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How do you divide intellectual property in a divorce?

On Behalf of | May 15, 2021 | Family Law

Property division is already a complex topic in divorce, but what happens when you try to split up the value of an idea between you and your spouse?

Intellectual property refers to the intangible creations of your mind and may include inventions, artistic works or designs. They may have tangible forms — for example, a book you wrote — but property division of a book does not equal dividing the total cost of a single hardback.

How an IP generates value

According to the World Intellectual Property Organization, the value of an IP comes from your right to exclude competitors from using it as well as the potential future economic benefits the IP may generate.

This could be the value that comes from Coca-Cola putting its label on something, but IP is not solely a corporation’s game.

How courts determine an IP’s value

When you enter divorce proceedings, property division requires a lot of evaluation. Current housing values or the going rate of your Ford pickup all factor when the North Carolina courts determine the most equitable split. The same happens with your IP, but the valuation process requires different methods:

  • The income method
  • The market method
  • The cost method

Each of these takes your IP and compares them against a certain precedence. The income method looks at past positive cash flows to estimate future earnings, while the market and cost methods compare similar IPs.

Finding the true value of your IP may sound like a hassle. Leaning on the right resources to do so increases the odds of a smooth divorce process. We encourage you to learn more about the complexities of IP regarding your divorce — you can contact our law firm for more information.