|
Patenting Tax Ideas— footnotes 1 P.L. No. 82-593, 82d Cong., 2d Sess. (1952); see 35 USC Sections 101–103 and 112.
2 In
2005, it was reported that the average patent infringement case
typically costs $650,000 per party when the amount at risk is
under $1 million, and $2 million per party when the amount at
risk is $1 million to $25 million; see American Intellectual
Property Law Association, “Report of the Economic Survey 2005,”
p. 22, available at
www.aipla.org/Content/ 3 State Street Bank & Trust v. Signature Fin’l Group, 149 F3d 1368 (Fed. Cir. 1998). Business methods include business practices in many fields, including healthcare management, insurance and insurance processing, reservation and booking systems, financial market analyses, point-of-sale systems, tax processing, and inventory, accounting and financial management. 4 KSR Int’l Co. v. Teleflex Inc., S. Ct., Dkt. No. 04-1350, 4/30/07.
5
The U.S. Patent and Trademark Office (USPTO) classifies TSPs as subclass 36T in Class 705, “Data Processing: Financial, Business Practice, Management, or Cost/Price Determination”; see
http://www.uspto.gov/go/classification/uspc705/sched705.htm. As of May 31, 2007, the USPTO’s website listed 60 patents issued in that subclass and 86 pending applications (i.e., published applications not yet examined/granted); see http://patft.uspto.gov/netacgi/nph-Parser? 6 See Stamper, “Tax Strategy Patents: A Problem without a Solution,” 78 Tax Notes 3 (4/23/07).
7
On Jan. 6, 2006, Wealth Transfer Group LLC filed a complaint in
a Connecticut Federal district court against John W. Rowe,
alleging that he infringed its SOGRAT patent; see Wealth
Transfer Group LLC v. John W. Rowe, Dkt. No. 3:06-cv-00024-AWT.
Wealth Transfer Group LLC sought an injunction and damages
against Rowe after discovering (through Securities and Exchange
Commission filings) that he funded a GRAT with NQSOs. On Feb. 6,
2007, the parties filed a joint motion to stay the case, stating
that they have agreed in principle to resolve the matter. On
March 9, 2007, the court approved a confidential settlement to
end the litigation, without Rowe admitting liability. The SOGRAT
patent is at
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2= 8 See Slane, Freeman and Simmons, “Efficient Use of Non-Qualified Stock Options as a Wealth Transfer Vehicle,” 32 Est. Pln’g 9 (September 2005).
9
Patent number 7,149,712 was issued to Alan J. Lang, a financial
adviser at Cantella & Co., Inc., on Dec. 12, 2006; see
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2= 10 IRS Letter Ruling 9009047 (12/5/89). 11 IRS Letter Ruling (TAM) 9825001 (6/19/98). 12 Hoffman, “Investment Strategy Patents for Charitable Vehicles?” (3/12/07), available at www.pgdc.com/usa/item/?itemID=403075.
13
The Section 1031 deedshare (patent number 6,292,788 B1) was
issued on Sept. 18, 2001, to Neal Roberts, Michael Franklin,
Charles Runnels and James Andrews. The patent is assigned to
American Master Lease, LLC, which has granted an exclusive
license to CB Richard Ellis Investors, L.L.C.; see
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2= 14 Rev. Proc. 2002-22, 2002-1 CB 733.
15
See Lederman, “Tax-Related Patents: A Novel Incentive or an
Obvious Mistake?” 105 J Tax’n 325 (December 2006), at p. 327;
see also “CB Richard Ellis Investors Patents $73 Million
Tenancy-in-Common Structure” (9/25/03), available at
http://netleasenews.blogspot.com/
16
Patent number 6,766,303 was issued on July 20, 2004, to David J.
Marshall and assigned to Goldman Sachs & Co.; see
http://patft.uspto.gov/
17
Patent number 6,058,376 was issued on May 2, 2000, to David A.
Crockett; see
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=
18
Patent number 20020147617 was issued on Oct. 10, 2002, to
Michael Schoenbaum, Mark Spranca, Jayanta Bhattacharya and
Neeraj Sood; see
http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=
19
FOLIOfn, Inc., was assigned three
patents developed by Steven M. H. Wallman. Patent number
6,996,539 was issued on Feb. 7, 2006, for a method and apparatus
enabling smaller investors or others to create and manage a
portfolio of securities or other assets or liabilities. Patent
number 6,161,098 was issued on Dec. 12, 2000, for a method and
apparatus enabling small investors with a portfolio of
securities to manage taxable events in the portfolio. Patent
number 6,516,303 was issued on Feb. 4, 2003, for a method,
system and apparatus for managing taxable events in a portfolio;
see
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=
20
Available at
http://tax.aicpa.org/Resources/Tax+Patents/ 21 See Statement of Ellen Aprill, note 2 supra.
22
See “AICPA Tells Congress to Restrict Tax Strategy Patents,”
available at
www.aicpa.org/Magazines+and+Newsletters/Newsletters/ 23 See “AICPA Criticizes Tax Patents” (May 2007), available at www.aicpa.org/pubs/jofa/may2007/taxcases.htm#AICPA; “Washington Reports: Tax Patents” (June 2007), available at www.aicpa.org/pubs/jofa/jun2007/wr.htm; and Cathey, Godfrey and Ransome, “Tax Patents Considered” (July 2007), available at www.aicpa.org/pubs/jofa/jul2007/cathey.htm.
24
See
http://tax.aicpa.org/Resources/Tax+Advocacy+for+Members/ 25 See http://tax.aicpa.org/Resources/Tax+Patents/.
26
For TSPs issued, see
http://appft1.uspto.gov/netacgi/nph-Parser? 27 S 681, the Stop Tax Haven Abuse Act, introduced by Sens. Carl Levin (D-MI), Barack Obama (D-IL) and Norm Coleman (R-MN), and companion bill HR 2136, introduced by Rep. Lloyd Doggett (D-TX) (with 40 co-sponsors), each contain Section 303, which is consistent with the AICPA position. Section 303 of each bill would amend 35 USC Section 102 by prohibiting patents on inventions “designed to minimize, avoid, defer, or otherwise affect the liability for federal, state, local or foreign tax.” This provision would be effective on enactment and applicable to patents that have not yet been granted. |