I. Overview

1. Definition and Legal Basis of Capital Contribution with Intellectual Property Rights

Article 48 of the Company Law of the People's Republic of China establishes the fundamental regulations for capital contributions made with non-monetary property. It explicitly states that shareholders may "make capital contributions with non-monetary property that can be valued in currency and transferred in accordance with the law, such as physical objects, intellectual property rights, and land use rights" [1]. This provision establishes the legal prerequisite for the capitalization of intellectual property: the property used for capital contribution must possess both "valuation capability" and "legal transferability."

Based on this provision, the terms "capital contribution with intellectual property" or "capitalization of IP" in legal practice typically refer to the legal act wherein a right holder uses their intellectual property, after it has been valued according to law, as property contributed to a target company. In exchange, the right holder acquires corresponding equity, thereby obtaining or increasing their shareholder rights and interests.

It is necessary to specifically clarify that the capital contribution with intellectual property discussed herein refers to two scenarios: capital contribution during the establishment of a new company and capital increase during the company's existence. It does not include the act of equity transfer where intellectual property is used as consideration to acquire existing equity. The former involves a shareholder fulfilling their capital contribution obligation to the company by transferring intellectual property in accordance with their subscribed capital contribution; this constitutes a different legal relationship from the latter, which involves the transfer of equity between shareholders [2].

Combined with the provisions of the Company Law, the current intellectual property capital contribution system in China can be summarized into five main components [3]:

First, Eligibility Review. The intellectual property used for capital contribution must simultaneously satisfy two core attributes: "capable of being valued in currency" and "capable of being transferred in accordance with the law." Among these, "capable of being transferred in accordance with the law" requires that the ownership of the intellectual property is clear, free of encumbrances, and can be transferred through statutory procedures. Intellectual property rights of a personal nature (such as the right of authorship or the right of modification within copyright), due to their non-transferability, shall not be used as the subject matter of capital contribution.

Second, Valuation. The intellectual property used for capital contribution must be evaluated by a qualified evaluation institution, which shall issue a valuation report to verify the property and determine its value objectively and fairly. This is to prevent the impairment of the legitimate rights and interests of the company, other shareholders, and creditors caused by overvaluation or undervaluation.

Third, Record in Articles of Association. The value determined by the evaluation must be explicitly recorded in the company's articles of association, serving as the public disclosure of the company's capital.

Fourth, Transfer of Title. The contributor must handle the registration of the change of ownership of the intellectual property in accordance with the law to complete the actual transfer of property rights.

Fifth, Liberalization of Contribution Ratio. Unlike the restrictions on the proportion of non-monetary property contributions in early corporate laws [4], current laws permit intellectual property to constitute one hundred percent of the company's registered capital.

2. Trends in the Commercialization of Intellectual Property

As China's economy accelerates its transition toward an innovation-driven model, the state continues to strengthen the institutional supply for the creation, utilization, and protection of intellectual property. The path for realizing the value of intellectual property has extended far beyond traditional licensing and transfer models.

For highly educated groups such as scientific researchers and technical experts, using intangible assets they hold—such as patent rights (covering inventions, utility models, and designs), computer software copyrights, and technical secrets (non-patented technology)—to "make capital contributions" for setting up or increasing the capital of limited liability companies has become a preferred solution for transforming intellectual achievements and sharing operational dividends.

This shift in property type has caused the composition of family property to break through the traditional scope of tangible objects, forming complex assets that possess "high value," "personal attachment," and "operational risk." "High value" is reflected in the fact that a core patent may support the majority of a company's valuation; "personal attachment" stems from the natural connection between intellectual property and the creator's individual intellect; "operational risk" implies that the ultimate value of the equity is not determined by the initial evaluation but is closely linked to the company's subsequent business success or failure. It is the intertwining of these three characteristics that plants the seeds for complex disputes in divorce property division.

3. Core Legal Conflicts in Divorce Property Division

The "time of acquisition" of intellectual property, the "time of realization" of property value (capital contribution), and the "time of appreciation" of equity often span multiple stages: pre-marriage, during marriage, and post-divorce. Among these, the scenario where "intellectual property is acquired before marriage, but capital contribution is completed during the marriage" creates the greatest controversy. Is the equity obtained thereby a transformation of the form of the intellectual property, or is it investment income obtained by leveraging the intellectual property? Should its ownership be recognized as pre-marital personal property or marital joint property?

