Can You Lose Intellectual Property in a Divorce?
When thinking about property division and divorce, many people immediately think about their tangible assets like their homes, investment properties, vehicles, and heirlooms. However, intangible assets—such as intellectual property (IP) royalties—can also be subject to division during your divorce if they are considered marital property.
In Florida, marital assets are divided fairly rather than equally (see Florida Statute § 61.075). Marital assets (or property) include any items or property that were acquired during your marriage and before your official date of separation. Separate assets include any assets that you obtained before getting married. Thus, the first question you should ask if you are wondering what will happen to your intellectual property during your divorce is whether the IP is considered a marital or separate asset.
What Is Intellectual Property?
Before continuing the discussion on how intellectual property rights can be divided in a divorce, we should define what intellectual property is. Intellectual property refers to intangible property that is a creation of the mind. Types of IP include:
- Copyrights, which are rights that creators have over their artistic, creative, or literary work. Lots of work can be protected through copyright such as books, paintings, films, sculptures, databases, advertisements, or technical drawings.
- Geographical indications, which are signs placed on goods that originated from a specific location or have characteristics or a reputation that is associated with that location.
- Industrial designs, which are the aesthetic aspects of an article and can consist of a variety of three-dimensional features (i.e. lines, colors, patterns, or shapes).
- Patents, which are rights granted exclusively to a person or group for an invention. After being granted a patent, the recipient can make the information concerning the invention and its creation public via the published patent documents and determine how the invention can be used by others.
- Trade secrets, which are IP rights concerning confidential information that can be sold or licensed.
- Trademarks, which are signs that differentiate companies’ services and goods from one another.
What Are Intellectual Property Royalties?
IP royalties are the payments made to a licensor for the use of their intellectual property. Generally, these payments are a percentage of the net or gross revenue that an IP made within a month, quarter, or year (depending on how often payments are made). In a divorce, the related rights and royalties are typically what will be divided rather than the work itself.
Options for Dividing Intellectual Property Rights
If your IP is a marital asset, you and your soon-to-be-ex-partner can agree on the terms of your property division settlement yourselves. However, if you cannot agree, a judge will be decided how the IP rights and royalties will be split.
In dividing your intellectual property rights, you can have the IP rights evaluated so that a monetary value can be assigned to the IP rights. Then, based on that determination, you can pay the other party a lump sum of their share of the royalties and own the IP rights outright going forward.
To determine a fair and accurate value of intellectual property, four methods made be used to estimate the monetary value. These methods are:
- The cost approach.
- The market approach.
- The income approach.
- The relief from royalty approach.
Another option for dividing the IP rights is to assign a percentage of any future royalties or income from the IP to your soon-to-be-ex-spouse. Unlike the previous option, you will not have to make a large payout immediately. However, the other party will always have a fixed percentage of the profits even if you put additional work into or improve the project after the divorce is finalized.
Protecting Your Intellectual Property in Divorce
Drafting a pre-or postnuptial agreement is the best way to protect your intellectual property. With a marital agreement, you can include terms that specify that your IP rights, royalties, and associated future income will be considered separate and that you will retain complete ownership.
If you do have a marital agreement before getting divorced, another way to maintain ownership of your IP is by going through divorce mediation. Mediation allows you to have more control over how the settlement works out rather than having the decision left up to the court. Working with a neutral, third party, you and your partner can peacefully come to an agreement concerning the division of property (as well as the other terms of your divorce).
Get Legal Help
Your ideas (and the related IP rights and royalties) should belong to you. If you are worried about losing your IP rights to your spouse in a divorce, contact Dale L. Bernstein, Chartered Law Office. Our attorney has over three decades of experience and is dedicated to helping clients protect their property and interests during their divorce. Once you retain our services, Attorney Bernstein can help you better understand your legal options and develop a case strategy to protect your intellectual property.
Known for providing clients with compassionate and aggressive representation, being extremely knowledgeable, and dedicating ourselves to excellence, you can trust our firm to help you. To schedule a case consultation, contact us online or call (727) 312-1112 today.