The End of Tax Strategy Patents

President Obama signed patent reform legislation late last week. Among other provisions, the bill moves the US from a “first to invent” system to a “first-to-file” system. The bill also bans tax strategy patents.

That’s right, if you devised a clever, tax-reducing way for an individual or business to arrange their finances you could have patented it and charged anyone who used that strategy. But no more.

Tax patents gained popularity in the late ’90s after the U.S. Federal Circuit Court of Appeals held that unique business methods could be patented. There are now around 150 tax strategy patents. For more information on tax patents, see this publication from the Congressional Research Service: Patents on Tax Strategies: Issues in Intellectual Property and Innovation.