U.S. corporations’ IP transfer tactics under scrutiny

President Obama’s tax reform proposal had some language hinting at what IP valuators, transfer pricing professionals and corporate tax strategists should be looking for in 2012.  “… there is evidence of income shifting offshore, including through transfers of intangible rights to subsidiaries that bear little or no foreign tax. Under the proposal, if a U.S. parent transfers an intangible to a controlled foreign corporation (CFC) in circumstances that demonstrate excessive income shifting from the United States, then an amount equal to the excessive return would be treated as subpart F income … The definition of intangible property for purposes of the special rules relating to transfers of intangibles by a U.S. person to a foreign corporation and the allocation of income and deductions among taxpayers would be clarified to prevent inappropriate shifting of income outside the United States.”

It has become a political issue, but vague terms such as “excessive” and “inappropriate” indicate this inchoate movement still has a way to go. Nonetheless, researchers should take care to do their homework. Readers tasked with pricing these types of transfers should know that the full-text-IP-license agreements in ktMINE are being used by transfer pricing specialists and taxing authorities throughout the world to find relevant comparables, as over 70% of the agreements involve territories outside the U.S. Having access to the full text, having the ability to find and eliminate related-parties’ agreements, utilizing the analysis center to offer an immediate statistical breakdown of a given search set of agreements, and being able to completely document the research are a few of the reasons why.

Growing trend towards physician-inventors assigning IP rights to employing hospitals

Valuation analysts in healthcare need to look for technology transfer arrangements between physicians and hospitals.  Just as researchers at labs and universities assign their invention rights to their employing institutions, there is a growing trend in non-academic hospitals to include the assignment of IP rights in physician employment contracts.

On their website, the Edwards County Hospital in Kinsley, KS publishes their policy:

Standard 6.5 – Intellectual Property Rights and Obligations
Any work of authorship or invention created by an employee during the scope of his or her employment with Edwards County Hospital shall be considered the property of Edwards County Hospital, including any patent, trademark, copyright, trade secret, or other intellectual property right in such work of authorship or invention.  Employees shall assist Edwards County Hospital in obtaining and enforcing intellectual property rights in their works of authorship and inventions, while employed by Edwards County Hospital and thereafter.

It’s not unusual for a physician or doctors group to have invented a medical device, for example. Analyst due diligence should include a look at all contracts between doctors, doctors groups and hospitals, confirming and clarifying IP rights ownership. BVR offers a complete webinar series on healthcare valuation.

Priority examination back on track at USPTO

Now that patent reform is a reality, and with it renewed agency funding, USPTO has put fast tracking back in play. IPVW discussed what this means to filers back in April.  To participate in the “Track I” program, applicants have to fulfill the following requirements:

• File a new original utility or plant non-provisional application under 35 U.S.C. § 111(a) on or after September 26, 2011 (the procedure does not apply to international, design, reissue, or provisional applications, or reexamination proceedings, but can be used for continuing applications);
• File an application that is complete under 37 C.F.R. § 1.51(b), including the oath or declaration, and payment of the filing, search, and examination fees, any applicable excess claims fee, and any applicable application size fee at the time of filing;
• File the application via the Office's electronic filing system (EFS-Web);
• The application cannot contain more than four independent claims and thirty total claims or any multiple dependent claims;
• Request prioritized examination (preferably by using Form PTO/SB/424); and
• Pay the required fees for requesting prioritized examination at the time of filing (i.e., the prioritized examination fee set forth in 37 C.F.R. § 1.17(c), the processing fee set forth in 37 C.F.R. § 1.17(i), and the publication fee set forth in 37 C.F.R. § 1.18(d)).

Litigator offers succinct tips on protecting trade secrets

Last month DuPont won a $919.9M verdict against Kolon for willful and malicious misappropriation of trade secrets. Michael Songer from Crowell & Moring LLP, who represented the plaintiff, offered three suggestions to companies wishing to reach a defensible level of trade secret protection:

1. Secure all company computers
2. Limit employee access to sensitive information through technology
3. Clearly communicate and reinforce company expectations with respect to sensitive information

Opting to go the trade secrets route rather than patenting does not mean a company has to give up on IP monetization. Several full-text examples of how organizations add trade secrets to patent licenses or license trade secrets and knowhow alone are found in BVR’s Licensing Trade Secrets.

Upcoming Events

Reputation: Business
Case For IP Professionals
October 13, 2011
10:00am - 11:15am PT Featuring: Dr. Nir Kossovsky