If recognized as a "transformation of property form," it can be argued that the intellectual property has changed from a "intangible property right" to "equity," similar to a pre-marital house being sold after marriage and converted into currency. The ownership of the right does not change, and the equity itself belongs to the original right holder individually.

If recognized as "investment income," the capital contribution is an active operational investment act, investing static property rights into commercial operations to obtain future returns, which aligns with the definition of "income obtained from investment" in the Civil Code. If this investment occurs during the marriage, the equity should be included in the marital joint property.

II. Ownership Attribution When Equity is Characterized as "Transformation of the Form of Intellectual Property"

In judicial practice, if the court determines that the capital contribution is merely a conversion of property form, the equity is generally classified as personal property. However, the appreciation in value during the marriage needs to be judged based on "joint management or contribution."

1. Equity Belongs to Personal Property (Premised on No Joint Management/Contribution During Marriage)

(1) Core Logic

First, intellectual property possesses strong personal attachment. Patent rights, technical secrets, etc., are inseparable from the creator's personal wisdom, knowledge, and experience. They rely on the right holder's individual intellectual labor, and their creation often stems from long-term accumulation and investment prior to marriage. Completion before marriage implies that the core labor input occurred before marriage, bearing no direct correlation to the marital relationship during the marriage.

Second, making a capital contribution with intellectual property after marriage constitutes the disposal of personal property by the owner. The equity received as consideration is merely a change in the carrier form of the property; its essence is the "value realization" of pre-marital intellectual achievements, rather than the product of joint labor or joint investment during marriage. The source and nature of the property right have not substantially changed. The morphological transformation of pre-marital property after marriage does not alter its personal attributes; therefore, the equity obtained through intellectual property should be recognized as personal property.

(2) Key to Exclusion from Joint Property: Burden of Proof regarding "Contribution" During Marriage

Under this viewpoint, the party claiming the equity is joint property bears the burden of proof to demonstrate that they made a substantial contribution to the acquisition of said equity or the acquisition of the relevant intellectual property during the marriage.

In judicial practice, some courts adopt the "fruits theory" (pre-marital IP is personal, post-marital IP income is fruits) or the "active appreciation theory." That is, if the other party contributed significantly to converting the intellectual property into economic benefits, or assumed more housework or family expenses to enable this, it may be recognized as marital joint property. Conversely, it is recognized as personal property, holding that unless the spouse made a due contribution to the benefits obtained from the intellectual property during the marriage, division will not be granted [5]. "Contribution" typically includes two categories:

First, Direct Contribution: The spouse directly participated in the subsequent R&D, improvement, or maintenance of the intellectual property, or participated in specific affairs such as negotiation, evaluation, or company establishment during the process of capital contribution.

Second, Indirect Contribution: The spouse assumed the vast majority of family affairs, child-rearing, and elderly care, creating a worry-free family environment and time conditions for the IP holder to devote themselves fully to technical R&D or company management. However, in practice, the standard of proof for indirect contribution is high, requiring a complete chain of evidence to prove that such contribution has a substantial causal relationship with the maintenance or enhancement of the intellectual property's value.

If the aforementioned contribution cannot be proven, the equity is the "natural extension" of personal property and belongs to the original IP holder. Relevant cases are as follows:

Case One: Dispute over Post-Divorce Property between Li and Yi [6]

Case Facts: Yi (male, IP right holder) acquired two patents in cooperation with others before marriage. During the marriage, he first held 36% equity in a Beijing company in the name of Li (female, non-right holder). Later, this equity was transferred, yielding over 19 million RMB in transfer proceeds. Subsequently, Yi used the vast majority of the transfer proceeds, specifically 17.22 million RMB, to invest in a Sichuan company, acquiring shares in that company and serving as a director and vice president. After the parties divorced, Li claimed the equity in the Sichuan company was marital joint property and requested an equal division; Yi argued that the equity was acquired using proceeds from the transfer of the Beijing company equity, which essentially originated from pre-marital patents, and only agreed to give Li 25%.

