ROYALTIES AS "INCOME" FOR PURPOSES OF CHILD SUPPORT
Laura Wish Morgan
Most, if not all, child support guidelines provide that income from self-employment, including rents, royalties, and benefits allocated to an individual for a business or undertaking in the form of a proprietorship, partnership, joint venture, close corporation, agency, or independent contractor, shall be considered "income" for purposes of child support. See generally Laura W. Morgan, Child Support Guidelines: Interpretation and Application § 2.03[a] at 2-8 (Supp. 1999). For this reason, the courts have held that royalty income, comprising income from patents, trademarks, copyrights, and other intellectual property is "income." E.g., Low v. Low, 79 Colo. 408, 246 P. 266 (1926); Gardry v. Gardry, 481 So. 2d 706, 708 (La. Ct. App. 1985); Hoffa v. Hoffa, 332 N.W.2d 522, 526 (Minn. Ct. App. 1986); In re Marriage of Julian, 868 S.w.2d 182 (Mo. Ct. App. 1994); Braeman v. Braeman, 192 Neb. 510, 222 N.W.2d 811, 812 (1974); Taylor v. Taylor, 333 S.C. 209, 508 S.E.2d 50, 53 (1998); Morey v. Morey, No. 01-A-01-9506-CV00243 (Tenn. Ct. App. December 15, 1995). See also Stone v. Gulf American Fire, 554 So. 2d 346 (Ala. 1989) (illegitimate child of Hank Williams Sr., acknowledged during his lifetime, was entitled to share in the estate of Williams, including royalty income).
Recently, however, a support obligor argued that the court could not consider his copyright income, for to do so would violate federal law. In Boutz v. Donaldson, 26 Fam. L. Rep. (BNA) 1016 (N.M. Ct. App. September 20, 1999), the father argued that the trial court's consideration of the income he received from his copyrights works was error, specifically basing his argument on a theory of federal preemption. The father argued that The Federal Copyright Act, 17 U.S.C. § 201 (1994) provides that a copyright "vests initially in the author," 17 U.S.C. § 201, and cautions that copyrights "are governed exclusively" by the Act and not by "the common law or statutes of any State," 17 U.S.C. § 301(a) (1994). The father further pointed to language in Section 201(e) of the Act that states may not "seize, expropriate, transfer, or exercise rights of ownership with respect to the copyright." Although the father conceded that his theory of preemption is not explicit in the statute, he relied on these Congressional expressions as an indication of Congressional intent to preempt the field. The court found "Father's argument novel but not persuasive." The court held that that copyrights are not federal benefits, but merely contractual benefits that are governed by federal law. This distinction is crucial was crucial to the court. Citing Worth v. Worth, 241 Cal. Rptr. 135, 139 (Cal. Ct. App. 1987), where the court rejected the argument by the author-spouse that income from copyrighted material could not be divided equally under California's community property law for fear of conflicting with the preemptive intent of the Copyright Act, the court concluded:
The trial court only included such income, as it passes unencumbered to Father, for purposes of calculating Father's ability to support his children. In short, the court's actions below are less intrusive on Father's copyright interest than the state judicial actions specifically approved by the California court in Worth. In the absence of any clear federal intent to preempt the effects of generic state law on child support, and relying on the discussion in the Worth opinion . . . we are not persuaded that the Copyright Act preempts the court's consideration of Father's income from copyrighted sources.
Thus, there is nothing to prevent a state court from considering royalty income as "income" for purposes of child support.