finngan, 64 Cal. App. 2d 109 (1944); Zanetti v. Zanetti, 77
Cal. App. 2d 553 (1947).
In a recent case, the Ninth Circuit affirmed the
appointment of a receiver to sell the music copyrights owned by musician
and band leader George Clinton. Hendricks v. Clinton, 2014 WL 2808138 (9th
Cir.). Clinton had been sued by his former lawyers to collect their fees.
They obtained a $1.7 million judgment. Unable to collect the full amount
of the judgment, the lawyers filed an action seeking an order for
Clinton’s judgment debtor examination and a separate action for the
appointment of a receiver and ordering the assignment of Clinton’s
copyrights to certain master recordings to the receiver. The district
court granted the motions and Clinton appealed. The Ninth Circuit
affirmed, upholding the appointment of the receiver to manage the
copyrights and, ultimately, to sell them to satisfy the judgment.
*Peter A. Davidson is a Partner of Ervin Cohen & Jessup LLP a
Beverly Hills Law Firm. His practice includes representing Receivers and
acting as a Receiver in State and Federal Court.