Court View: The court held that the attributes of the shares in question could be determined based on the following facts: First, Yi had acquired the two patents in question before marriage, and the rights basis of this intellectual property was unrelated to Li. Second, the funding source for the shares in the Sichuan company was the transfer proceeds from the Beijing company equity, which substantially originated from Yi's pre-marital IP income. Furthermore, Yi's status as a senior executive in the company also contributed to the acquisition of the equity; the two factors jointly constituted the source of the shares in question. Third, according to Article 18 of the former Marriage Law of the People's Republic of China (corresponding to Article 1063 of the Civil Code), which stipulates that "property of one party before marriage shall be the property of that party," the income obtained by Yi from pre-marital intellectual property should be his personal property. At the same time, because Yi failed to provide evidence to prove the specific proportions of "pre-marital IP income" versus "contribution from senior executive status" within the shares in question, to balance the principle of fairness during the marriage, the court ultimately decided that Li should receive 35% and Yi should receive 65% of the shares in question.

Lawyer's Comment: In this case, the court believed that the acquisition of the equity in question stemmed partly from the male party's pre-marital IP income and partly from his senior executive status in the company. Regarding the IP portion, even though the proceeds (over 19 million RMB transfer funds) were obtained after marriage, because the IP itself was acquired before marriage, that portion of the corresponding equity was a transformation of the male party's pre-marital personal property and was not included in the scope of marital joint property division. Regarding the portion of equity obtained through the senior executive status, considering his continued service and participation in management during the marriage, it should belong to marital joint property. This case distinguishes between "equity converted from pre-marital IP" and "equity generated by marital labor contribution," respecting both the personal exclusivity of IP and the joint value of marital management.

2. Equity Itself Belongs to Personal Property, but Post-Marital Appreciation Belongs to Joint Property

(1) Core Logic

The initial value of the equity corresponds to the evaluated value of the intellectual property at the time of capital contribution, classifying it as a transformation of personal property. However, the appreciation of equity during marriage must be distinguished by source: if the appreciation stems from market factors (such as industry trends), it is "natural appreciation" and belongs to the individual; if it stems from active management and operation, it is "operational appreciation" and, according to Article 1062 of the Civil Code, should be recognized as "income from production and operation," belonging jointly to the couple.

(2) Distinction between "Operational Appreciation" and "Natural Appreciation"

Operational appreciation is typically directly related to the holding party's position in the company (e.g., director, senior executive, technical lead), their specific management activities (e.g., strategic decision-making, market expansion, technical upgrades), and the resulting improvement in the company's profitability. If the spouse claims division of the appreciation, they must provide evidence proving that the other party engaged in active management behavior during the marriage.

Natural appreciation refers to value increases caused by non-effort-based factors such as market fluctuations, inflation, or overall industry development. For example, the sector in which the company operates suddenly becomes an investment hotspot, causing a general rise in the valuation of all similar companies.

Regarding the allocation of the burden of proof, the principle of "who asserts must prove" is usually followed. The party claiming division of appreciation must bear the initial burden of proof to demonstrate the existence of management behavior and the fact of appreciation. Subsequently, the burden of proof may shift to the holding party to prove that the appreciation mainly originated from natural appreciation factors. In practice, the company's shareholders' meeting resolutions, board resolutions, financial statements, and labor contracts may be considered relevant evidence.

There are currently no cases directly related to IP capital contribution for this specific type, but similar cases can be referenced:

Case Two: Dispute over Post-Divorce Property between Yao and Zhang [7]

Case Facts: Plaintiff Yao and Defendant Zhang engaged in a dispute over equity division after divorce. The Defendant invested 2.9 million RMB in a Haining company before marriage and increased the capital by 2.5 million RMB after marriage. The Plaintiff sued to request division of the equity value corresponding to the post-marital capital increase and the post-marital appreciation of the pre-marital equity, claiming the Defendant concealed property and requesting a larger share (60%-70%); the Defendant agreed to divide the equity rather than pay monetary compensation, and the third parties (the company and other shareholders) had no objections and waived their right of first refusal. Judicial audit and evaluation determined that the post-marital capital increase corresponded to an equity ratio of 23.15%, and the post-marital appreciation of the pre-marital equity corresponded to an equity ratio of 15.97%.

