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back to article Patent tax break takes effect in April 2013

A 10 per cent corporation tax rate will apply to profits from companies' worldwide trading activities which are attributable to qualifying patents, the Treasury confirmed in draft Finance Bill 2012 legislation published today, establishing the 'Patent Box' tax regime. The Patent Box will allow companies to elect to apply a 10 …

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WTF?

Is it just me?

I read the article three times and I still can't understand it, but then I'm only an IT person.

Oh hang on it's the UK Treasury, so it's bound to be needlessly complicated to the point at which Kafka would shake his head in disbelief.

No doubt somewhere there is a tax lawyer, IP lawyer, accountant or bureaucrat punching the air and shouting "ALL RIGHT!".

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Anonymous Coward

No possible loop holes in this.

Can't see this being abused can we, looks like an easy way to reduce tax bills, buy some cheap tatty patents, apply to product (given it's hard to tell if many moderately complex electronic items infringe anyway), take tax break for nothing, brilliant, give money to the ones that need it least.

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Naughty but Nice

This sounds great on the face of it, but it means that corporations will have a greater vested interest in their patents, so we can expect lots of lobbying to extend patent terms, and to broaden their scope. If anything, patents need reining in and reducing in length/scope to fuel innovation, but that'll always be at odds with corporate interests.

Suffice to say, the little guy won't be able to benefit from this nearly as much as the big players. In that sense, this will be a failure. It'll probably generate a whole industry of lawyers (like the patent system in the US has), which is job creation of a sort. However, as all failed empires will tell you, bureaucracy always kills you in the end, so one is left wondering if we want to create a super-race of lawyer/bureaucrats?

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Anonymous Coward

And how long before we suddenly find that the Googles etc. of this world transfer all their IP to a subsidiary holding company, 'license' it from that holding company at ridiculously inflated royalty rates, and get away with hiding most of their profits under that 10% tax rate? Might as well have just offered to drop the corporation tax rate to 10% for multinationals, at least that'd be honest about letting them get away with paying chicken feed tax rates...

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Silver badge

Seeing how Google don't currently pay any corporation tax in the UK, that would be a bloody good thing (for the UK).

Any other multinationals who want to declare their global profit in the UK and take advantage of our generously low corporation tax would be more than welcome.

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Not too long; the $BIG_COMPANY will now have their European corporate headquarters in Ireland (with a staff of 2) to avail of the low corporation rate there, their IP owned by a UK subsidiary (with a staff of 2) , their copyrights held by a Dutch company (with a staff of 2) , their distribution centre in Germany (with a staff maybe more than 2) , and all their product made by a sweatshop in China (somebody else's low paid staff) .

Welcome to the global economy proles.

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Meh

Unintended consequences?

As far as I know, research doesn't have to be done in the UK for UK patent office to award a patent... so firms will not do more research in the UK, they will just register more patents there. Unintended consequences this will have:

1) relocation to UK of patent trolls

2) huge pressure by big multinationals on the UK patent office to accept bullshit patents

3) huge flood of bullshit patents awarded by the UK patent office

Might be well-intentioned, however I doubt that this measure will improve innovation in the UK.

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Might be well-intentioned

No, just well lobbied by the vested interests.

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So they want to drop the rate that companies pay tax, at a time when there are massive cuts in public spending, we are in a ressecion in everything but name, and the tax paying public have been squeezed into poverty? WTF? Well done Tories and Dave, you truly are "for the people" .

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Ha Ha Ha!

More stupids who think innovation has anything to do with how easily patents are granted or can be obtained.

"The Patent Box will provide an additional incentive for companies in the UK to retain and commercialise existing patents and to develop new innovative patented products,"

More like, UK companies actually building something will be marooned in intellectual red tape and wander or die off while a thickening (and sickening) cesspool of "IP attorney" types will start its neverending cancerous growth, leading to the known feedback effect of more IP protection laws with even less companies able to do anything.

"This will encourage companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK and maintain the UK’s position as a world leader in patented technologies."

Just what I said.

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Anonymous Coward

"More stupids who think innovation has anything to do with how easily patents are granted or can be obtained."

Quite. But then again, these are the people who brought you league tables for everything ("We pay the teachers and nurses peanuts, but fuck them and their failing schools and hospitals: send your kids and ill people elsewhere; problems solved!") and habitually reward the rich at every turn.

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Pirate

Stupid, stupid, stupid.

