§ 7.16 Copyrights and Patents
| Jurisdiction | United States |
| Publication year | 2021 |
§ 7.16 Copyrights and Patents
Federal statutes provide protection for intellectual property pursuant to copyrights and patents. A copyright protects artistic creations, such as literary, musical or dramatic works, photographs, fine art, motion pictures and sound recordings.1126 Patents provide protection for inventions.1127
Some influential commentators have argued that patents and copyrights should be divisible in a divorce, since they are personal property.1128 A basic issue is whether the federal intellectual property law preempts state regulation on the division of this type of property at divorce.1129 All courts to date have determined that a spouse's interest in a copyright may be divided at divorce.1130 Courts have also concluded that federal law does not prohibit dividing a spouse's rights in a patent at divorce.1131 If division of the intellectual property right is not barred by preemption, a court must decide whether the right is too "personal" to the artist or inventor to be divided, or whether the value of the right is too speculative to value.
The Hawaii Supreme Court has ruled that any distribution by the trial court in a divorce proceeding of the authoring spouse's interest in a copyright must result in the authoring spouse retaining the exclusive rights set forth under the Copyright Act, i.e., the rights to reproduce, adapt, distribute, perform, and display copyrighted works, but that the non-authoring spouse can be granted an economic interest in the copyright.1132
In contrast to the cases regarding the division of copyright mentioned above, courts have ruled that patents can be divided at divorce.1133 A patent obtained before marriage, of course, would be considered separate property in a marital property state.1134
If copyrights and patents are deemed property divisible at divorce, courts will then have to decide how to characterize these rights. Inventions and artistic creations frequently are created over time. Prior attempts, sketches, or drafts of the work are not uncommon, and the work itself might take a substantial period to complete. For example, the work might be partially completed at another time. In other words, such intellectual creations are creations over time. Courts normally characterize such acquisitions pursuant to either the pro rata1135 or inception of title1136 approach.
Inception of title analysis focuses upon the first moment the spouse has a "right" to the property, and state divorce courts can only divide property if it is "acquired" during marriage. It therefore would be useful to determine when patent and copyright "property rights" arise under federal law. Copyright protection begins at the time of "creation."1137 This is the time the work is first fixed in a tangible medium of expression.1138 Copyright protection can exist for a partial work, to the extent that it is fixed. The federal statute provides that, if a work is prepared over a period of time, "the portion of it that has been fixed at any particular time constitutes the work as of that time. . . ."1139 No copyright protection exists until something is fixed in a tangible medium. For example, no copyright protection exists if an author has only done preliminary research.
It is difficult to predict with certainty how a court would apply the inception of title doctrine to characterize a copyright. Since copyright protection begins when the work is first fixed, the copyright could be characterized when this occurs. However, this might be when the first chapter is written; the remaining twenty chapters might be written at another time. This later work could at least create a reimbursement right. Under a pro rata approach, the copyright presumably would be characterized based upon the total time spent creating the work.
A further characterization complication would be created if the work is licensed to another. This should be considered a sale or lease of the copyright, so the proceeds of the license should be considered a mutation1140 of the copyright. It could be argued, though, that this is a rent and profit1141 of the original property, not a sale.
Almost all courts to date have not applied the inception of title approach to characterize rights in patents or copyrights. The "pro rata" approach has been used where a court in a marital property state determines to what extent the creation was made during marriage through the time spouses stop accumulating property in that state. To the extent the work was created during marriage, there is a marital claim.
In a Florida case,1142 the court found that the husband had devoted during marriage about 50% of the work that would be needed to finalize the patent, and hence 50% of the right to all royalties or other proceeds ever received by the husband after divorce were treated as marital. The court reached this conclusion even though a patent had not yet been issued. Similarly, in another Florida case the court treated as marital property all royalties received after divorce from books the husband wrote during marriage.1143 However, the marital estate was not entitled to share in royalties generated by a new edition of one of these books, where the husband began working on the new edition after the divorce petition had been filed, which is the cut-off date for accumulating marital property in Florida.
In a Tennessee case, the husband had developed a tracheostomy kit during marriage. Because the husband needed to devote substantial effort after divorce to complete the invention, the wife was awarded 20% of all future revenues generated.1144
In a Florida case, where the husband made an invention during marriage and had filed a patent application before the divorce petition was filed, the court treated the patent as marital property.1145
Therefore, in all cases involving the creation of intellectual property, the court will have to consider both the extent to which the work was created during the marriage as well as the extent to which post-divorce efforts will be required to continue to develop the work or commercially exploit it. If intellectual property is created during marriage and no post-divorce work will be needed, all revenues generated by the work should be 100% marital, regardless when recovered.1146 If the work is created during marriage, but will require substantial post-divorce effort to improve it or commercially develop it, the marital claim will be reduced or possibly even eliminated.1147
In a Connecticut case, the husband wrote a book that was published during the marriage. The divorce court treated royalties to be received after the divorce as divisible property.1148
The Alaska Supreme Court has stated in dictum that "if a spouse holds an interest in intellectual property at . . . divorce, future royalties flowing from that property are marital so long as such proceeds are neither indefinite or speculative."1149
In some instances a work is completed during marriage but marketing efforts could continue after divorce. In an Illinois case, the court concluded that, because the spouse would be responsible for the post-divorce marketing, the other spouse should only get 25% of the royalties, after the payment of all income taxes.1150 An Iowa...
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