Court View: The 2.9 million RMB was an investment made by Zhang before marriage and belonged to Zhang's pre-marital personal property. However, the returns generated by this investment during the marriage belong to "other property that should be jointly owned" as stipulated in Article 11 of the Interpretation II of the Supreme People's Court on Several Issues Concerning the Application of the Marriage Law of the People's Republic of China. Yao had the right to claim division. However, based on the personal nature of Zhang's pre-marital investment behavior and the joint nature of the returns after marriage, and considering the intuitus personae (personal trust) characteristics of the company, in a situation where Zhang and Yao disagreed on how to divide this portion of property, it was inappropriate to convert all of this property into equity and directly confirm the non-holding spouse as a company shareholder. Instead, it was more appropriate to rule that the holding party pay the other party a corresponding discounted payment. The court held that the appreciation portion of the investment involved in the case should be divided equally. Ultimately, it confirmed that the equity corresponding to the 2.9 million RMB capital contribution belonged to Zhang, and Zhang was ordered to pay Yao one-half of the appreciation amount corresponding to that portion, based on the amount determined in the evaluation report.

III. Ownership Attribution When Equity is Characterized as "Proceeds of Intellectual Property"

According to Article 1062 of the Civil Code, "proceeds of intellectual property" during marriage belong to marital joint property. Article 24 of the Interpretation I of the Supreme People's Court on the Application of the Marriage and Family Section of the Civil Code of the People's Republic of China [8] further clarifies that such proceeds refer to "pecuniary proceeds actually obtained or clearly obtainable" during the marriage.

Therefore, if equity is recognized as "IP proceeds," judgment must be made based on four scenarios, combining the time of IP acquisition and the time of capital contribution:

1. Pre-marital IP Acquisition, Pre-marital Capital Contribution — Personal Property

In this scenario, there is little controversy in both judicial practice and theory. Both the acquisition of the intellectual property and the acquisition of proceeds occurred before marriage. The entire process of property formation and transformation had nothing to do with the spouse. The equity obtained thereby belongs to pre-marital personal property.

2. Post-marital IP Acquisition, Post-marital Capital Contribution — Marital Joint Property

This is a typical, undisputed scenario of marital joint property. The creation of the intellectual property and the investment proceeds both occurred during the marriage. As income from production and operation during marriage, the equity should be recognized as marital joint property.

3. Pre-marital IP Acquisition, Post-marital Capital Contribution — Marital Joint Property

Some views hold that shares in this category are not a transformation of the form of pre-marital intellectual property (the scenario discussed in Point II of this article), but rather new returns obtained by investing intellectual property during the marriage. Although the right to the intellectual property was acquired before marriage, its immense economic value moved from potential to reality through the key legal act of "capital contribution" occurring during the marriage. This act is an active investment process containing commercial judgment and risk; its result is the creation of a new pecuniary right—equity. Therefore, the income realization behavior of "investing shares and acquiring equity" occurred during the marriage, fitting the characteristics of "actually obtained" pecuniary proceeds during marriage as required by Article 24 of Interpretation I of the Supreme People's Court on the Application of the Marriage and Family Section of the Civil Code of the People's Republic of China. Relevant cases are as follows:

Case Three: Statutory Succession Dispute between Zhu and Wang [9]

Case Facts: Wang (the decedent, male, IP right holder) held a certain non-patented technology before marriage. Later, during the marriage, he used this technology, valued at 4.49 million RMB, to increase the capital of a company.

Court View: The company was established before the marriage of Wang and Zhu (female, non-right holder). However, Wang increased the capital of the company with non-patented technology worth 4.49 million RMB after marriage. This portion of value should be deemed as proceeds obtained after marriage. Therefore, the company equity share corresponding to the 4.49 million RMB contribution should be deemed marital joint property. Consequently, when inheriting this portion of equity, half should first be separated as belonging to Zhu.

Case Four: Dispute over Confirmation of Contract Invalidity between Wu and Tianjin XX Technology Co., Ltd. [10]

Case Facts: Hu (male, IP right holder) acquired non-patented technology before marriage and used it to contribute 4.92 million RMB to a company during the marriage. Later, Hu and Wu (female, non-right holder) divorced overseas, and the domestic marital joint property had not yet been divided. Hu transferred the equity without authorization after the divorce. Wu sued to request that the transfer agreement be deemed invalid.

