Can the government not just compulsorily acquire the rights to the flag? Waiting until 70 years after the guy has died and it goes into the public domain doesn't seem like a great solution.
I would have more sympathy for the creator / owner if he wasn't on-selling said rights to some particularly unsavoury companies.
I don't have a problem with the creator getting financial benefit but having ongoing royalties seems problematic for a flag.
Something stinks about this arrangement.
It's a cracking flag.. so pity to see it at the centre of a dispute..