A proliferation of newly issued tax-related patents has resulted in concern and confusion among tax practitioners. Tax practitioners argue that the tax strategies claimed in the patents have been used for many years and do not meet the novel and nonobvious requirements of patent law. Additionally, tax professionals are concerned that enforcement of these patents will limit their ability to serve as advocates for their clients and recommend tax strategies that legally minimize their clients' taxes. Tax professionals also worry that they may be in jeopardy of being sued as defendants in tax-related patent infringement cases.
In this paper, the authors review the basics of patent law, discuss business method patents, and analyze five tax strategy patents in order to determine whether the inventions claimed in the patents meet the nonobviousness and novelty requirements of patent law. The authors examine articles, IRS Revenue Rulings, Private Letter Rulings, continuing education materials, and other evidence in publicly available printed publications and conclude that the “prior art” in the field was sufficient at the time of the patent applications in order to potentially question the validity of the patents.
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