April 17, 2018
Valuing intellectual property in divorce
Intellectual property rights are rights to exclusive ownership and interest in the intangible assets such as trademarks, patents and copyrights. Intangible assets exist on paper and by operation of law and are not otherwise physical items that can be physically divided or split in a divorce. Whether a tangible, physical asset or an intangible asset that is conceptualized, your intellectual property can be valued and divided in your divorce. If your copyright, trademark or patent is valued, the amount of that value can be divided. The intellectual property as an intangible asset is not itself divisible, so one spouse may be required to pay the other the amount of money that equals the value of the other spouse’s share of the intellectual property.
Understanding and dividing intangible assets
An intellectual property asset such as a trademark in a product is an asset with value. When you own that trademark, you have the exclusive right to use it in commerce. You also have the right to sell another individual or organization the licensed right to use your trademark. When someone uses your trademark without permission or they use a trademark too close to yours to the extent consumers may be confused as to whose product is which, you can sue the infringer and obtain a money judgement.
Intangible assets such as intellectual property can be valued for sale. It is common for businesses to sell their intellectual property. Like any other business asset, a financial expert can determine and assign a current fair market value of the intellectual property asset. You may also be able to forecast projected income and the rising value of an intangible asset. Therefore, when you divorce, your intellectual property assets are valued to be included in the overall marital estate which is then divided. Valuing a trademark requires an accepted process, like a process involved in valuing the fair market value of a home, cars, and other assets.
Does the intellectual property asset produce income?
If you own a patent, trademark or copyright that is producing income through a licensing agreement or similar contractual obligation, that income earned during the marriage is community property and marital income in divorce. For purposes of the court ordered financial support of a former spouse, child or even for an order to contribute to the payment of attorney’s fees for your spouse during a divorce, money earned from intellectual property is part of the combined income of the spouses, as a divorce attorney Collin County, TX trusts can explain.
The long-term ability of intellectual property to produce income may affect the overall value of the intellectual property in commerce. Note that trademarks, for example, must be registered and there are registration renewals over a schedule of years. Eventually a trademark reaches an age that it can become public domain. In either case, the value and profitability of intellectual property assets is never certain, which may give divorce attorneys and experts more room to negotiate property division in a divorce.
Thanks to our friends and contributors from Scroggins Law Group for their insight into divorce.