During a divorce, there will be proceedings focused solely on dividing your assets. In a digital world, there may be “property” that is not physical, but still needs to be divided. Intellectual property (IP) has become important during divorce cases because it can hold significant value. If you are in the throughs of divorce you need to understand if your Intellectual Property is at risk. Our divorce lawyers are here to help you have a fair division and navigate the emotional turmoil of divorce.
What Is Considered Intellectual Property?
Intellectual property refers to creations and inventions. Any things that is creative will fall under intellectual property rights and could be split with your ex-spouse. Things that could be considered intellectual property include:
- Manuscripts
- Artwork
- Logos
- Inventions
- Books
- Software
- Brand names
- Slogans
- Confidential business information
- Formulas
- Royalties of all types of creative works
When IP Is Considered Marital Property
Multiple factors can impact when intellectual property may be considered marital property. Intellectual property that was created during your marriage will be considered marital property. If you developed a business, or logo, or wrote a book during your marriage, this will need to be split during a divorce. The proceeds from any creative work will be discussed by your lawyers to help determine what a “fair” split would look like. While the division may not end up being 50/50 it will need to be offered to each partner.
Courts will also consider who the creator of the creative work was and how much each spouse contributed to the creation. Lawyers and judges will look at direct contributions and indirect contributions and take those into consideration.
Some states may have additional laws that impact intellectual property. Some states will follow community property laws or have equitable distribution principles in the divorce proceedings.
- Community property refers to property that is acquired during marriage like income and debt. In a community property state, your property will be divided equally.
- Equitable distribution principles look at more personal factors like income, length of the marriage, or other contributions to the marriage. The court will look at what each spouse can provide and determine what is equitable for their specific situation.
The Value Of Intellectual Property
The value of your creative works or developed business secrets will be assessed against several methods, including market value, income approach, and cost approach. This will look at the current value or useability of the IP as well as how it will change in the future. Evaluating the expense it took to create and develop the intellectual property will also play into its current value. The value of IP will help determine what you get during a divorce when your spouse has rights or time in the creation.
Dividing Intellectual Property During A Divorce
The best way to have a positive split of intellectual property is to discuss and negotiate. Determining a fair split will be much easier when you involve lawyers and mediators to help keep the facts straight. Mediators will help keep emotion out of the situation and work hard to reach an agreement that is acceptable to both parties.
When dividing IP is not feasible, royalty-sharing agreements or buyouts are an option. Royalty-sharing will require the holder of the IP rights to share an agreed-upon portion of the income. Your ex-spouse may not want half but may want to have some of that passive income going into the single life.
Buyouts are used when complicated divorce proceedings make it difficult to split things equitably. One partner can buy out the other’s shares in the creative work. While this will have a higher financial cost upfront, it could save you from regret later on, if the popularity of the IP continues to grow. Buying out your ex-spouse will limit your contact with them in the future.
How To Protect Your Intellectual Property
Even if you aren’t worried about an impending divorce, there are ways you can protect yourself for the future. To protect your intellectual property you can:
- File a prenuptial or postnuptial agreement
- Have a clearly defined contract of who is the owner of the IP
- Maintain detailed records throughout the creation process
- Consult legal experts about how to ensure your rights are protected
Divorce Help From Kaufman, Nichols, And Kaufman
Our lawyers love to help with family cases and divorce cases in Utah. KNK has over 100 years of collective experience that will help you approach divorce with confidence. We know that divorce is vigorous and emotional, so we are here to support you and help you get what you deserve according to the law. No matter what matters you are struggling with, our team can help you navigate child custody, personal injury, criminal charges, and estate planning. Reach out to us to learn more about our affordable options that can help you approach the future with hope. Contact KNK through our consultation form to start today!