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How do you divide intellectual property in a divorce?

On Behalf of | Aug 17, 2021 | blog, Divorce | 0 comments

Intellectual property refers to intangible assets like brands, logos and other valuable images. That may sound like the realm of businesses and corporations, but IP extends to all creative works like novels, art or inventions — all of which you or your spouse may create over your marriage.

So how do you divide the value of an idea? Splitting the cost of a hardback book is not the same as splitting the cost of the value that book as a concept may produce.

Deciding an IP’s value

As the World Intellectual Property Organization explains, the value of IP comes down to the right of the owner to exclude competitors from using it. But not all ideas are equally valuable. Evaluators approach IP in three distinct ways.

The first is the cost method, which calculates and compares the cost of similar IP assets. This method is useful when an asset’s economic benefits are difficult to quantify.

The second is the market method, which compares historical prices paid for similar IP assets.

The third is the income method and is the most common since it looks at the historical income generated by the IP and attempts to assess how much it might generate over the coming years.

Dividing an IP’s value

Once the courts determine the value of an IP, there are various ways to divide it. This may involve splitting the IP rights to you while your spouse gets an equitable amount of property instead. Other compromises like royalty percentages are also possible depending on the divorce agreements. Like any asset, divorce divides IP as equitably as possible in a divorce.

If you and your spouse have a lot tied up in the creative endeavors you built during your marriage, understanding the ins and outs of IP valuation may help that facet of the divorce process go smoother.