Abstract – Full Article Available Below

The American Jobs Creation Act of 2004 significantly limited the tax benefits to companies for charitable donations of intellectual property. This has arguably restricted within the U.S. the influence and distribution of technology to limited or non-developing user groups, such as nonprofits and universities. Notwithstanding this decrease in benefits, the growth of an international licensing model may provide a new domestic framework for exploiting tax provisions surrounding charitable IP contributions through the operational mechanics of patent pools. Increased consideration of patent pools is important for other reasons as well. The growth of university commercialization offices facilitating enhanced industry-academic relations and the increasing complexity of commercial products, most notably in the biotech field, are just a sampling of factors calling for broadened use of large-scale collaborative models of exchange.

How, then, can U.S. firms take advantage of implicit pecuniary and non-pecuniary benefits through the patent pool structure; or, more specifically, how can firms donate their shelved, unworkable patents towards a common good, while also taking advantage of goodwill and federal tax incentives? While this article does not offer a prettily packaged answer to the question, it does provide a useful analysis of the relevant IP and taxation principles and concerns that must be factored into any attempt at a soluble approach towards a balancing of the respective federal and societal interests involved. This article fits squarely at the intersection of intellectual property and tax law, exploring cooperative developments seeking to disseminate intellectual property while circumventing tax limitations of the Jobs Act.

In order to test the workability of a tax-friendly patent pool, one must first grasp the relevant law and theory establishing patent pools generally, and more specifically patent pools as charitable contribution stores. Section I thus surveys environmental conditions leading to the creation of modern patent pools, and defines modern patent pools. Section II surveys the landscape of the U.S. federal tax provisions governing technology transfer, with a particular emphasis on establishing intellectual property transfers as charitable contributions. Section III makes use of the IP and tax related principles and rules though a case study involving an international patent pool devoted to environmental sustainability and cleantech innovation.

Share