Check the divorce laws in your state before you value early-stage intellectual property!

Patent attorneys and business appraisers who work with intangible assets need to understand…divorce law, at least according to Enovsys v. Nextel.

The new decision involves a claim against Sprint-Nextel for infringement.  At the time of his invention, Mundi Fomukong was married to Fonda Whitfield. After the first patent was issued, Fomukong and Witfield divorced (and Witfield assigned whatever rights she was presumed to have to Sprint), and a second patent was issued.  Fomukong and his co-inventor formed Enovsys; and they assigned their rights to the new company.

Later, when Enovsys sued Sprint-Nextel, the defendant challenged on the rule any patent infringement actions must be brought jointly by all co-owners of the patent—including Whitfield’s retained interests after the divorce. Enovsys lacked standing, Sprint argued.

In deciding this case, the court looked first to the law of California — the site of the marriage, the invention, and the divorce.  California is a “community property” state and “all assets acquired during a marriage are presumptively community property.” In their divorce filings, however, Fomukong and Whitfield checked the box next to the statement, “We have no community assets or liabilities.” Without citing specific California law, the Federal Circuit held that that the final divorce decree coupled with this box-checking stripped Whitfield of her community property rights in the patent. “[A]lthough the final divorce decree was silent as to particular property, it nevertheless adjudicated the parties’ rights with respect to that property because it was based on an uncontested complaint which alleged that there was no community property.”

With the “community property” issue settled, the court then affirmed the lower court’s infringement verdict.

The best place to meet with lawyers and appraisers who value intellectual property is the BVR Summit on Best Practices in Valuing IP, Sept 15-16 in Chicago, or live via webcast in your office.