Court View: Regardless of whether the equity in the company under Hu's name could ultimately be divided as marital joint property, the equity transfer behavior constituted an obstacle to Wu's request to divide that portion of equity as marital joint property and impaired Wu's interests. The Capital Contribution Transfer Agreement was invalid.

Case Five: Dispute over Post-Divorce Property between Wu and Hu [11]

Case Facts: The parties in this case are consistent with Case Four. After the court ruled that the transfer behavior of Hu (male, IP right holder) was invalid, Wu (female, non-right holder) filed for post-divorce property division in China, requesting division of the equity under Hu's name. In this case, Wu argued that the 1.44 million RMB intellectual property contribution was effectively a transfer of intellectual property to the invested company in exchange for equity in the invested company. This method of earning returns is the same as transferring intellectual property for monetary value; both involve exchanging intellectual property for returns. Therefore, acquiring equity through intellectual property investment belongs to a type of realization of intellectual property proceeds and should be treated as acquiring IP proceeds.

Court View: Regarding the equity obtained by Hu through the investment of pre-marital non-patented technology during the marriage, the court explicitly recognized it as marital joint property. Furthermore, because Hu engaged in behavior to transfer/conceal property, the court ultimately ruled that Wu should receive 55% of the discounted value of the equity.

Lawyer's Comment: In the above three cases, the courts held that when pre-marital intellectual property is contributed as capital during marriage, it is actually the realization of the property value of the pre-marital intellectual property during the marriage. This realization process relies on investment decisions made during the marriage and constitutes returns obtained after marriage. Therefore, the equity should be recognized as marital joint property.

4. Post-marital IP Acquisition, Post-divorce Capital Contribution — Not Marital Joint Property

Because Article 1062 of the Civil Code explicitly stipulates that only proceeds of intellectual property acquired during the marriage belong to marital joint property, judicial practice generally holds that IP proceeds have a certain expectancy and uncertainty and cannot be valued and divided if not realized. If the right holder has not put their intellectual property into use, its returns are not clear, and it cannot be recognized as joint property for division. Therefore, for intellectual property acquired during the marriage, if its returns cannot be determined, the returns cannot be recognized as marital joint property at the time of divorce. Relevant cases are as follows:

Case Six: Dispute over Post-Divorce Property between Chen and Li [12]

Case Facts: During the marriage of Chen (male, IP right holder) and Li (female), Chen acquired two personal patents. After the parties divorced, Chen used this intellectual property to make a capital contribution to a relevant company and obtained equity. Li claimed that the equity was marital joint property and requested division on the grounds that "the patents were acquired during the marriage."

Court View: Proceeds of intellectual property should refer to remuneration obtained after works are published, staged, or broadcast, or remuneration obtained by permitting others to use them, or remuneration obtained by patent holders transferring patent rights or licensing others to use their patents. Although the intellectual property in question was indeed acquired during the marriage, the key to judging whether its proceeds belong to marital joint property lies in whether such proceeds were "actually obtained or clearly obtainable" during the marriage. In this case, Chen completed the act of capital contribution with intellectual property after the divorce. At the time of the parties' divorce, the pecuniary proceeds of the intellectual property had not yet been actually obtained. Meanwhile, existing evidence could not prove that at the time of divorce, Chen had already signed a legally binding capital contribution agreement with the investment company; that is, the proceeds were not "clearly obtainable" property at the time of divorce. Therefore, the equity in question did not belong to marital joint property.

Lawyer's Comment: In this case, the court clarified that even if intellectual property is acquired during the marriage, if the basis for obtaining its proceeds is formed after the termination of the marital relationship, it no longer belongs to marital joint property. At the same time, "clearly obtainable" requires a substantive basis (such as signing a shareholding agreement or determining the equity ratio during the marriage). Claiming division merely because the intellectual property possesses potential value is difficult to support as it does not meet the requirement of "certainty" of proceeds.

IV. Ownership of Equity Appreciation After the Expiration of Patent Rights

When pre-marital personal patents are used for capital contribution to acquire equity, after the patent rights expire and become invalid, is the appreciation of that equity a natural appreciation of personal property, or should it be recognized as marital joint property?

