Remember that novel you wrote in college? The manuscript sits in your personal file in the desktop, and pillow talk with your partner occasionally involves a dreamy discussion of the manuscript’s future. You give the details of the plot to your partner (or spouse), who encourages you to pursue publication.
You could be the next Tim Burton or J.K. Rowling. Why shouldn’t you get your accolades and profits after all the coursework you completed and the hours you spent writing?
Of course, you might be the next Tom Clancy if your prenup, antenuptial, postnuptial, or cohabitation agreement never covered such intellectual property. Clancy created the character, Jack Ryan, who then became the subject of an intellectual property custody battle during Clancy’s divorce.
As you face divorce, your soon-to-be former spouse or partner, who contributed only verbal encouragement here and there, will now benefit from the rights to your novel. Divorce means that not only will you lose exclusive ownership of the novel that has been your companion through your college and post-graduate years, but you will also lose a lifetime of profit from your efforts across all media platforms.
“Everyone has a plan until they get punched in the mouth.”
Don’t assume that ownership of potentially profitable ideas will simply take care of itself or somehow “just work out.” A breakup may entail disputes that you never thought would occur.
A marital (prenup or postnup) or cohabitation agreement can cover more than the typical finances and physical property. Intellectual property (“IP”) refers to items that result from your mental labor or your creativity, such as ideas or items that have the potential for profit in, for example, artistic, technological, business, or medical arenas.
IP may include, but isn’t limited to, business ideas, tentative or actual business plans, aesthetic/artisan/creative ideas, copyrights, patents, drafts or approximations of any creative endeavors, publications, designs, trademarks, prototypes, beta versions, finished products, blueprints, trade secrets, patent submissions, and innovations that may or may not be eligible for patent status. IP may include trade secrets, such as your current client list for your business, or the 3D-printed prototype for the next skateboard your business will release.
Your prenuptial or postnup agreement can make sure that ownership of your IP, including future IP that you have not yet created, will reside solely in you as the party who is the originator of the concept or creator of the product. Your agreement can protect your rights to the assets that can derive therefrom; in the case of the novel described above, you can protect your rights to all royalties, including across translations, formats (e.g., digital and paper), and development into other media, such as television, movies, and franchises. The same applies to business plans, technological ideas, medical products, and more.
Tom Clancy, the famous novelist, experienced not only the pain of divorce, but the loss of his intellectual property, including book series and even computer games derived from his work. At the time of his divorce litigation in 1998, the Los Angeles Times characterized this issue succinctly: “These fruits of Tom Clancy’s imagination have become the potential spoils in a complicated case in which family law collides with intellectual property law.” The take-away lesson is that you can avoid this situation through a prenup. While you can’t make a custody arrangement for existing or future children in your prenup or postnup, you *can* determine the custody of your IP well in advance of any marital issues and before the materialization of any creative effort.
Let’s say one spouse assists the other in the development of the IP, or a couple becomes collaborators unwittingly – partners share in their significant others’ projects and interests. The couple will have to decide on where collaboration begins and ends and with what consequences: who owns what in the future? Your agreement can demarcate explicitly in writing the ownership, or interest percentages, and/or rights to any resulting assets, and you can, for example, put timeframe or geographical limits.
But what about domain names, business websites, client lists, contractor’s privy to relevant confidential information, social media names, and online content? What about ownership of other promotional materials? Is there any type of inventory that both spouses can claim in the absence of a pre/postnup or other contract? What about communications from or about thebusiness, or the future of the artistic IP’s development? What if you need to sell the IP to satisfy creditors, or one party simply sees the money and decides it’s time to cash in? If one spouse retains the business or creative material, can the other spouse “compete” in the same or similar conceptual arena?
Human capital matters too. The couple can make arrangements so that both sides are treated fairly for their efforts; for example, the owner of the IP may agree in writing to compensate a contributing spouse, especially if the spouse took a low-paying, unsatisfactory job to enable the creator/business spouse to develop the IP or to push a start-up into Silicone Valley stardom.
Your prenup or postnup agreement can protect your IP on additional levels: the couple can agree to treat all such shared IP as confidential between the spouses, such that either party cannot convey sensitive or competitive aspects of the IP to a third party, unless the owner grants permission in writing. Such a provision is the equivalent of an “NDA” or a non-disclosure agreement that companies often require from their workers. For example, if you own a business with trade secrets or patents that are integral to the competitive edge and thus the financial success of the business, such a clause is essential to encourage appropriate behaviors by both parties in the aftermath of a divorce, in addition to a social media clause.
Warning: All posts on this website and its partner website, DADvocacy.com, contain general information about legal matters for broad educational purposes only. This information is not legal advice and should not be treated as such. This blog post does not create any attorney-client relationship between the reader and the DADvocacy™ Law Firm or between the reader and JustPrenups.com.