Getting a divorce as a well-known person can be challenging. People are curious about your relationship, and you may find that your private life becomes more public than you’d like. However, another potential divorce problem comes with becoming a household name: after the split, who gets ownership of that name?
That’s the problem that Dr. Dre has run into in his divorce from Nicole Young, his wife of nearly 25 years. Dr. Dre, whose real name is Andre Young, has trademarked his stage name as a part of his career. In theory, any assets created during a marriage should be considered marital property. When it comes to applying this to trademarks and other intellectual property, matters can become complicated.
How the Division of Assets Works in California
Every state has its own laws regarding the division of assets in a divorce, but California creates some unique difficulties. California is a community property state, as opposed to an “equitable division” state. In equitable division starts, assets are divided between the parties fairly, but not necessarily equally. If one partner brought in the majority of the income, they are likely to receive a larger percentage of the marital assets than their partner.
That’s not the case in California. All assets the couple acquires after marriage are considered community property. Both parties have exactly 50% ownership of all community property, unless there’s an agreement in place that designates certain assets as “separate.” In a divorce, both partners are supposed to receive half of the value of the marital assets unless they both agree otherwise.
This equal split requirement is intended to be fair to both partners. However, it can also make divorce more complicated. This is particularly true when the couple needs to split assets that can generate more money, such as ownership of intellectual property like copyrights or trademarks. In these cases, there are a number of solutions that can be suggested for how these assets should be divided.
Trademarks as Assets in Divorce
Trademarks like Dr. Dre’s name are a common type of intellectual property (IP). Trademarks play a critical role in branding a product, business, or performer. Dr. Dre’s name is a crucial aspect of his musical career; few people are aware of his legal name, so losing control over his stage name could be seriously detrimental to his career.
Nevertheless, his name is an asset, and Nicole Young claims that the registration of that name occurred after they were married. If that is the case, only a binding prenuptial or post-nuptial agreement would firmly place the trademark in Andre Young’s ownership. Since Nicole Young also claims that she was under duress when she signed the couple’s prenuptial agreement, there is a significant chance that Andre Young will need to consider ways of splitting ownership of his stage name with his ex-wife.
The first and potentially most complicated solution for splitting IP in a divorce is simply to divide its ownership. In this case, both partners would receive half control of the IP. However, this solution can lead to serious complications since neither party will have a controlling interest. IP with split ownership is at risk of getting tied up in disagreements about licensing and marketing. This is even more true when one partner had little knowledge of or involvement with the IP before the divorce.
In many cases, the spouse who created the IP wants to retain full control over it. If that’s true, then they may offer what’s known as a “disproportionate” split of the rest of the marital assets. For example, to retain ownership of their IP, a person might offer full ownership over houses, cars, or joint accounts to their former partner.
This is often described as buying out the other partner’s share of the IP. However, the other person does not need to accept this offer, and may request such a significant percentage of the other assets that the person who created the IP would be left with little else. To use this solution, the IP must be valued fairly.
Splitting Income, but Not Ownership
The third potential solution for dividing ownership of an IP is to divide the income it generates, but not control over the IP itself. This is a common solution for trademarks and copyrights in particular. While this leaves the IP creator in full control over the IP itself, both partners may still find this unsatisfying. The IP creator will likely resent losing their profits after putting in work, while the other spouse may suspect that the IP is being purposefully mismanaged.
Ownership of Intellectual Property with a Third Party
A further complicating factor for dividing IP in a divorce is a third party who owns part of the IP. The third party’s ownership isn’t affected by the divorce; if they owned half of the IP before the divorce, they would continue to do so afterward.
Since the third party will likely be affected by a change of IP owner, they will be joined to the divorce action to have a say over the division of the IP involved in many cases. Adding a third party to a divorce obviously adds another layer of complexity. Working with an experienced legal team will help you keep the financial details clear and avoid complications.
Splitting Intellectual Property Equitably
To split intellectual property equitably, there are a number of hurdles you need to jump. Whether you want to retain full control or you’re willing to split ownership, it’s important to iron out the details before you agree to anything. To do this, you shouldn’t hesitate to work with a qualified business law attorney. They have the experience to handle the fine details and help you retain ownership of your IP, even if it makes up more than 50% of marital assets.
If you’re considering getting a divorce and you own a significant amount of intellectual property, reach out to our trial-proven attorneys today for a consultation.