DEVELOPMENTS IN IP
- Proposed “patent box” corporation tax reduction regime
- Unitary European patent proposal – an update
- Planned extension of European patents to Tunisia
Proposed “patent box” corporation tax reduction regime
There are tax reduction mechanisms in the UK that can help to reduce the tax paid on work relating to research and development
activity. The R&D tax credit system, for example, has been in place for some time. The UK Government is now proposing another
tax reduction system, called the “patent box” tax regime, under which businesses paying corporation tax could claim a reduced
10% tax rate for profits attributable to patented products. The regime is due to enter into force from 1 April 2013 and will apply
to profits arising after that date.
The relevant profits would be those derived worldwide by a UK business from inventions covered by a UK or European patent. The profits may derive from the sale of patents, from the sale of any patented products or spare parts for a patented product, or from damages paid by third parties for infringing the patent rights.
The business must be actively involved in the patent development cycle, rather than a passive recipient of income from holding patents, and must remain actively involved in exploiting the patent. The business must also have performed significant activity to develop the patented invention.
The regime is currently under consultation, with draft legislation proposed for autumn 2011. Further updates will be provided in relation to this proposal as it develops.
Unitary European patent proposal – an update
There continues to be a strong political desire for progress to be made on setting up a system for obtaining a unitary EU patent.
The EU Competitiveness Council has agreed to move forward with the unitary system that has been proposed by 25 of the 27 EU
member states under the “enhanced cooperation” provisions of EU law, and the EU Parliament is due to review the proposal in
November 2011. Italy and Spain remain opposed to the system, however, and these countries have now submitted formal legal
challenges to the proposal and the use of the enhanced cooperation system to implement an EU patent without them. It remains
to be seen whether either of the challenges holds any weight, but it seems likely that they will delay progress.
The proposals are based on a unitary patent right for the participating EU countries being obtained following the grant of a patent
by the European Patent Office (EPO), so that, in effect, the EPO patent becomes validated as a unitary European patent, covering
the participating EU countries. Only a single renewal fee would be required annually to maintain the unitary right in force in all
these countries.
EPO patents are granted in English, French or German, with the claims being translated into the remaining two languages as part
of the grant procedure, and the intention is that, in the long term, the validation of an EPO patent as a unitary European patent
will not require any further translations. However, the current proposal involves a transitional provision, under which one translation
will be required for the EPO patent to take effect as a unitary European patent. The transitional provision would stay in place for
a maximum of 12 years.
The proposals also bring in a unified patent litigation system, which involves a new patent court that will be set up by the
participating EU member countries only. This patent court would therefore fall directly within the judicial system of the EU. This
court would be able to consider infringement and validity for EPO patents that have been validated in EU countries on a national
basis as well as EPO patents brought into effect as an EU unitary patent right.
We will report on further progress in due course.
A detailed article is available – please contact us or see our website
Planned extension of European patents to Tunisia
The European Patent Office (EPO) and the authorities in Tunisia have agreed to cooperate more closely on patent protection. It is envisaged that this will lead to an agreement by the end of 2012, under which European patents could be registered in Tunisia.
Tunisia will not become an EPO member state or an extension state. Nevertheless, the mooted procedure could boost the number of patent rights in Tunisia, which may help to increase investment in the country.
As reported in our Spring 2011 newsletter, the EPO has been in similar discussions with Morocco. The EPO’s efforts to extend its influence to non-European markets should be positive for applicants already familiar with EPO law and practice. Once such countries implement their cooperation with the EPO, filing strategies covering these territories should become simpler and patent prosecution may be quicker and more predictable.
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