Protect Your Intellectual Property in a Divorce Context in New Jersey
Explore the Ways Available to Shield Your Intellectual Property Rights with the Help of Our Divorce Attorneys
If you get a divorce in New Jersey, all marital assets and debts will be subject to equitable distribution. Properties, cars, retirement accounts, and other assets are appraised and divided according to a judge’s decision. This is much more difficult to do when the assets fall under something intangible such as intellectual property. Whose idea was it? Was there any collaboration? How much did the project grow before, during, and after the marriage? This is not something most divorcing couples have to deal with. Still, inventors, authors, screenwriters, musicians, and business owners must evaluate their projects’ financial worth and provide a monetary value for distributed past, present, and future earnings.
Divorces involving high-net-worth individuals can be difficult, particularly if non-monetary or intangible objects are involved. You want to ensure that the distribution is resolved fairly for you. Our divorce lawyers at Bronzino Law Firm, LLC have a significant amount of experience with high net worth divorce proceedings and the division of marital property. Contact our office right away for a consultation if you’re going through a divorce and have significant assets, such as royalties from creative works. We serve clients in Red Bank, Berkeley, Asbury Park, Toms River, Jackson, Bay Head, and towns throughout Ocean and Monmouth Counties. For help, contact our team of family lawyers today at (732) 812-3102.
Understanding Intellectual Property in New Jersey
Intellectual property is any creation of the mind, such as inventions, works of art, books, trademarks, designs, and symbols. Intellectual property categories include trademarks, copyrights, patents, and trade secrets.
- A trademark is stamped with a “™” and it is a word, logo, symbol, design, or image. If the brand has the ® character, it is an indication that it was a trademark that has been registered in the U.S. Patent and Trademark Office. Examples of trademarks include Just do it® (Nike), McDonald’s golden arches, Twitter®, and Barbie®. Their typeset and symbols are stylized with a specific shape and color, and a trademark is a way to make that symbol exclusive for their use.
- Copyright includes ideas that are expressed tangibly. Drawings, paintings, scores (sheet music), movies, videos, computer files, software, paintings, scripts, and books are examples of copyrighted intellectual property. Copyright laws protect the creator’s work from being published or distributed by anyone other than themselves. The creator can permit others to reproduce their work entirely or partially and create derivatives from the original work. An example of this is a famous pop and rap music trend called “sampling,” where sections of one song are inserted into a new song to create a separate piece of music. The song’s original creator can give their permission with or without financial remuneration.
- A patent is used to protect an invention or a process. An inventor can file a patent and have it protected for twenty years. After that, the patent must be renewed, or someone else can refile the same invention and patent it for themselves. No one other than the patent holder can make, use, or sell the invention.
- A trade secret is used to protect information that could benefit the owner because it isn’t general public knowledge. This information is not subject to expiring as long as the information is never disclosed.
Royalties are a form of income gleaned from copyrighted material, typically books, music, television shows, or movies. The party who wants to use the artist’s work must pay them a fee. Residuals are a kind of royalty paid to the artists involved in the original work. Television shows that are run in syndication (reruns) or movies that go to DVD pay residuals to any actor with a speaking part. Of course, the less significant actors don’t receive the same amount as the main characters. Besides royalties as income, famous movie and television stars can also make much money on the “back end” which includes merchandise such as dolls, t-shirts, hoodies, etc.
How Is Intellectual Property Cataloged when Distributed in a Divorce in NJ?
Equitable distribution is used in a divorce to dole out assets to both parties fairly. When spouses create an idea for an intangible product and they divorce, it must be appraised to split the product fairly. An analysis of when the idea was created (before the marriage or during the marriage) and how much it is worth must be assessed to make a fair split of the product’s potential value.
There are four classifications used to determine the division of intellectual property. Suppose the party copyrighted or patented the work before marriage is likely to be found a separate property and given in its entirety to that person. If it was made and registered before marriage but then increased in value during the relationship, it may be seen as commingled income and could be subject to equitable division. If the project was created before marriage but wasn’t registered until after the marriage, if it is proven that the spouse did not contribute in any way, it may be an individual asset. If the work was created and registered after marriage, it would probably be seen as community property and thereby be subject to equitable distribution.
Methods Commonly Used to Appraise Intellectual Property
There are four techniques used to obtain the value of intellectual property. The first is the Cost Approach. This is all but impossible. Putting an exact price on a patent or copyright means solving a puzzle of variables in a fickle market, thus making a fair determination an arduous task. The three-pronged guide to determining the value of intellectual property is its historical, replacement, and replication cost.
The Market Approach determines the value on the price the owner would sell it for or a buyer would pay to obtain it. The problems with this process are finding similar products to compare with the work, and because most sales of intellectual property are private, finding comparable sales in a public forum would take much work. Moreover, getting information from a private transaction with the strictest confidentiality agreements, including an NDA (non-disclosure agreement), is nearly impossible.
The third approach is the Value to the Owner. The amount of income generated by the item from its inception until the present day will give the court a figure that can be used to determine the property’s value. The uncertainty of how long or how much it will continue to make money is a drawback to using this method.
The Income Approach is an effort to predict future earnings in time and amount. How long will the product make money, and how much will it make? There are guidelines to all of these processes, but there is always room for error.
Criteria Considered by Courts when Ruling on Intellectual Property Allocation
The court will evaluate how much both spouses worked on the product itself during their marriage. Also, if one spouse took care of the children and household duties to facilitate the other to work on the project, that is considered a joint effort. If the product increases in value, that amount will be distributed. The routine evaluation of assets and debts, along with how long the marriage lasted, the education and employability of the non-working spouse, etc. Something else to remember is that frequently it is not just the item of intellectual property that has economic value, if not the derivations as well. An example of a derivation is a novel later made into a movie and then a tv series. Derivations can only be accurately estimated some of the time. The potential of intellectual property is sometimes hard for the court to determine and may require experts.
Protecting Intellectual Property in a Divorce Scenario
A prenuptial or postnuptial agreement is always a good idea. A lawyer can help create one tailored to your needs. You can protect your assets, including your intellectual property and any future earnings. You can claim ownership of the idea as exclusively yours and that it will stay with you if there is a divorce.
Put your intellectual property and anything else related to it in a trust. If the intellectual property is a part of a business you own, make sure the trust is in someone else’s name, such as a family member, to avoid having it included in the equitable distribution process.
Negotiate a buyout with your ex. After getting an appraisal for your work, have your lawyer negotiate a lump sum to be paid to your ex. This one-time payment will let you keep your intellectual property and prevent future earnings from being taken.
Concerned About How Intellectual Property Distribution Is Handled? Contact Our Team of Divorce Lawyers in Ocean and Monmouth County, NJ
As you can see, protecting your intellectual property during a divorce is a cumbersome task. Getting an accurate appraisal and protecting what is yours means you need excellent legal representation. The subtle nuances of the laws surrounding intellectual property can lead you to make mistakes that could cost you thousands of dollars now and in the future.
The Bronzino Law Firm never gives cookie-cutter representation. We know that every case is unique, and we strategize to offer you a plan that meets your needs. We have a great deal of experience working with the division of businesses and properties in Brick, Point Pleasant, Freehold, Rumson, Beach Haven, Manchester, or elsewhere in Monmouth and Ocean County, NJ.
Is a divorce in your near future? Do you own intellectual property that you need to protect? You should call us at (732) 812-3102 for a confidential FREE consultation. If you want to receive information about how we can assist with your divorce case, you can also complete our contact form. We are ready to advocate for you.