University of Southern California

Effecting the Impossible: An Argument Against Tax Strategy Patents

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Note by Michael Moulton
From Volume 81, Number 3 (March, 2008)

In 1998, in State Street Bank & Trust Co. v. Signature Financial Group, Inc., the U.S. Court of Appeals for the Federal Circuit rejected the contention that “business methods” are per se unpatentable, and stated that a business process patent can be granted on the same basis as any other patentable invention. The decision fostered a new awareness that business method claims could be patented, and in the wake of State Street Bank, the United States Patent and Trademark Office (“USPTO”) saw an almost six-fold increase from 1998 to 2001 in the number of patent applications for business methods. While some commentators applauded the State Street Bank decision, others maintained that methods of doing business should be an excluded category of invention, articulating that the traditional filters of patent law are not appropriately sized to sieve overly broad business practices from attaining patent protection. Despite those concerns, business methods remain patentable inventions.

Perhaps emboldened by patent grants for business methods, some businesses and individuals have begun seeking patent protection for tax strategies that they claim represent new and unique ways to alleviate tax burdens. And while the USPTO has issued patents for tax strategies and created a subclass of business method patents to house those tax strategy patents, whether tax strategies can and should be patentable processes remains unsettled.

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