From a legal foundation, according to Article 1063 of the Civil Code, pre-marital personal property and its natural fruits and natural appreciation belong to the individual. Therefore, a distinction should be made as to whether equity appreciation belongs to "natural appreciation." It is generally considered that equity appreciation attributable to the operational behavior of one or both parties belongs to joint property; equity appreciation brought about by market fluctuations does not belong to joint property.

After using patent ownership for capital contribution, the shareholder has effectively lost ownership of the patent (ownership is transferred to the company) and exchanged it for equity in the company (which belongs to a transformation of property form or new investment property). Equity and patents are mutually independent property carriers. The value of the patent has been "solidified" in the initial equity through the contribution valuation. The source of subsequent equity appreciation has no direct correlation with the patent itself; therefore, equity appreciation cannot be recognized as "natural appreciation of the patent" and the attributes of the equity appreciation must be judged separately.

When a patent expires, the company loses the exclusive rights to that patent, but the existence and value of the equity are not directly affected by the patent's invalidation. After the patent expires, the equity value no longer relies on the patent itself but depends on the company's overall operational status (such as profitability and business expansion), management capabilities, market share, and other operational elements. The appreciation portion is essentially company operating income. Furthermore, the value at the time of patent contribution was already solidified as the initial equity share. Subsequent equity appreciation relies on "continuous company operation and management input" for realization. This process requires the participation of subjective operational behavior and does not belong to passive natural appreciation. Even if the patent becomes invalid, the operational results such as brand recognition, market barriers, and customer base accumulated by the company during the validity of the patent have been integrated into the overall value of the company and reflected in the equity appreciation. This appreciation stems from prior and post-marital continuous operation, rather than simple market fluctuations.

The patent is merely one intellectual property asset among many assets of the company. Its expiration does not change the essence of the equity. The core driver of appreciation remains operational behavior, not the already invalid patent itself.

According to current judicial practice in China regarding the division of intellectual property: Regarding the intellectual property right itself, it belongs exclusively to the creator individually (regardless of whether acquired before/after marriage), and the spouse has no right to claim division of the right itself. Regarding the pecuniary proceeds of intellectual property, they belong to marital joint property only when the proceeds are "actually obtained" or "clearly obtainable" (possessing certainty) during the marriage. For equity formed by pre-marital patent contribution, if its post-marital appreciation belongs to "definite income generated by company operation," it fits the characteristics of "pecuniary proceeds clearly obtainable during the marriage" and should be considered for inclusion in the scope of marital joint property.

V. Practical Suggestions for Different Subjects

Given the aforementioned complex legal rules and judicial uncertainty, risk prevention plans for all parties involved are crucial.

1. For the Party Holding Intellectual Property Before Marriage

(1) Pre-event Prevention, such as Signing Written Property Agreements

According to Article 1065 of the Civil Code, spouses may agree in writing on the ownership of pre-marital and marital property. For the holding party who plans to or may make a capital contribution with intellectual property, signing a Prenuptial Property Agreement or Marital Property Agreement with clear terms and complete content with their spouse is the most thorough and effective way to avoid future disputes. The agreement should explicitly stipulate: the existing and future proceeds of specific intellectual property are personal property; the ownership of all or part of the equity formed by its future capital contribution, as well as rights and interests such as appreciation and dividends; and the calculation method or compensation scheme for such equity in the event of future divorce division.

(2) Retention of Evidence to Avoid Inability to Prove in the Future

If signing relevant agreements is difficult due to other factors, relevant evidence should be retained, such as: intellectual property certificates, application documents, R&D records, valuation reports, capital contribution agreements, capital verification reports, etc. If one wishes to claim that the equity and appreciation are personal property, one can collect industry research reports, market analyses, and macroeconomic policy documents to prove that the company's value growth is not highly correlated with individual operational efforts. On the other hand, one can collect company decision-making documents and board meeting minutes to prove that oneself and the spouse did not participate in the company's operation and management.

2. For the Spouse

(1) Focus on Contribution

The spouse should strive to secure evidence of their contribution to the career or within the family, which can be divided into direct contribution evidence and indirect contribution evidence:

1. Direct Contribution Evidence: Emails, WeChat records, meeting minutes, and signed documents regarding participation in company affairs; bank transfer vouchers providing financial support to the company; documents providing guarantees for the company in one's own name, etc.

