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How is intellectual property divided in divorce?

On Behalf of | Aug 5, 2020 | Uncategorized |

If you are divorcing your spouse, one of the biggest areas of contention besides determining child custody matters is how to split the community property. But if you think that it is difficult to divide tangible property and assets, it’s even harder to determine which spouse will retain ownership of any intellectual property (IP) assets the two of you may have.

Even the term is a bit misleading since it covers so much often-nebulous intangible assets like:

  • Copyrights
  • Patents
  • Trade secrets
  • Software

First step: Valuation

As one might imagine, it can be quite challenging for the average person to place a dollar value on IP, especially if it is part of a pre-revenue startup. Since this is California, a community property state, all assets must be split 50-50 in divorce.

Suppose, too, that your partner had a role in developing the tech software you patented but there is also a company involved who is the actual assignee of the patent. One or both spouses could receive cash or other incentives from the monetized company that reaps the benefits. Even if only one spouse receives incentives for their role in the development, under California laws, that payment will also need to be counted as community property.

The bottom line is that you will never know to what you may be entitled if you don’t have a clear idea of an IP asset’s true worth.

Finding and analyzing IP assets

One problem with valuating IP assets is that if you do not know of their existence, you can’t derive their value. Companies are often loathe to disclose these assets’ value in their own financial statements because they worry that competitors might use that information to get ahead.

This is where the discovery process of divorce is quite useful to ferret out hidden IP assets that might otherwise go undivided between the spouses. Here, the date that the couple separates can have a major role in the valuation process. If you feel that your spouse is being disingenuous about their IP assets, you, your attorney or a forensic accountant that you hire, can search the U.S. Patent and Trademark Office’s (USPTO) patent filing database as well as conduct other in-depth searches.

By working in close conjunction with your Pleasanton family law attorney, you can arrive at the true value of any community property IP assets. The value of these assets can be used to offset the value of other marital community property assets and/or debts in your California divorce.


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John T. Chamberlin, Attorney at Law
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