In Divorce Actions, “Double Dipping” Analysis Applies to Intellectual Property

In a relatively recent decision, the Connecticut Appellate Court held that a trial court erred in treating intellectual property as a marital asset subject to division while also awarding the wife a percentage of the income derived therefrom.  The parties in this particular case were married in 1992 and were the parents of two children.  In the underlying divorce action, the trial court found that although the parties were struggling financially, the husband had published a book from which he was experiencing financial gain.  After trial, the court ordered the husband to pay the wife periodic alimony and child support.  The court also ordered the husband to pay the wife thirty percent of the value of his unsold books, as well as thirty percent of all income received from the sale of the books.

The husband appealed, arguing that the court was not permitted to treat intellectual property as a martial asset subject to division while also ordering that he pay to the wife a portion of the income generated therefrom.

The Appellate Court agreed.  In furtherance of its decision, the Court noted that proceeds flowing from an interest in intellectual property constitute marital property subject to division as long as the proceeds are neither indefinite nor speculative.  The Court further explained that the consideration of a marital asset in both the property distribution and alimony award does not constitute double dipping unless any portion of the asset assigned to the nonemployee spouse was counted in determining the employee spouse’s resources for purposes of alimony.  Lynch v. Lynch, 135 Conn. App. 40 (2011).  Because the husband had a contractual right to receive royalties, the Court found that the value of the unsold books was in fact a marital asset subject to division.  However, the Court also determined that by dividing the value of the husband’s unsold books and then ordering him to pay income from royalties on those whose value was already allocated to the wife, the lower court essentially engaged in impermissible “double dipping.”  Thus, although the lower court was permitted to assign a portion of the value of the books to the wife, it was not permitted to grant her a portion of the royalties as well.

By: Attorney Michael D. DeMeola, Esq.

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