Senate Passes Bill Blocking Patenting Of Tax Strategies

On March 8, the Senate by a vote of 95-5 approved S. 23, “The America Invents Act” (Patent Reform Bill), as amended. Sec. 14 of this comprehensive patent reform bill would prevent individuals or firms from being able to receive patents on tax strategies. An amendment (#141), that was offered by Senate Finance Committee Chair Max Baucus (D-MT) and Finance Committee member Chuck Grassley (R-IA) to clarify that Sec. 14 wouldn't apply to an invention that is a computer program product or system used solely for preparing a tax or information return or other tax filing, was agreed to by unanimous consent.

Observation: The pre-amended text of Sec. 14 was identical to the text of the “Equal Access to Tax Planning Act of 2011” introduced in January by Senate Finance Committee Chair Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA).

Sec. 14 of S. 23 provides that for purposes of evaluating an invention under Secs. 102 or 103 of title 35, USC, any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, would be deemed insufficient to differentiate a claimed invention from the prior art. The rule would be effective on the date of enactment and apply to any patent application pending and any patent issued on or after that date.

Observation: For an article on a Supreme Court opinion that may affect the patenting of tax strategies. For an article on two Congressional Research Service reports examining patents on tax strategies.