Today’s blog was written by Jessica Butler, Law Clerk at Fasken LLP.

Last weekend my husband and I settled in for a typical Sunday night at home – cozy on the couch with a good Netflix documentary. We decided to watch “Bob Ross: Happy Accidents, Betrayal and Greed”. What I didn’t expect was that not even 15 minutes into the documentary, I’d find myself running back to my office to grab a notebook and pen to take notes for what would ultimately become this blog.

When you hear the name “Bob Ross”, most of us think of beautiful oil paintings complete with “happy little accidents”, a calm demeanor and, of course, that head of curls (spoiler alert – it was a perm!). After watching this documentary, I now also think of the sad story of Bob’s estate which serves as a real warning: failing to coordinate your business agreements with your estate planning can lead to unintended consequences.

Formation and Changes in Bob Ross Inc.

By the 1980s, Bob was already seeing success with the launch of his painting classes. It was at one of these classes Bob met Annette Kowalski, who, together with Annette’s husband, would go on to be Bob’s business partners.

Bob Ross Inc. (“BRI”) was founded in 1985 between Bob, his wife Jane, and the Kowalskis. The two families owned the shares of BRI equally under a shareholder agreement. Bob, happy to leave much of the business dealings to the Kowalskis, focused on being the public face of BRI. BRI went on to register several trademarks using Bob’s name and likeness and signed several licensing agreements with third parties. At this point, Bob’s son, Steve Ross, was also a budding painter. Steve joined his dad on Bob’s hit PBS television show, The Joy of Painting, as a special guest on many occasions, and travelled across the United States hosting painting workshops under the BRI umbrella. Suffice it to say, the success of BRI was largely derived from Bob’s personality and the goodwill generated by same.

Bob’s wife passed away in 1992. The shareholder agreement under BRI required that any shares of a deceased partner were to be distributed equally among the surviving partners. This meant that Bob now found himself with only a one-third interest in BRI, despite being the face of the company. Shortly thereafter, Bob was diagnosed with non-Hodgikin’s lymphoma which would ultimately take his life two years later.

It was during the lead-up to Bob’s passing that the Kowalskis asked Bob to sign over all commercial rights to his name, image, voice, biographical material and creative works to BRI in exchange for 10% of BRI profits generated in the following decade. Bob had started to have his concerns about the Kowalskis as business partners prior to this incident. This proposed contract was the proverbial ‘straw that broke the camel’s back’, and Bob felt like the Kowalskis had truly gone too far –  Bob refused to sign the agreement.

The Trust and Litigation

With a progressing illness and growing weariness of his business partners, Bob became concerned about his existing estate plan. In 1994, Bob settled the “Robert N. Ross Revocable Trust” (the “Trust”) in an attempt to maintain ownership of Bob’s intellectual property within his own family. The Trust assigned Bob’s intellectual property interests 51% to his half-brother, Jimmie Cox (who was also named Bob’s executor) and 49% to his son, Steve, who was only 28 years old at the time.

Bob passed away on July 4, 1995, at the age of 52.  His estate was valued at an estimated $1.3 million USD, half the value of which was derived from his interest in BRI. The Kowalskis subsequently sued Bob’s estate to gain full control of BRI, including all intellectual property rights. Bob’s estate and the Trust entered into a settlement agreement with the Kowalskis and BRI which fully released the parties, their heirs, assigns and successors in interest from any claim arising prior to the date of the settlement.

Over a decade after the settlement, Bob’s son Steve commenced new litigation against BRI alleging that the Trust assigned all rights to his father’s name, likeness and publicity to Steve and so the settlement was invalid. By this time, the Bob Ross brand was bigger than ever, and Steve alleged he could not enjoy the fruits of his father’s labor due to BRI’s unauthorized use of Bob’s likeness. Unfortunately for Steve, the Court found that it was impossible for the Trust to give the intellectual property rights to Steve because Bob did not have ownership of those rights when he settled the Trust – the shareholder agreement executed by Bob and the other owners of BRI transmitted those rights to BRI.

Conclusion and Lessons Learned

Would Bob have called this a “happy little accident”? Doubtful. It seems that Bob, while an amazing artist, may not have been sophisticated from a business perspective and perhaps did not appreciate the full scope of the agreement with BRI, what intellectual property rights were, and how assigning those rights to BRI would mean his legacy would not be controlled by his own family members.

Business agreements and estate plans need to be considered concurrently and the intention of the individual should be carefully ascertained to ensure that all documents operate together as one whole succession plan. The best way to safeguard against the issues experienced by Bob and his family are good lawyers who can help you ensure your business structure and estate plan can function together and protect both the shareholders and beneficiaries[1].

Thank you for reading!

[1] But, as always, this blog is not meant to be construed as legal advice.