Don’t mention the ‘P’ word

Patent claim

Patent claim


Mentioning the word patent within the technology community, especially in software can be like bringing up sex, politics or religion at a dinner party.

The controversy surrounding patenting continues to spark much debate in software circles, particularly in relation to whether or not patents are a good idea when applied to the software itself. As a service provider dedicated to helping Australian software and technology companies to access government grants, the issue of patenting often comes up in discussions with our clients in the context of the R&D Tax Incentive.

We should declare up front that when it comes to the patent tug-of-war, our focus is always on what’s best for our clients to ensure they are well positioned to receive maximum benefit from the R&D Tax Incentive. While some clients choose to pursue the patent path, others are firmly in opposition – at Innercode we respect that.

Views on both sides are certainly reflected in global media coverage and the issue of patenting remains on the agenda. Earlier this month, The Wall Street Journal reported that two of the world’s most recognised tech giants Apple and Samsung had called a truce on patent disputes in eight countries, with intentions to push ahead with the most high-profile cases in the US.

A few days later The Conversation went live with an opinion piece ‘Grants aren’t helping Australian tech, but patent reform could’ by Ian Maxwell, Adjunct Professor at RMIT, entrepreneur and consultant in the patent space.

The title of this article grabbed our attention. Firstly, because we believe that while more could be done by the government to help grow the Australian tech industry, programs like the R&D Tax Incentive and the Entrepreneurs’ Infrastructure Programme do provide much needed support. Secondly, we were curious to read on to find out what benefits the author, who according to the disclosure statement owns a part share in a patent brokerage firm, would propose in the space of the R&D Tax Incentive.

In terms of R&D, Maxwell proposes that Australia introduce a ‘patent box’ scheme allowing a tax break to be given to companies for the sale of patented products or services. He suggests that the patent box scheme would work with the R&D Tax Incentive to encourage investment into the development and commercialisation of new technology platforms to a higher quality.

Maxwell acknowledges that care would need to be taken to avoid some of the pitfalls in similar schemes in other countries. Perhaps most notably, to prevent large multinationals ‘taking Australia for a ride’, as per Michael West’s investigation into the Google ‘tax dodge’ published in The Sydney Morning Herald back in June.

In terms of treating patent costs as part of a company’s R&D expenditure, as the R&D Tax Incentive currently stands companies are rather limited in what they can claim with regard to patents. Generally we are only able to claim expenses related to researching other technologies that often occurs as part of the patent application process. We are unable to claim the expenses related to the actual application of the patent itself.

As the patent discussion continues, we’ll be keeping our eye on anything that we believe could affect the R&D Tax Incentive. At the moment we’re working with our clients to wrap-up 2014 claims and helping them get the wheels in motion to prepare for 2015. The earlier you get plans in place, the better position you’ll be in next year to maximise your R&D benefit. It’s never too early to start planning! In the meantime, if you’re having a dinner party any time soon…

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