I spent yesterday in an all day meeting with fellow grantees of the John D. and Catherine T. MacArthur Foundation. The Foundation supports PK and other organizations working on domestic and international copyright and patent reform. I really enjoy these meetings – they give me a chance to meet new organizations in the field and to see where new collaborations might spring up. I always come away learning a few things I did not know previously.
One of the things I learned yesterday not only shocked me, but also my other 25 colleagues as well. Patent expert and Georgetown Law Center Professor Jay Thomas told the group about the newest practice in the patent field – the patenting of tax strategies, or advice on how to avoid paying taxes. Yes, you heard that correctly – individuals and corporations are patenting tax strategies as “business methods.” Business method patents have infamously been used to patent one-click shopping (Amazon.com), name your own price websites (like Priceline), the crustless peanut butter sandwich and swinging on a swing sideways (the latter being filed by a five year old at the behest of his lawyer father). While some business method patents are just plain silly and harmless, others can greatly raise the costs of innovation and commerce.
Completely coincidentally, New York Times columnist Floyd Norris writes today about tax strategy patents (apologies to those of you who are not Times Select subscribers). He writes about how “after one conference where tax strategies were discussed, participants got a letter of warning that using one idea mentioned would be in violation of a patent.” McDermott, Will & Emery lawyers Paul Devinsky, John R. Fuisz and Thomas D. Sykes also have an article on the topic in this week's Legal Times.
Just think about the litigation insanity that will arise if this practice to continues to increase. Yes, Norris, concedes, some of these patents will be found to be obvious, but many certainly will not be, and in any event, why should the Patent & Trademark Office's resources be even more taxed (pun intended) reviewing this nonsense? But as Devinsky and his co-authors point out, perhaps the worst effect of such patents is that certain tax strategies will no longer be available to certain taxpayers, leading to an inequitable treatment of taxpayers in a system that isn't so fair to being with.
To the extent that anything positive can be said about this development, it is that these patents are so jaw dropping that it might actually cause some movement in the stalled attempt to reform patents in Congress. Seems like the accounting and tax legal professions may soon join their brethren in the tech and financial communities to bring an end to the endless cycle of silly patents that limit innovation and commerce.