Gill v. American Mortgage Educators, Inc., 2007 WL 2746946 (W.D. Wash. Sept. 19, 2007), illustrates how tangled a web copyright ownership can become when it is part of a small business. The court does such a good job of laying out the facts, that I reproduce them, in slightly edited form:
The two consolidated cases arise out of an acrimonious divorce. No. C07-5244 was originally filed by AME against Harjit Gill, in Thurston County Superior Court. Mr. Gill had the case removed to this Court. AME is a Washington corporation co-owned by Lisa Rosenberger, Mr. Gill's ex-wife and AME president, and Robert Rosenberger, Ms. Rosenberger's father and majority shareholder. Mr. Gill filed Cause No. C07-5229 against AME, Inc. Mr. Gill, a self proclaimed “world authority on accelerated [home] mortgage reduction strategies”, is an Australian citizen currently residing in Yelm, Washington. In 1995 while living in Australia, Mr. Gill published How to Own Your Home Years Sooner and created a software program that allows paid subscribers to track online his/her individual mortgage and equity. Both the book and software are part of an accelerated equity system designed by Mr. Gill to teach homeowners how to save money in interest payments by using the banking system to their advantage. This system was successful enough that upon moving to the United States, Mr. Gill decided to redevelop the book and software to make them applicable to the North American home mortgage market. ... ... A year later, in 2003, Mr. Gill redeveloped and branded the software as “Speed Equity” software (the “software”) and published it live on MortgageFreeUSA.com The software was registered with the Copyright office on June 1, 2007. ... That same year Mr. Gill published the U.S. version of How to Own Your Home Years Sooner (the “Book”), which was also sold on the website. He formed Mortgage Eliminators, LLC (“LLC”), a Washington limited liability company in 2003. The LLC was supported by Mr. Gill's speaking engagements, Speed Equity seminars and workshops, online software subscriptions, and book sales. ... In 2002, while trying to get the LLC off the ground, Mr. Gill met Ms. Rosenberger at a spiritual retreat and they began dating shortly thereafter. Mr. Gill and Ms. Rosenberger cohabitated, became pregnant with their daughter, and subsequently married in 2005. While dating Mr. Gill, Ms. Rosenberger began working in an administrative capacity at the LLC. She and members of her family, including Mr. Rosenberger, became minority shareholders of the LLC; Mr. Gill, however, remained the majority shareholder. Later, Mr. Gill met Perfecto Bobadilla-who would become AME's Chief Operating Officer, Bobidilla encouraged the formation of a corporation to better market and commercialize Mr. Gill's intellectual property, and to provide liability protection the LLC supposedly lacked. In May of 2006 AME was formed; the LLC dissolved in June of 2006. ... In forming AME the intention of the participants was that Mr. Gill would transfer his ownership in the intellectual property while Mr. Rosenberger and others made financial investments in the corporation. Presumably, the investors and Mr. Gill would share ownership of the corporation. AME claims that Mr. Gill transferred his intellectual property interest to the new corporation (AME). It relies on undocumented conversations between Mr. Gill and Mr. Bobadilla, Bobadilla ... and Mr. Gill's failure to expressly state that he was not surrendering his intellectual property to AME. .... Mr. Gill, however, states that when Mr. Rosenberger became majority shareholder Mr. Gill refused to transfer his intellectual property rights, which included the book and all of its physical copies and the Software. .... No evidence of an actual transfer of ownership to the corporation has been presented to the Court.... In 2007 Ms. Rosenberger filed for divorce. Just prior to filing of dissolution proceedings, it is alleged that Mr. Gill and the others decided that Mr. Gill would not be a shareholder in AME but that he would instead be an independent consumer advocate who could promote the corporate website with greater credibility. AME claims Mr. Gill is not an AME shareholder but rather a mere independent contractor. In the divorce proceeding the Thurston County Family & Juvenile Court concluded: 1. There is a prima facie showing that [t]he intellectual property of the books and on-line software is the separate property of Harjit Gill. 2. The intellectual property should be turned over to [him]. 3. The court does not have the jurisdiction to order the corporation to take any action or turn over any property.
The principal copyright question was who owned rights in physical copies of Mr. Gill's books. AME had physical possession of them, and there was no allegation that possession was unauthorized. In holding that Mr. Gill owned rights in the physical copies, the court declared the parties' evidence scant, albeit AME's even more scant. In the end, the court focused on who might have paid for the books' printing. Under the facts, that may have been all the court could so, but I'm not sure that paying for printing always equates into ownership of the physical object, as compared say, to a right of reimbursement for the printing costs.