California is home to many a creative entrepreneur who, in addition to the earnings they may take home from a “day job,” also creates intellectual property which may bring in money at a future date, but currently is unsold, or at least has not reached its full financial return.
In short, that unsold or at least unproduced screenplay, novel, app, song, play, board game, or any other creative endeavor might be worth any amount of money in the future, but right now it might have earned little to nothing.
This can get tricky when the creator of that intellectual property enters into a divorce, as one of the key aspects of divorce is dividing the community property between the two spouses, which is split 50/50 between the parties.
Unsold Intellectual Property Can Be Considered Community Property
Community property includes all property that derives from either spouse’s labor during the marriage, whether that be one spouse’s year-end sales bonus or that spouse’s unsold YA novel about vampires fighting robots for control of the outer rings of Saturn, which could be worth millions or nothing.
There are a number of questions to analyze in working out these issues. First - and perhaps easiest (although not in all cases) - is to determine when the intellectual property was created. If it was completed solely before the marriage or after the date of separation (the date that one spouse decided to end the marriage), then it will not be community property, and will rather be considered separate property which is awarded solely to the creator of the intellectual property. Property which was created both during the marriage as well as before or after the date of separation might be considered partial community property.
Of lesser importance is whether the other spouse contributed to the intellectual property, such as through providing comments, ideas, and other creative contributions. Remember, community property is split 50/50 between the spouses, and that is true whether both spouses contributed or only one was responsible for the creative work.
The much more complicated issue is determining how much the intellectual property is worth. Whether a divorce is settled or litigated, pieces of distinct property (as opposed to cash or other purely financial holdings) are not literally split down the middle. Instead, each spouse should get an allotment of property that is roughly equal in cumulative value to that of the other. Again, because the vampires v. robots novel could be a gold mine or worthless, allotting its value can be complex.
Reaching a Settlement Agreement Regarding Intellectual Property Issues
Because of these valuation issues, spouses are encouraged - as they are with most property issues - to reach a settlement agreement between each other regarding who should get what property. Settling such issues of complicated valuation will usually be far easier and less expensive than asking a judge to determine how much your intellectual property is worth and divide it accordingly.
Speak to an experienced California family law attorney about intellectual property issues arising in your divorce.
Get Answers to Your California Family Law Questions
At Kearney | Baker in Pasadena, we represent spouses through all aspects of the dissolution/divorce process. Our partners, Brian A. Baker and Gary W. Kearney, are both Family Law Specialists, as certified by the California State Bar. To schedule a consultation regarding any questions about family law in California, contact one of the family law attorneys at Kearney | Baker today at 626-768-2945.