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Valuing intellectual property in your divorce

On Behalf of | Feb 12, 2022 | Divorce

Property division in divorce is rarely a walk in the park, since you and your spouse may have vested interest in much of the marital property. Who takes the car is a big question when dividing everything.

Ideas get even trickier since there might not be anything physical to divide. The cost of a hardback book does not equal the cost of the intellectual rights of that novel. You may have creations that are more valuable than your house!

Evaluating intellectual property

According to the World Intellectual Property Organization, assessors use a few methods to determine value on IPs:

  • Income method
  • Market method
  • Cost method

The income method looks at previous cash flow to estimate future cash flow and reliability. The market method compares your IP to a similar IP asset and its value under comparable circumstances. The cost method looks into how much it costs to reproduce an IP asset, depending on the situation.

The reason IPs have value comes down to their exclusivity and how much control you have when it comes to allowing or disallowing people and organizations to use your idea.

Dividing intellectual property

Once the courts determine an IPs value, they divide it like anything else. If you claim full rights to the IP, your partner gets an equitable amount of property as per New Jersey law. You may also opt to divide the rights to that IP in half between you and your spouse. It is important to lean on your resources, have a clear idea of the value of your ideas, and determine how best to fairly divide your marital property in a divorce.

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