(CN) - Marilyn Monroe's estate lost its publicity rights to the iconic actress by trying to duck California inheritance tax, the 9th Circuit ruled Thursday.
The federal appeals court upheld an order granting publicity rights to Milton H. Greene Archives and Tom Kelley Studios.
Marilyn Monroe LLC and its licensee, CMG Worldwide, sued the companies in Indiana Federal Court in 2005 for advertising and selling photographs of Monroe. The companies countersued in Los Angeles, seeking a declaration that the estate does not own Monroe's publicity rights.
The stakes are high, according to the ruling, as Forbes Magazine ranked Monroe third on its "Top-Earning Dead Celebrities" list, with an income of $27 million in 2011.
Before the actress died in 1962, she executed a will that divided the "rest, remainder and residue" of her estate among May Reis, her private secretary; Dr. Marianne Kris, her psychiatrist; and Lee Strasberg, her acting coach and close friend. Strasberg received 75 percent of the "residual estate," which he left to his wife, Anna, when he passed away in 1982.
Anna Strasberg is now executor of Monroe's estate, incorporated as Marilyn Monroe LLC.
Though Marilyn Monroe LLC and CMG assert ownership over Monroe's publicity rights, the 9th Circuit said their claim hinges on whether the actress was living in New York or California when she died.
After divorcing playwright Arthur Miller, Monroe executed her will in Manhattan on Jan. 14, 1961. She then went to California to film "Something's Got to Give," where she bought a home. During that time, she also maintained her apartment and staff in New York.
Twentieth Century Fox Studios fired the actress a few months into filming for her repeated absences and tardiness. On Aug. 5, 1962, she was found dead in her Brentwood, Calif., home.
California and Indiana -- where the dueling lawsuits were filed -- both recognize a posthumous right of publicity. New York, however, does not.
The executors of Monroe's estate (Strasberg and former executor Aaron Frosch) have argued over the years that Monroe lived in New York for tax purposes. In doing so, the estate was able to pay less than $800 in California inheritance taxes.
But that stance ultimately unraveled the estate's publicity rights claim, the 9th Circuit ruled, because it means courts have to apply New York law.
California and Indiana -- where the dueling lawsuits were filed -- both recognize a posthumous right of publicity, according to the ruling. New York does not.
And the estate was influential in getting California to recognize such a right, which did not exist at the time of Monroe's death. After a federal judge sided with Milton Greene, state Sen. Sheila Kuehl, herself a child actress, introduced a bill that retroactively recognizes the right of publicity as a transferrable property right that can be passed on after death. The 2007 bill's expressed intent was "to abrogate the summary judgment orders" in the Monroe estate case.
"This is a textbook case for applying judicial estoppel," Circuit Judge Kim Wardlaw concluded. "Monroe's representatives took one position on Monroe's domicile at death for forty years, and then changed their position when it was to their great financial advantage; an advantage they secured years after Monroe's death by convincing the California legislature to create rights that did not exist when Monroe died. Marilyn Monroe is often quoted as saying, 'If you're going to be two-faced, at least make one of them pretty.' There is nothing pretty in Monroe LLC's about-face on the issue of domicile."
The court said it was too late for the estate to switch sides, because doing so would give it an unfair "second advantage."