Patent reform passes in House; tax strategy patents banned
By Anne Rosivach
A comprehensive patent reform bill, the America Invests Act, which includes a provision prohibiting the award of new tax strategy patents, was approved in the House by a vote of 304 to 117 on June 24. Minor differences must now be reconciled with the Senate version before the bill goes to the president. The Obama administration supports patent reform.
The tax strategy provision says that any "strategy for reducing, avoiding, or deferring tax liability" is prior art, and therefore not patentable.
Tax strategies have been patentable as a type of business method since 1998. Since then, the U.S. Patent and Trademark Office (USPTO) has granted nearly 150 patents on tax strategies.
The America Invents Act is the first major revision of patent law since 1952. The bill changes who is awarded a patent from the first person to invent to the first person to file for a patent. The bill also attempts to limit frivolous lawsuits and allows the USPTO's director to set the fees for patents. Currently Congress sets the fees, and the agency is said to be underfunded.
Some small business lobbying groups have opposed the legislation, saying that it will give larger, well-funded companies an advantage over smaller companies. The National Small Business Association points to the "effective elimination of the American grace period, which grants firms up to a year to raise capital, assemble partnerships, and perform field tests before filing a patent application. The language of the law will force small firms – the ones that can afford it – to file applications early and often, even before good information was available."
The American Institute of Certified Public Accountants has supported the ban on tax strategy patents.
Voice of the Editor
Even though any accounting auditor would tell you it seems like there are an awful lot of tax accountants out there, surely one-third of the country isn't made up of tax preparers, so it's rather startling news to learn that one-third of Americans like to do their taxes. Who knew?
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