Federal Preemption of Intellectual Propery Upon Divorce
(Provided by National Legal Research Group, Inc.)

In the United States, most intellectual property is a creature of federal law. See generally 17 U.S.C. 101 et seq. (1996) (copyrights); 35 U.S.C. 1 et seq. (1984) (patents).

Whenever property rights derive from federal law, it is important to ask whether state courts are permitted to divide those rights in divorce cases. Sometimes the answer is no. E.g., Mansell v. Mansell, 490 U.S. 581 (1989) (veteranís disability benefits); McCarty v. McCarty, 453 U.S. 210 (1981) (military retirement benefits; overruled in large part, subject to limitations, by 10 U.S.C. 1408 (1998)); Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979) (railroad retirement benefits); see also 29 U.S.C. 1056(d) (1998) (retirement benefits under ERISA-regulated plans cannot be divided unless the order of division constitutes a qualified domestic relations order (QDRO) under federal law).

In the context of intellectual property, however, the answer is yes. The federal statute on the transfer of patents, 35 U.S.C. 261, states generally that patents constitute property and that they are subject to assignment. Courts considering the issue have held that an inventorís creditors can reach the inventorís patents, although with somewhat more difficulty than other types of assets. 60 Am. Jur. 2d Patents 1168 (1987). Given these points, there is general agreement that federal law does not prevent a court from treating a patent as divisible property in a divorce case.

The transferability of copyrights is more limited, and the possibility of federal preemption is accordingly somewhat greater. Nevertheless, the leading federal decision rejects a preemption argument, reversing a contrary decision by a lower federal court. Rodrigue v. Rodrigue, 218 F.3d 432 (5th Cir. 2000). The court noted that federal copyright law does not give exclusive "ownership" of the copyright to the creator; it defines ownership in terms of title and possession. The owner of a copyright has only five specific rights: to reproduce the work, to prepare derivative works, to distribute copies, to perform the work, and to display the work. 17 U.S.C. 106. "Notably absent from the Copyright Actís exclusive sub-bundle of five rights is the right to enjoy the earnings and profits of the copyright." Rodrigue, 218 F.3d at 440. Because federal law does not award the owner the exclusive right to receive all economic benefits from the copyright, the court held that an order awarding part of those benefits to the creatorís spouse would be consistent with federal law:

[W]e decline to assume globally that the commercial and economic interests of spouses during marriage are so at odds that one spouse would be disinclined to create copyrightable works merely because the economic benefits of his endeavors would inure to the benefit of their community rather than to his separate estate. As for a former spouseís lack of incentive following divorce, we perceive the presence of the proverbial stick and carrot. To mix metaphors, the carrot is the half-a-loaf incentive of the author to exploit pre-divorce copyrights to the best of his ability rather than shelve them and receive no benefit whatsoever; the stick is exemplified by the affirmative duty "to manage prudently" former community property that remains under one spouseís exclusive control.

Id. at 442 (courtís emphasis).

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