2. Indirect Contribution Evidence: Evidence of long-term assumption of housework, child-rearing, and elderly care (such as records of long-term procurement of household supplies, communication records with school teachers, records of accompanying the elderly to medical appointments, etc.); evidence that the other party went on business trips or worked overtime for long periods while one supported the family alone; evidence proving that one sacrificed one's own career development to support the other party's career (such as giving up promotion opportunities, switching to flexible work, etc.).

(2) Multi-layered Offense in Litigation

Regarding the scenario of pre-marital intellectual property contributed as capital after marriage, in divorce litigation, a litigation plan can be designed with progressive layers or gradual defense based on the family situation and whether one is a full-time homemaker. The first layer is to claim that the equity obtained through "capital contribution during marriage" belongs to marital joint property and request full division according to law. The second layer is an alternative claim: if the court tends to determine that the equity body is personal property, one can turn to claim that the post-marital appreciation portion of the equity belongs to "operational appreciation," provide sufficient evidence and arguments revolving around the holding party's operational behavior and one's own indirect contribution, and request division of the appreciation portion. The third layer: if the appreciation is recognized as natural appreciation, the party who is a full-time homemaker can attempt to claim "housework compensation," requesting the other party to pay corresponding compensation pursuant to Article 1088 of the Civil Code.

3. For the Company and Other Shareholders

(1) Risk Prevention Clauses in Articles of Association and Shareholder Agreements

Companies may add "Intellectual Property Contribution Clauses" to their Articles of Association, stipulating that if a shareholder makes a capital contribution with intellectual property and is married, they must submit a Letter of Informed Consent signed by their spouse, confirming knowledge of the intellectual property contribution act and equity ownership. It can also require the shareholder to undertake that the ownership of the intellectual property used for contribution is clear, and if disputes over the company's equity arise due to ownership issues of the intellectual property prior to contribution (including but not limited to marital property division disputes), causing losses to the company or other shareholders, that shareholder shall bear corresponding liability for compensation. This compels the holding shareholder to properly handle their family property relations to a certain extent.

(2) Information Disclosure and Risk Prompting

For core technical personnel contributing capital with intellectual property, the company may increase inquiries and prompts regarding their marital status and the existence of property agreements during due diligence. It is suggested that they clarify property ownership through agreements in advance to maintain the stability of the company's equity structure and avoid corporate governance crises triggered by the founder's marital changes.

VI. Conclusion

The divorce division of intellectual property capital contribution requires finding a balance between "protecting innovation" and "family fairness." The core can be summarized in the following three key points:

1. The Core of Equity Ownership is the "Dual-Point Combination," requiring consideration of the time of IP acquisition and the time of capital contribution:

(1) If "IP acquired before marriage + Capital contribution before marriage / after divorce": Equity is personal property; generally no controversy.

(2) If "IP acquired during marriage + Capital contribution during marriage": Equity is marital joint property; generally no controversy.

(3) If "IP acquired before marriage + Capital contribution during marriage": Controversy exists. If the court recognizes it as "transformation of property form," the equity body belongs to the individual (appreciation judged separately); if recognized as "marital investment income," the equity as a whole is joint property, with judicial tendency leaning towards the fact that "the act of contribution (realization of returns) occurred during the marriage."

2. The Intellectual Property Right Itself is Not Divided; Only "Definite Pecuniary Proceeds During Marriage" are Divided:

(1) Regardless of whether the intellectual property was acquired before or during the marriage, its personal rights (such as the right of authorship) and the property right body (such as patent rights, copyrights) belong exclusively to the creator, and the spouse has no right to claim division of the right itself.

(2) Only when proceeds are "actually obtained" (e.g., obtaining equity through contribution) or "clearly obtainable" (e.g., signing a contribution agreement during marriage) during the marriage do they belong to joint property. Proceeds realized only after divorce, even if the intellectual property originated during the marriage, are not included in the scope of division.

3. The Attribution of Equity Appreciation Requires Distinguishing between Operational Appreciation and Natural Appreciation:

(1) If appreciation is directly related to marital operational behavior (e.g., the holding party serving in management, participating in decision-making, driving business): It belongs to "operational appreciation" and is marital joint property.

