Splitting Ideas: How Intellectual Property Division is Handled

 Posted on July 18, 2025 in Divorce

When couples divorce in Illinois, it can be challenging enough to divide marital assets, such as the family home, vehicles, and household items. When the property in question is more intangible, the challenges can multiply. Intellectual property is often overlooked when marital assets are being divided, yet it can hold significant present and future value.

Illinois courts treat intellectual property as marital property if it was created or acquired during the marriage, as governed by equitable distribution divorce laws (750 ILCS 5/). A Kane County, IL marital property division lawyer can help ensure you fully understand how intellectual property is valued, classified, and divided.

What is Intellectual Property in the Context of Divorce?

Intellectual property refers to creations of the mind, such as inventions, designs, symbols, and literary and artistic works that are protected by patents, copyrights, and trademarks. These protections enable creators to earn recognition and financial benefits for their creative works. Intellectual property can include a wide array of things, including:

• Patents
• Trademarks
• Copyrights
• Royalties from a book
• Royalties from a song
• App designs
• Business branding
• Trade secrets
• Tech inventions
• Brand names
• Other creative works

Marital vs. Non-Marital: What Counts as Divisible Intellectual Property?

Any intellectual property created before marriage is generally not considered marital property; it is considered separate property, which is not subject to division, except under certain exceptions.

Even when one spouse developed the intellectual property prior to the marriage, if marital funds or efforts were used to commercialize, maintain, or enhance the IP during the marriage, the other spouse could have a claim to a portion of the increased value or future income.   

Depending on the specific type of intellectual property, if it was created before the marriage but its value increases significantly during the marriage, the increase in value is subject to marital division in the event of divorce. Absent a post-nuptial agreement, intellectual property created during the marriage is considered marital property.  

Challenges Associated with Valuing Intellectual Property

Appraising intangible assets can be challenging, requiring expert valuations and income projections. The future earning potential of the intellectual property vs. the current value will also determine how the intellectual property is divided. The current market value assesses the IP’s worth based on its potential for revenue generation, market demand, and other factors.

The court may consider future income streams such as royalties or licensing fees, which could involve ongoing payments to the other spouse after the divorce or a higher allocation of assets to the other spouse during the divorce. Valuation methods include the market-based approach, income-based approach, and asset-based approach.

The court may split ownership of the intellectual property, offset the value of the intellectual property with other assets, or award licensing rights to the non-creator spouse. The court will consider the contributions from both spouses that made the particular intellectual property valuable and will strive for a fair division considering the current worth, anticipated income, and each spouse’s contributions and future needs. If the IP was jointly created or collaborative, division difficulties become much more complex.

Protecting Your Intellectual Property Rights During Divorce

In many cases, the non-creator spouse has no idea of the worth of the other spouse’s intellectual properties. If the creator spouse hides those intellectual properties or fails to declare them as financial assets, they may not be fairly divided. Documentation and disclosures are extremely important, as well as having a highly experienced IP valuation expert.

Contact a DuPage County, IL Divorce Lawyer

If you or your spouse owns any intellectual properties, these creations can be among the most valuable – and contentious – assets in a divorce. A highly skilled Wheaton, IL marital property division attorney from McSwain Rapp Law, LLC will ensure IP divisions are handled properly. Our attorneys possess the necessary experience to navigate complex property division issues during divorce. Call 630-581-2877 to schedule your free consultation.