How do you evaluate intellectual property in divorce?

On Behalf of | Aug 16, 2021 | Uncategorized

When it comes to divorce, there is more to dividing property than just the house and car. In some cases, the most valuable parts of a marriage are intangible creations. This might mean the royalties from composing music, the patent for an invention, or the world and characters from a book.

Unfortunately, not all ideas have the same value. Depending on the IP, that value may increase or decrease over time. The World Intellectual Property Organization details how exclusivity plays a major role in how IP generates value and what assessors do to determine an IP’s value.

Income method

If you or your spouse has an idea or IP that already generates money, then this method serves as the fastest way to determine the potential value. By comparing past income, adjusting for present-day value and using that information for the future, assessors determine the IP’s potential value.

Market method

Sometimes assessors look for a total value by comparing an IP’s transfer price. By looking at a real-world transaction for a similar IP asset under comparable circumstances, this method establishes approximate values in determining royalty rates and taxes.

Cost method

The cost method is a handy tool when assessors have an issue accurately determining an IP asset’s economic benefits. By comparing the reproduction costs of a similar or exact IP, assessors have a ballpark estimate to work with.

Once you and your spouse determine the values of the various IPs you created during your marriage, dividing them comes next. This comes in a variety of options and might include splitting royalties or transferring full copyrights to one spouse in exchange for property of equivalent value.

When dealing with the complexities of IP law, you may want to lean on all your resources to make sure your marital property division happens fairly as possible.