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11.17.16

Cheapening of Patents at the EPO, Cheapening of Staff of the EPO, and Emergence of Large Corporations’ Tax Evasion Using Piles of Patents

Posted in Europe, Patents at 11:54 am by Dr. Roy Schestowitz

Whose system is it anyway?

Patent box
Reference: “The “Patent Box” – Proof That the UK is a Rogue State in Corporate Tax”

Summary: Patents are, over time, becoming not about innovation but about passage of heaps of monopolies to large corporations that then use them to evade tax (the patent box loophole)

TODAY we became aware of this blog post from just two days ago. “USPTO Memo Indicates a ‘European’ Approach to Software Inventions,” says the headline, tacitly implying that the EPO is strict on software patents even though the opposite is true (especially in recent years). Lawyers’ favourite CAFC cases are presented as evidence. For instance:

Earlier this month, the USPTO issued a memorandum to patent examiners discussing recent court decisions regarding the patentability of software inventions. The memo refers to three federal circuit decisions in which software inventions were found to be eligible for patent protection. The three decisions mentioned in the memo are McRo v. Bandai (Sept. 2016), BASCOM v. AT&T (Jun. 2016) and Amdocs v. Openet (Nov. 2016).

Recently, I summarised the McRo and BASCOM decisions in a blog post for Cambridge Wireless. The Amdocs decision was issued only a day before the USPTO published its memo to examiners on this issue. Therefore, Amdocs is not considered in detail in the memo. However, the USPTO states that further guidance on the Amdocs decision will be given at a later date.

The USPTO is always behind the times when it comes to regulating patent quality. We saw that as recently as this year because it took 2-2.5 years for the USPTO to truly come to grips with Alice. In the mean time, the EPO went in the opposite direction and insiders tell us that they grant software patents because there is growing pressure to keep up with ‘production’ demands (where grants are rewarded, not proper/thorough examination). A new Central Staff Committee report [PDF] was also leaked to us today. The Central Staff Committee is concerned that 15% increase in so-called ‘production’ results in reductions for staff. Figures are shown to support this claim and also some ‘missing money’ becomes the subject of inquiry. One has to wonder where all that money comes from and how this so-called ‘production’ is attained without increases in staffing. Of course, all it means is that patent quality continues to nosedive.

Speaking of fiscal irregularities and low patent quality, Benjamin Henrion highlight this new article about “patent boxes” — a subject we wrote about before. “Race to the bottom and Apple fiscal evasion via patents will continue with the blessing of Europe,” Henrion noted, as it’s quite common and increasingly ‘normal’ for large corporations to dodge (or evade) tax with patents as a hidden instrument of some kind of “money laundering” . Here is what the Wall Street media said this week:

Adoption of legislation for a common consolidated corporate tax base by 27 EU member states would resolve current patent box conflicts and end transfer pricing disputes that cost multinational companies hundreds of millions of dollars in double taxation, according to EU and industry officials.

Speaking at a Nov. 15 conference hosted by the Federation of European Accountants, Uwe Ihli, the chief architect of the October CCCTB proposal unveiled in October, said tax credits for research and development in the pending legislation are seen as a way to prevent harmful tax competition, triggered by the rush to attract investment by high-tech companies via tax breaks on intellectual property profits.

“We believe the research and development tax breaks in the new proposal will not only be a major attraction for businesses but they will also help resolve the divisions in the EU over patent box tax regimes,” Ihli said.

He added that the R&D terms are based on EU state aid rules and in line with the OECD’s modified nexus approach.

If a process patent-granting en masse can become just an instrument for the benefit of large corporations, and patents are made a lot easier to get, what does that say about the real beneficiaries of today’s EPO? Regarding Apple’s patents, we are planning some articles about those. The EPO is doing a terrible job and it’s not hard to guess who will pay the price.

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