At least with 'normal' patent use, there is an opposing party to question the validity any time the patent is used, but not here - if I can get a "Business Process" patent to be approved, then so long as I never use it against a competitor, I'm going to be able to use it to apply to everything my company ever does!

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Flame

Basic description of a patent

A patent removes an idea from the effective sum of human knowledge. Nobody can use it, improve it, or do anything with it. This is the same as burning a piece of paper containing the only copy of the idea.

How about an even bigger tax break for companies that make information public without rendering it unusable with a patent?

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No, you can use it - you just have to pay.

You can improve it - get a new patent for your improvement, then go and have a chat with the original patent owners.

You can do more - when you see their idea, and their way of doing it you can simply think of a new way of doing it.

In fact, if you have half a brain some one else's patent is a great way of moving forward with new ideas.

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Anonymous Coward

"You can do more - when you see their idea, and their way of doing it you can simply think of a new way of doing it."

Their idea? I thought that mere ideas weren't supposed to be patentable.

In fact, a lot of patents in the software and user interface domains are vague statements about how the "inventors" could do something but haven't, or maybe they have done something but won't describe it properly, yet still want a monopoly on that thing anyway.

And in those domains, a lot of people come to the same conclusions about what the new ideas are and how they should be implemented independently, so giving some people a monopoly is unjust to say the least.

Patents are a great way of sustaining a bureaucracy that has nothing to do with innovation. The money locked up in feeding that bureaucracy and litigating its products would be better spent on other things like, for example, actual research and development. That's if that kind of thing actually matters to you, of course.

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We're doomed

Just goes to show. We are all doomed if the government still doesn't understand that patents destroy innovation.

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Unhappy

I was going to say it will all end in tears, but I think I'm too late - all hope has already ended.

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Anonymous Coward

So patents now the new forests in Scotland accountancy special

Why do I read about new get out of paying tax clauses alot more than any paying extra tax ones when it comes to non-individuals of the World.

Profit is profit, income is income and tax is tax. I pay the same tax for every penny I earn as others do as well. How many patents are solely attributed to individuals and in no way related to a company. This is just not going to float my boat.

Bottom line patents messed up, I mean you can file a UK patent, get it approved, and some USA company can see it - copy it and get a USA patent just because they were first to file in that country and there wonderfiul new law encouraging such stealing of idea's.

What is the UK goverment doing about that - heh!

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Anonymous Coward

Marvellous.

Just as the software industry is doing its best to persuade people that the patent system is in desperate need of reform and, ideally, disposal (my preference would be a much stronger copyright system that can extend to, for example, copyrighting drugs - I speak as someone with a friend in the UK patent office, and I'd rather see him out of a job than see this mess continue) the government decides to promote the things. I generally try to ignore any talk of how out-of-touch the government-of-the-day may be, because there's always someone who'll feel that way, but this is ridiculous.

For some reason the patent mess, especially in the software industry, still doesn't seem to have hit the mass media. I was banging my head on the window when Radio 4's "Unreliable Evidence" did a thing on patents and made *one* throw-away remark to the possibility that more than one person might come up with the same idea, "possibly in engineering" (followed by laughter about how unlikely that was) in a half-hour programme.

I'm off to seethe.

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Anonymous Coward

Lots of uninformed speculation here...

The new law (for a fluffy summary, read http://www.hm-treasury.gov.uk/d/condoc_responses_patent_box.pdf) specifically avoids trolls by having eligibility requirements that go beyond passively holding IP.

The down side though is that in practice it would only knock 1-2% off any normal corporation's tax bill because of how it's all calculated.

As for the IT angle though, by contrast it may be very helpful to any company whose primary business model is IP licensing, like ARM...

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Pint

Too easy...

Quick - someone patent the method behind this "patent box" idea and problem solved, it can't be done!

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Alert

Catchup

Someone has seen how the 'merkins use patents and thinks we can catch up:

1. Award patents willy-nilly to any US company who fills in a form (e.g. NTP).

2. Make it cripplingly hard, expensive and slow to challenge a patent. Especially for a non-US company (e.g. RIM).

3. Enforce patents worldwide through the WTO.

4. Enforce patents in the US with draconian sanctions up to and including a total ban on doing business in the US.

We're a smaller country, coming from way behind in the dodgy-patent stakes, and with an economy that $bigco could afford to be locked out of while a patent was challenged, if the worst came to the worst. What could possibly go wrong with US-style economic imperialism?

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Anonymous Coward

So what's ARM Holdings take on it? They seem to do perfectly well with our patent system.

It's just crap companies with nothing useful that have problems.

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