Divorce is a social and legal issue that many people will unfortunately face at some time in their life. One of the significant concerns for those involved is the effect of a divorce on property distribution among the spouses. For many of my artist and musician clients, this can be a matter of increased importance, particularly whether divorce law considers intellectual property, including copyrights, as marital property for purposes of dividing property. The important lesson here is that intellectual property can be a marital asset subject to equitable division in a divorce.
In Indiana, in the absence of a mutual agreement between the spouses, courts will follow state law in dividing property subsequent to granting the divorce. Property is presumed to be divided equally. As a general proposition, value created during the marriage should be divided, but any value created before or after the marriage should be excluded. Of course, in many situations, the current value (i.e. during marriage) of intellectual property is speculative. Even where an invention or work has been completely created during the marriage, most courts will recognize that time and effort must be spent developing the intellectual property into a source of income. For example, recorded songs may not yet be released or finished paintings may not be sold. To the extent that this necessary development work is done after the marriage, intellectual property interests are separate property.
When dividing interests in intellectual property, Indiana courts are sensitive to the policies behind patent and copyright law as well as to the policies behind divorce law. This often means that creative control remains with the inventor/creator spouse. This result is strongly in both parties’ interests, as it maximizes the future income potential of the creative spouse, thereby making more dollars available for property and support awards. Indiana courts have wide discretion in their division of property.