Patents don’t just allow you to stop others from using your ideas; they can help you to maximise the value of your innovation efforts.
An overarching theme for SPE Offshore Europe 2023 is accelerating the transition to a better energy future. Innovation will be key to this transition.
The development and deployment of innovative technologies will drive progress toward a better energy future by providing new and sustainable energy solutions.
Innovation is inextricably linked to intellectual property, which exists to help innovators get value from their ideas and a return on investment.
Patents are one form of intellectual property that is specifically focused on innovative technologies.
When used within a sound intellectual property strategy, patents can help with both the development and deployment of such technologies.
The purpose of the patent system is to encourage technological innovation by providing an incentive for research and development.
Patents protect the core concept or idea that underpins an innovative technology.
In exchange for disclosing your idea, a granted patent provides you with a number of benefits, primarily the right to stop anyone from using it without your permission.
However, patents do offer other, more often overlooked benefits. The Patent Box is one of these.
The Patent Box
Granted patents open the door to offering incentives that can help with the deployment of innovative technologies.
In the UK, the Patent Box allows companies to apply a lower rate of corporation tax to profits earned from their patented inventions to encourage the commercialisation of intellectual property in the UK.
It does this by allowing a lower, effective 10% rate of corporation tax to be applied to profits earned from patented inventions when a company elects into the Patent Box.
The value of this incentive increased significantly with the rise in the corporation tax from 19% to 25% in April 2023.
Through this reduction in corporation tax, a patent can ultimately pay for itself.
The first criterion is that a company must make a profit from exploiting patented inventions.
Not all of a company’s profits may be related to patented inventions, but those eligible for the Patent Box are quite broad.
Unsurprisingly, eligible profits include those from selling patented products and manufacturing using a patented process.
Concerning selling patent products, this includes the sale of products incorporating a patented invention, bespoke spare parts, and providing a service using a patented product.
Perhaps more surprisingly, profits made from licensing or selling patent rights and income relating to infringement or other compensation related to patent rights are also eligible for Patent Box.
The second criterion is to own or have an exclusive license of an eligible patent. Not all patents are eligible.
Patents are territorial rights and, in general, are only applicable in the country in which it was filed. That being said, patents eligible for Patent Box are not limited to those granted in the UK, by the UK Intellectual Property Office.
Rather, eligible patents also include those granted by the European Patent Office and certain countries in the European Economic Area, such as Austria, Czech Republic, Denmark, Finland, Germany, Hungary, Poland, Portugal, and Sweden.
The third criterion is that a company needs to have undertaken a qualifying development on the patent.
This means that the company must have significantly contributed to the creation of or further development of the innovative technology that the patent covers.
Consequently, a qualifying development is not limited only to the initial breakthrough idea of the innovation.
Rather, it includes the development of a product or process incorporating the patented invention and also further developing the initially patented invention.
Such contributions include creating or significantly contributing to the creation of the innovative technology that was patented, to further develop the patented invention, a product incorporating the patented invention, or any process incorporating the patented invention.
A contribution can be significant in terms of costs, time, or effort or due to the impact of the contribution on the technology. The tax incentives from Patent Box are therefore available to more than just the initial inventor of an innovative technology.
Patents can therefore be used to both protect the core concept underpinning an innovative technology and help maximise value from the technology.
Intellectual property can be leveraged to accelerate the development and deployment of innovative technologies that are key to driving progress towards a better energy future.
Hear more from our experts at HGF’s upcoming webinar: ‘Intellectual property essentials for the energy transition’ on Thursday 29th June, 12 pm BST.
This exciting webinar will explore the key issues presented by the energy transition and how to tackle your IP strategy in the face of change. Registration details will be available soon.
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