Intellectual Property Issues In Divorce

intellectual property divorceBy Jennifer M. Paine

Cordell & Cordell Divorce Lawyer

For self-employed and inventive spouses, the discussion for divorce does not end with deciding what income to use to calculate support and who is taking the business debt – or should not, rather.

An often overlooked but equally, and sometimes more, important topic is intellectual property.

Intellectual property, or IP, refers to the set of legal rights that attach to an expressed idea; that is to say the set of “property” rights that result from one’s mental labor.

Intellectual property includes:

1. Copyrights, which give the creator exclusive rights for a limited period of time to the manner in which an idea is expressed;

2. Patents, which give the creator exclusive rights for a limited period of time to the sale, use and import of an invention;

3. Trademarks, which distinguish a product by a unique symbol; and

4. Trade secrets, which consist of formulas, practices, processes, etc., that give a business economic advantage and are, thus and necessarily, not generally known to the public.


Common Intellectual Property Examples

IP issues come up in a divorce more often than you might think. For example, if a wife who conducts yoga lessons out of her home has developed a training model for associate teachers, with her husband’s input, and plans to sell that model, then that model has value, and the husband may have contributed directly (his input) or indirectly (by marriage) to it.

As another example, if a husband sells food with certain family recipes, to which his wife had intentional or unintentional access during the marriage, what should be done with those recipes after divorce, and how can the then-ex-husband protect them?

As a final example, do either the training model or the family recipes, standing alone and independent of the work efforts of the spouse who created and/or used them, have value and is that value an asset of the marital estate?

The answers are yes and yes.


Intellectual Property Valuation

Issues of IP valuation fall, generally speaking, along the same lines as issues of typical property valuation. Defer to your state’s laws and a family law attorney licensed to practice in your state for details.

It may be trickier to value IP, since it is unique and its “worth” is subject to future market conditions. However, such is generally the case with business valuations, a good appraiser will discount the value to account for market volatility.

It also may be trickier to pay the non-creating spouse a share of that value, but a good appraiser can recommend lump sum payments or a formula tied to the market and perhaps royalties for a defined term.

If these options sound heady, it is because they are, and you are best to speak to professionals in your state and the IP field.


Divorce and IP Protection

Issues of IP protection, by comparison, are simpler. Just as the divorce court can restrain ex-spouses from disparaging each other and destroying each other’s property, the court can restrain them from using IP, competition with business, and selling protected information.

Even if you do not foresee your soon-to-be-ex selling or competing with you post-divorce, you are best to request such a restraining order to protect yourself, and, more importantly, your IP in the event you wish to sell it (without the threat of near and easy competition) in the future.

At a minimum, you must speak to an attorney early about these issues. You do not have to be a big business owner to have IP or a business owner at all for that matter.

Your expressed ideas, your recipes for foods you sell, your models for the business you run out of your home, etc., may and probably do all vest you with IP rights. Identify, value, divide and protect them now – or you could find your ex-wife setting up shop next to you and stealing your business away.

Cordell & Cordell:

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Jennifer M. Paine is a Michigan Divorce Lawyer with Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.

Ms. Paine received her Bachelor of Arts in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.

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