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What Happens to Intellectual Property in a Divorce?

Wed 17th Jan, 2024 Family Law

California is a community property state. What this means is that property that is part of the marital estate — generally, property acquired by either spouse during marriage or purchased with money earned while married — is divided equally between the spouses upon divorce. The division of property after marriage is one of the most complex and often contentious elements of the divorce process, and can become particularly complicated when it involves intangible or difficult-to-value assets, such as intellectual property (IP). If you’re going through a divorce as an IP owner, a Stockton divorce attorney can help you protect your interests. 

Types of Intellectual Property 

Even though IP assets are intangible, they are considered property rights similar to property rights one would have in tangible real property or personal property. Generally, IP refers to the property rights associated with the output of a person’s mind. IP rights allow their owners to exclude others from using or selling the assets they cover and to license them to third parties for royalties or other fees. 

There are three major types of IP: 

  • Patents: Patents cover technological inventions, processes, and compositions of matter. For example, if you invent a new type of cleaning solvent that is an improvement over other cleaning solvents on the market, you may be entitled to a patent on it. 
  • Trademarks: Trademarks are words, phrases, slogans, logos, jingles, or designs that identify a a product or service as being from a particular source and distinguish it from others. They are closely associated with the business that owns them and the products or services they sell.
  • Copyrights: Copyrights are the rights that creators of original works have to perform, copy, adapt, display, or sell their works. They generally apply to artistic creations like books, films, songs, plays, and dances. 

IP assets can be valuable sources of income for individuals and businesses. First, IP owners may license their IP to third parties in exchange for the payment of royalties. And second, if a third party uses the IP without the owner’s permission or a license, the owner can sue the third party for IP infringement. 

How Intellectual Property Is Divided in Divorce 

Disputes involving IP are more likely to arise in high asset divorces, divorces in which one or both spouses own a business, or in which one or both spouses are artistic creators. There are several ways to handle IP assets in a divorce. When dividing IP assets in divorce, courts typically require the parties to split the income (i.e. royalty payments and damages awards from infringement lawsuits) those IP assets generate. In some cases, one spouse may be able to buy out the other spouse’s interest in the asset. An effective strategy for handling property division of IP preemptively is to ensure that a prenuptial agreement includes provisions related to current or future IP assets.  

Protect Your Property Rights With Help From a Stockton Divorce Attorney

If you are an IP owner interested in preserving your property rights during divorce, you should speak to an experienced attorney. To get started, please contact a Stockton divorce attorney at McKinley, Conger, Jolley & Galarneau by using our online form or calling us at 209-477-8171.

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