Monday, September 12, 2011
Congress-passed patent reform bill bars patents for tax strategies.
On September 8, the Senate by a vote of 89 to 9 approved H.R. 1249, the “Leahy-Smith America Invents Act.” Since the measure previously passed the House of Representatives on June 23, it is now cleared for the President's signature.
Among other changes, this comprehensive patent reform bill prevents individuals or firms from being able to receive patents on tax strategies. Sec. 14 of the Act (below) provides that “any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art.” Tax liability includes any liability for tax under federal, state or local law or any foreign law.
The Act provides an exclusion for methods or software used solely to prepare a return or other tax filing, or to transmit or organize related information. There also is an exclusion for methods or software that are used solely for financial management, to the extent that they are severable from any tax strategy or do not limit any taxpayer's (or tax advisor's) use of any tax strategy.
Sec. 14 of the Act takes effect on the enactment date and applies to any patent application that is pending on, or filed on or after, the enactment date and to any patent issue on or after the enactment date.
20 SEC. 14. TAX STRATEGIES DEEMED WITHIN THE PRIOR
22 (a) IN GENERAL.—For purposes of evaluating an in-
23 vention under section 102 or 103 of title 35, United States
24 Code, any strategy for reducing, avoiding, or deferring tax
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1 liability, whether known or unknown at the time of the
2 invention or application for patent, shall be deemed insuf-
3 ficient to differentiate a claimed invention from the prior
5 (b) DEFINITION.—For purposes of this section, the
6 term tax liability refers to any liability for a tax under
7 any Federal, State, or local law, or the law of any foreign
8 jurisdiction, including any statute, rule, regulation, or or-
9 dinance that levies, imposes, or assesses such tax liability.
10 (c) EXCLUSIONS.—This section does not apply to
11 that part of an invention that—
12 (1) is a method, apparatus, technology, com-
13 puter program product, or system, that is used sole-
14 ly for preparing a tax or information return or other
15 tax filing, including one that records, transmits,
16 transfers, or organizes data related to such filing; or
17 (2) is a method, apparatus, technology, com-
18 puter program product, or system used solely for fi-
19 nancial management, to the extent that it is sever-
20 able from any tax strategy or does not limit the use
21 of any tax strategy by any taxpayer or tax advisor.
22 (d) RULE OF CONSTRUCTION.—Nothing in this sec-
23 tion shall be construed to imply that other business meth-
24 ods are patentable or that other business method patents
25 are valid.
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1 (e) EFFECTIVE DATE; APPLICABILITY.—This section
2 shall take effect on the date of the enactment of this Act
3 and shall apply to any patent application that is pending
4 on, or filed on or after, that date, and to any patent that
5 is issued on or after that date.