Intellectual Property and Divorce

by Scott Morgan on January 17, 2013

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According to the Miriam-Webster dictionary, intellectual property is “property (as an idea, invention, or process) that derives from the work of the mind or intellect; also: an application, right, or registration relating to this.” Intellectual property division is an issue in divorce more often than one may think. Authors, professors, software engineers, artists, architects, songwriters, inventors and others may have intellectual property. Intellectual property created during the marriage is marital property, and as such, the value of that property will need to be divided upon divorce.

If I Created it Why Does My Spouse Get a Share?

In general, intellectual property created between the date of the marriage and the date of divorce is subject to division. And any value created before the marriage or after the divorce will not be subject to division because it won’t be considered marital property. However, laws vary from state to state, so you must consult with your local attorney to obtain state-specific advice. Here is a related article on common property division issues in a Texas divorce. Also, for an example of how a state determines what is and is not community property, see this article on separate property in Texas.

How Is Intellectual Property Handled in a Property Division

As a basic primer on the topic, there are four types of intellectual property: patents, copyrights, trademarks, and royalties or other contract rights.

In the United States, there are two general kinds of property division: There are community property states and equitable division states. “Community property” means a 50/50 division of assets acquired during the marriage. “Equitable distribution” means the property is divided fairly. “Fair” will be determined by the Court or by way of a negotiated agreement. Some states follow a blend of these two methods. Your attorney can explain which of these methods are followed in your state.

How Do You Split the Value of the Intellectual Property

But how do you know the value of the intellectual property? There are essentially two methods of determining value. One is to have the property appraised and to pay out half the value upon divorce (or whatever amount is either negotiated or Court-ordered). This method has the benefit of being final at divorce, so the parties can avoid future financial entanglement. However, this method is also speculative, since no one can determine with certainty the future value of intellectual property.

The second way to set the value is to agree on a division of future earnings, with each spouse getting a percentage. The earnings are then paid out on an ongoing basis, for so long as there are earnings. This can be a bit complex, however, as it also means taking into account the intellectual property creator’s ongoing input and labor.

It’s important to understand that like any other issue, intellectual property division will be dictated by the jurisdiction in which you are getting divorced. As always, seek the advice of local counsel about your particular situation and your state’s laws.

Scott Morgan
Morgan Law Firm is dedicated exclusively to representing clients in divorce and family law matters. Founded in 1994 by Scott Morgan, the Morgan Law Firm strives to diligently represent its client's interests and conclude their cases fairly and expeditiously.
Scott Morgan
Scott Morgan
Scott Morgan

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