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How do you divide your IP in a divorce?

On Behalf of | Sep 28, 2022 | Divorce

When you think about intellectual property, you might envision big companies with major logos like Coca-Cola or Disney. However, everyone in Florida has access to IP protections and the value it generates.

Much like any marital property, IP that generates value — or that might generate value later — needs consideration during property division. Unlike tangible assets like a car or a house, the process of valuing an IP is a little more involved.

Where IP gets its value

According to the World Intellectual Property Organization, an IP asset derives its value from its exclusivity. If you write a book or compose a song, people must pay you for its use. These might not be customers, they could even be platforms like Audible or Spotify licensing your work.

You have the right to say yes or no to its use and that is what people or businesses value.

Finding an IP’s value

There isn’t really a price tag on exclusivity though and it is important to determine the value of your IP during divorce. Estimators frequently use three methods:

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

The income method looks at how much money your IP already makes. The market method looks at what a similar IP makes. The cost method looks at how much it might cost to create a similar IP.

Once estimators have a number, you can divide this value between your spouse like any other marital property. Other options, though, include dividing the rights over it.

This is a complicated affair that may cause hurt feelings if an evaluation comes out too low or too high. There are resources to help you and your spouse come to an agreeable compromise over these assets during your divorce.

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