Divorce & Copyright Protected Property

by Cindy Hill
The creative works of composers, writers and artists are valuable assets that should be considered during a divorce.

The creative works of composers, writers and artists are valuable assets that should be considered during a divorce.

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Copyright-protected property can be a valuable economic asset that must be considered in the financial settlement of a divorce. Like other forms of personal property, the divorcing parties will have to determine if copyrights are marital property subject to division in the course of the divorce or separate property of each spouse. Valuation of copyrights may complicate divorce settlement negotiations. Potential future value of copyrights, such as the creation of sequels, should also be considered in the divorce process.

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Marital Property

Copyright-protected property, like books, movies, computer programs or artwork, created by either spouse, should be listed as an asset on the financial disclosures that must be filed in any divorce proceeding. The divorcing parties, and ultimately the court, must decide if the copyright is individual or marital property. This will depend on the divorce laws of the state in which the action is taking place as well as on factors such as when the property was created, whether the other spouse contributed to its creation and whether the property is a product of other copyrighted works produced before the marriage, such as the sequel to an earlier book or movie.

Valuation

Valuation of intangible intellectual property like copyrights is a complex process. The appropriate methodology for valuing copyright protected property in a divorce will depend on the purpose for which that valuation will be used. The valuation for purposes of establishing net worth relative to child support or alimony payments may be different from the valuation for the purpose of selling the copyright in order to divide the cash returns between the divorcing spouses. The divorcing parties will need to agree on a purpose and method of valuation for these assets or ask the court for an order directing how the valuation must be produced.

Transfer or Division

Ownership of a copyright can be transferred in writing and may be shared by multiple people.The divorcing parties may agree to transfer or share copyright ownership interest, though this may reduce the value of the copyrighted property by making it harder to license or sell. Agreeing to a division of future royalties or income derived from the copyright protected property while leaving the copyright ownership in the name of one spouse, can maximize the value of the property while insuring income to both of the divorcing spouses.

Future Works

Copyright holders have the exclusive right to produce derivative works of their copyright protected property, such as book sequels, movies based on a book or posters containing the image of an original painting. The divorce settlement should take into account the potential for future successful works based on copyright protected property that existed at the time the marriage dissolved. Although the work on a sequel or remake may occur after the divorce, a substantial part of its value arises from the initial version that was part of the divorce settlement. Agreeing ahead of time on the apportionment of royalties or other income from future derivative works can help prevent conflict and expensive valuation issues down the road.