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Intellectual Property in Divorce: How to Retain Control of Your IP

There are few things that you may feel as connected to as your intellectual property (IP). In most cases, this property results from your knowledge, experience, and creativity coming together to make something out of nothing. Since IP is so fundamentally your creation, it feels like it should remain under your control no matter what. However, that’s not the case.

In some ways, intellectual property is treated similarly to any other property type in the legal system. It’s possible for intellectual property that you created to be wholly owned by someone else. In some cases. This is understandable – if you sell the copyright to a song, a story, or a piece of programming, you have given up control of the IP and given it to the buyer. However, it’s also possible for the court system to seize your IP just as it can take other forms of property. In a divorce, that means your IP can become subject to property division in a California divorce.

The Law Surrounding Intellectual Property

Obviously, ownership of intellectual property is a little more complex than ownership of physical objects or financial assets. Historically, however, the idea that someone could own and enforce ownership over an idea or a piece of art or music is relatively new. Even today, intellectual property rights are closer to a bundle of privileges that the owner has, rather than true possession of the IP.

Depending on the type of property, there are a few ways that ownership can work. For ideas, processes, designs, or programs, you’re likely to get a patent. A patent lasts for 20 years before expiring. On the other hand, if you write something or make art, you’re more likely to hold the copyright for the work; for individuals, a copyright lasts for the length of your lifetime plus an additional 70 years.

Whether you have a copyright or a patent, you have certain benefits because of your ownership. People who own a piece of intellectual property have the right to profit from the idea and decide who can use it. People with a copyright, in particular, have the right to license their work, giving other people limited opportunities to use their work for commercial gain. These licensing fees can be a significant source of income, especially for popular works and creators.

Losing these rights in a divorce is not just a financial loss; it’s also an emotional blow. The loss of ownership rights means you no longer have the right to choose who can use your work and where. Instead, your former spouse has the right to make these decisions and has no obligation to consider your feelings or thoughts.

When Is Your Intellectual Property in Danger?

Not all property is up for division during a divorce, and that includes intellectual property. There are several situations in which you aren’t at risk of losing your IP.

First, if you created your IP before getting married, it is considered “separate” property, not “marital” property. Separate property is not up for consideration when dividing assets. It will always go with the person who owned it before the divorce unless both spouses agree to something different.

Second, if you set up a prenuptial agreement prior to your marriage or a transmutation agreement before your divorce, you may be safe. If either agreement specified that you have sole ownership of any IP created during your marriage, then the IP is considered separate property during the division of assets. That allows you to keep control of it regardless of when the IP was produced.

Finally, if you have a company, it’s possible to set up an automatic transfer of IP ownership to the company if the IP relates to the business. In this case, you’re ceding personal ownership of the IP to your company. This is most likely to protect your IP from a divorce if you have business partners who co-own the business; however, this does give your business partners partial ownership instead. Whether that is a helpful strategy depends on your situation.

Strategies for Maintaining Your Intellectual Property

If you’re already getting a divorce, then it’s likely a little late to sign a transmutation agreement with your spouse. However, there are still ways to retain full control over your intellectual property. As long as you’re open to compromise, you have options.

Be Prepared to Compromise

No matter what, you should be prepared to compromise with your spouse during the division of assets. No matter what assets have been combined in the marriage, there are probably things that you both would like to have. Set clear priorities for yourself in advance, and be prepared to concede lower-priority items like vehicles or a vacation home to maintain your ownership of your IP.

Consider a Buyout

One excellent way to maintain ownership of your IP is to buy out your former spouse. In this case, you’ll offer them a cash sum or some other collection of assets proactively. Just keep in mind that a buyout offer may let your former spouse know that you value your IP highly, and may give vindictive people a target.

Work with a Mediator

If your spouse is open to negotiations, working with a mediator is an excellent strategy for keeping control over your IP. Mediators are neutral third parties that work with both of you and your attorneys to come to an agreement that everyone can accept. This neutral third party can help you both keep cooler heads and focus on the task at hand instead of letting emotions drive your decisions. When it comes to retaining your IP, that’s critical.

Your Ideas Should Belong to You

Maintaining your IP during a divorce can be stressful, but it’s worth it. There’s no reason to lose your IP rights to your former spouse. Working with a qualified divorce lawyer with specialties in intellectual property can help you retain your rights without the worry. As long as you’re open to negotiations and compromise, you can walk away with the IP assets that you really care about. –