Is Debtor’s Copyright Exposed to Execution of Civil Judgement?

A client has a new tech company with what he describes as a valuable copyright. His ex-partner sued him in Virginia federal court and obtained a large judgment which the ex-partner domesticated in Florida. The creditor registered a judgment lien with the Secretary of State. The client is concerned that the lien attaches to the copyright and that the creditor will take the copyright to satisfy the judgement.

A copyright is intangible personal property. Judgment liens recorded in Tallahassee create a lien on all of the debtor’s personal property of the type described in Section 56.061 of the Florida Statutes. Intellectual property such as copyrights does not fall within the property described in the statute.

A creditor would have difficulty executing a judgment against a debtor’s copyright in Florida. Technically, a writ of garnishment is the tool to attack a copyright but it is not practical to enforce a garnishment against a copyright. The copyright has value to the creditor only if he can demonstrate he has acquired clear and complete title which can then be sold to collect money.

I think an experienced creditor attorney would pursue a debtor’s copyright through proceedings supplementary. These proceedings give the court broad equitable power to enforce a civil judgment. The creditor could ask the judge to have a receivership established over the client’s new company that owns the copyright so that proceeds the company obtains by virtue of the copyright be applied to satisfy the judgment, or the creditor could seek an order against the client to simply assign the copyright through a filing with the appropriate government agency.

I’ve never defended a client’s copyright from creditor execution. I suspect most creditor representatives would not know how to execute a judgment against a debtor’s copyright, but I know several very competent judgment collection law firms that would figure out an effective procedure to execute against a copyright that is not otherwise an exempt asset.

Last updated on May 22, 2020