Close Close

Financial Planning > Tax Planning

S. 23: Patent Bill Includes Tax, Business Methods Provisions

Your article was successfully shared with the contacts you provided.

Members of the Senate have voted 95-5 to pass S. 23, the America Invents Act bill – a measure that could affect insurers’ and planners’ ability to patent business methods and tax management strategies.

Section 14 of S. 23 would block applicants from trying to patent “any strategy for reducing,U.S. Capitol avoiding, or deferring tax liability.”

Section 18 of the bill would have the U.S. Patent and Trademark Office set up a “transitional post-grant review proceeding for review of the validity of covered business methods.”

The lead sponsors of the bill are Sens. Patrick Leahy, Vt.; Orrin Hatch, R-Utah; and Charles Grassley, R-Iowa. The bill would give the patent office more pricing flexibility.

Grassley and Sen. Max Baucus, D-Mont., have championed the ban on tax strategy patents, and Sen. Charles Schumer, D-N.Y., an opponent of business method patents, has backed the business method patent review program.

The Financial Planning Association (FPA), Denver, has been lobbying for Section 14. The FPA has argued that the practice of patenting tax strategies and corresponding advice limits taxpayers’ ability to use some parts of the tax code and some tax rule interpretations.

Some life insurers have tried to patent annuity riders and other insurance and annuity product riders and features.

In June 2010, the U.S. Supreme Court raised questions about the validity of financial services industry business method patents by ruling 9-0 against petitioners who tried to patent a commodity price hedging strategy. The court indicated that inventors might still be able to patent some business methods.

In July 2010, a 3-judge panel at the Federal Circuit Court of Appeals blocked efforts by an insurer to defend a variable annuity administration method patent.

More patent law coverage from National Underwriter Life & Health:


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.