Have you ever wondered how patents are addressed or divided in a divorce case? Who has ownership, and is it considered marital property? The issue of dividing intellectual property in a dissolution is not necessarily a simple one, which is why we sat down with Patent Attorney, J. Curtis Edmondson, to shed some light on the topic.
What Is a Patent?
“Patents are for inventions, and these inventions are new processes, methods—things you create once you prove something, or devices that you build. [Getting a patent] involves going to the United States Patent Office and applying for a patent, where it's looked at by an examiner, and at the end of the process, you get a patent issued, hopefully. That patent is typically then used by a company. Ideally, it's licensed by a company, or you might use it in your own company to manufacture a product. Additionally, people might pay your licensing fee if they want to use that patent in the manufacturing of their own product.”
Who Owns a Patent?
“For a patent, when the inventor-- or there can be co-inventors--creates something, the ownership of that invention attaches to the inventor at the start. And then typically, if, for example, you work for a company, there's some sort of agreement or contract, where that invention is assigned to that particular company. That's usually part of an employment agreement. But it's not uncommon for a garage inventor, or somebody doing things on their own, to just think of something on their own and file for a patent themselves.”
Are Patents Considered Marital Property?
“A patent ownership right is personal, and whether it attaches to the marital estate is the cause of some controversy. This is because you have the inventor who's doing things in the basement, inventing these things, but clearly their wife, or husband, or partner, is contributing to the marital estate, and may have contributed to the things needed to make that invention. So that's why a lot of these things can be clarified ahead of time if there is, for example, a divorce. [This is important] because down the road, that invention might be something that becomes very valuable, which is where the disputes come up.”
How Can Couples Plan Ahead to Prevent Disputes Over Patents in the Event of a Divorce?
“Let’s start with an example. Say a woman invents a new type of syringe. She's the homemaker, and the husband works at a big company; he's been “supporting the family”. Then they get a divorce, but they don't determine how that patent interest is going to be treated under the divorce decree; at the time of divorce, the patent might not be worth anything, and there's no licensors for it. But then, after the divorce, because she's the purported owner, [the wife] goes off and makes $10 million, and her husband and says, 'Well, wait a minute, you got that patent while we were married, I should get half,’ and that leads to a lot of disputes down the road.
So by valuing that particular patent at the point of a divorce, and clarifying what's going to happen to it, you can avoid disputes— [maybe you agree that] if the patent is turned into something, then it'll be divided equally.
Or another aspect of patents to consider is that once the patent is issued, then approximately every three years, you have to pay additional money to keep it enforceable. So, who's going to pay that money to keep it enforceable? Are you going to let it go bad? Additionally, the patent itself typically has to be marketed to somebody who wants to use it. So, who's going to pay for that marketing effort to make the patent have value? And those are things that you can discuss after divorce. And I’m just using divorce as the example here, but it certainly comes up in the context of death as well, where the estate or the kids are trying to figure out what to do with this patent that Dad or Mom had. How do we deal with paying to have it marketed? How do we have to deal with paying for the maintenance fees?
Whatever the context, it's better treated ahead of time while the people are still on good terms—or, I suppose, not on such bad terms.”
If you or your spouse have a patent, and you would like to speak with Curtis Edmondson or one of our family law attorneys about how to safeguard your rights in the event of a divorce, call our office today at (503) 227-0200 to get connected.