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How Intellectual Property Rights Are Divided in a Divorce

Property Division in California

California courts divide property according to the community property system of dividing marital assets. Under principles of community property, all assets the parties acquire during their marriage qualify as community property and are subject to equal division upon divorce. Conversely, all property a party acquires before marriage or after the date of separation is considered separate property and is not subject to division upon divorce. Furthermore, property a party acquires during the marriage by way of gift or inheritance is also characterized as separate property.

As a result, things like homes, cars, furniture, and collectibles are subject to division upon divorce. Importantly, the property and assets that qualify as community property include intangible assets. Intellectual property rights, including copyrights, trademarks, and patents, are considered to be intangible property. So, interests connected to intellectual property rights are subject to division during divorce proceedings as well.

Dividing Copyright

Contrary to popular belief, a person does not have to register copyrights with the United States Patent and Trademark Office (USPTO). Instead, the benefits of copyright automatically arise upon meeting specific criteria. However, registration with the USPTO has certain perks. For instance, infringement of a registered copyrighted work allows the owner to sue for statutory damages—up to $250,000 per instance of infringement.

The federal Lanham Act governs copyright issues in the United States. Under the Lanham Act, copyrights grant exclusive rights over original works of authorship fixed in a tangible medium of expression. Copyright protection automatically arises when someone fixes an original work to a physical medium—such as paper, vinyl, magnetic tape, digital computer memory, etc. This is similar to other situations where rights and obligations automatically arise—such as the duty of confidentiality in a patient-doctor relationship, or the duty to provide financial support in a child-parent relationship

Copyrights are subject to division between spouses upon divorce. In California, the community or separate character of copyrights depends on the state of the parties’ marriage when the work in question was fixed in a tangible medium of expression. However, the value of a copyrighted work can be difficult to prove with evidence.

Copyright holders make money by licensing the use of their work to other parties for a fee known as a “royalty.” When a copyright qualifies as community property, courts will order the copyright holder to split royalty proceeds with their former spouse. Additionally, copyright holders extract value from their copyrights by suing infringers for damages. Courts will likewise order the owner of a community copyright to split any damages they won from a copyright infringement lawsuit.

Dividing Trademark

Trademarks are another form of intellectual property that grants exclusive rights for the use of a trademark to its owner or owners. A trademark is a term or symbol that identifies the source of goods—or the source of services, in the case of service marks. Like copyrights, trademark protections don’t require registration with the USPTO. Instead, trademark rights arise when a mark is first used to identify a product in the market. However, registration does allow the owner to sue for statutory damages.

Trademarks are typically associated with a business that produces goods or services. Whether a trademark qualifies as community or separate property depends on when the trademark was first used by a company to identify the source of its goods. As a practical matter, the community or separate character of a trademark typically coincides with the character of the business that uses the mark. Business valuations might classify trademark rights as part of the company’s goodwill, which can be a divisible asset in a divorce.

Dividing Patents

Patents refer to a special type of intellectual property where the owner has exclusive rights to manufacture or otherwise use a novel invention. Unlike copyright and trademark, patent rights do not automatically arise when someone creates an invention. Instead, the USPTO examines whether an invention meets basic patentability requirements.

Courts have held that patents can qualify as community property if the USPTO issues them during the parties’ marriage. Some courts have even held that patent applications, pending approval by the USPTO, are subject to community property rules. As a result, courts can order the parties to split any income derived from a patent. Additionally, damages from patent infringement actions are also subject to equal division.

Get Started with the Help of Bremer Whyte Brown & O’Meara

Are you going through a divorce involving high-value, or complex assets, such as intellectual property rights? If so, you should consult with an experienced divorce attorney from Bremer Whyte Brown & O’Meara for quality legal counsel. Our legal team has experience with various types of family issues, including high-asset divorces. We provide knowledgeable legal advice and advocacy for our clients, ensuring that their rights when it comes to issues like property division are not infringed.

For a consultation about your case, contact our office at (949) 229-8546 to schedule an appointment with one of our qualified attorneys today.