(2) If appreciation is solely due to market trends, industry hotspots, inflation, and other non-human factors: It belongs to "natural appreciation" and belongs to the registered equity holder individually.

(3) Even if the patent expires, appreciation depends only on the company's subsequent operational results and has no correlation with the original intellectual property whose value has been solidified.

With the deepening commercialization of intellectual property, such disputes will increasingly arise. Only through the triple guarantee of "active prevention by parties + improvement of legislative systems + unified judicial standards" can the dual goals of protecting enthusiasm for innovation and maintaining family property fairness be achieved, promoting the harmonious and sustainable development of the innovation economy and marital family relationships.

Footnotes:

[1] Article 48 of the Company Law of the People's Republic of China (2023 Revision): Shareholders may make capital contributions in currency or with non-monetary property that can be valued in currency and transferred in accordance with the law, such as physical objects, intellectual property rights, land use rights, equity, and creditor's rights; however, property that may not be used as capital contribution according to laws or administrative regulations is excluded.

Non-monetary property used for capital contribution shall be evaluated and verified; it shall not be overvalued or undervalued. Where laws or administrative regulations have provisions on valuation, such provisions shall prevail.

[2] Kong v. Mao, Dispute over Equity Transfer, Civil Judgment of Xi'an Intermediate People's Court of Shaanxi Province, Case No. (2023) Shan 01 Min Zhong 14083.

Holding: This Court holds that... a shareholder fulfilling their capital contribution obligation to the company in accordance with their subscribed capital contribution constitutes a different legal relationship from the transfer of equity between shareholders. Even if Mao did not actually make the capital contribution, it does not affect the authenticity of the declaration of will regarding the equity transfer contract between him and Kong. Kong's refusal to pay the equity transfer price on the grounds that Mao did not actually make the capital contribution cannot be established, and this Court does not support it in accordance with the law.

[3] Liu Jinbo, Woguo Gongsi Fa Shang Zhishi Chanquan Chuzi Zhidu De Wanshan [Improvement of the Intellectual Property Capital Contribution System in China's Company Law] (Master's Thesis, South-Central Minzu University, 2018).

[4] Article 27 of the Company Law of the People's Republic of China (2005 Revision): Shareholders may make capital contributions in currency or with non-monetary property that can be valued in currency and transferred in accordance with the law, such as physical objects, intellectual property rights, and land use rights; however, property that may not be used as capital contribution according to laws or administrative regulations is excluded.

Non-monetary property used for capital contribution shall be evaluated and verified; it shall not be overvalued or undervalued. Where laws or administrative regulations have provisions on valuation, such provisions shall prevail.

The amount of monetary capital contributions by all shareholders shall not be less than thirty percent of the registered capital of the limited liability company.

[5] Zou Qianwen, Lihun Caichan Fenge Yu Gongtong Zhaiwu Chendan Sifa Shiwu [Judicial Practice of Divorce Property Division and Joint Debt Assumption] 203 (Law Press China 2023).

[6] Civil Judgment of Meishan Intermediate People's Court of Sichuan Province, Case No. (2018) Chuan 14 Min Chu 74.

[7] Civil Judgment of Jiaxing Intermediate People's Court of Zhejiang Province, Case No. (2016) Zhe 04 Min Zhong 2001.

[8] Article 24 of Interpretation I of the Supreme People's Court on the Application of the Marriage and Family Section of the Civil Code of the People's Republic of China: "Proceeds of intellectual property" as stipulated in Item (3), Paragraph 1 of Article 1062 of the Civil Code refers to pecuniary proceeds actually obtained or clearly obtainable during the marriage.

[9] Civil Judgment of Beijing Changping District People's Court, Case No. (2014) Chang Min Chu Zi No. 03091.

[10] Civil Judgment of Beijing First Intermediate People's Court, Case No. (2018) Jing 01 Min Zhong 6048.

[11] Civil Judgment of Beijing First Intermediate People's Court, Case No. (2022) Jing 01 Min Zhong 11216.

[12] Civil Judgment of Beijing Second Intermediate People's Court, Case No. (2017) Jing 02 Min Zhong 6962.