Division of intellectual property in a divorce

On Behalf of | Feb 10, 2021 | Divorce |

Divorce in New Jersey involves property division at all levels from tangible assets like cars and houses to valuable legal agreements like trusts and insurance policies. But what happens when the courts need to split the value of an idea or a brand? The Coca-cola logo does not feed people or drive people to work, but the right to use it costs however much the company is willing to license it for. 

Sometimes, a spouse creates something while married and that may fall into the definition of marital property. Sometimes spouses come up with the idea together and create something that brings in a lot of value. Regardless, when it comes time to divide an IP’s potential value, it may be more complex than guessing the amount of an old car. 

Appraising intellectual property

According to the World Intellectual Property Organization, the value of an IP comes down to two things: exclusivity and future benefits. If having exclusive access to that IP currently generates value or could potentially generate value for its owner in the future, then that value may count towards marital assets in the equitable distribution. 

Those professionals chosen to evaluate an IP use three methods: 

  • Income method—calculating any positive cashflow the IP produced up to the point of division 
  • Market method—comparing any similar IP transaction under comparable circumstances 
  • Cost method—comparing the cost of similar IPs 

Dividing intellectual property

Once the courts determine an IP’s value, it falls under New Jersey’s equitable distribution like everything else. According to New Jersey statutes, the courts look at a number of factors such as the length of the marriage, the standard of living and each spouse’s financial strengths. 

Knowing how to approach these more nebulous assets may help couples prepare valuation paperwork and determine the best way to divide IP value amid the rest of their marital property. 

findlaw-network

CONTACT FORM

Schepisi & McLaughlin, PA BBB Business Review

peer-rated