This article is part 3 of a series of 5 articles relating to Patent Box.
Are you eligible for Patent Box?
Patent Box can provide a generous relief of Corporation Tax. In order to be eligible for Patent Box, HM Revenue & Customs’ guidance on Patent Box specifies that you can only use the Patent Box if your company:
- is liable to Corporation Tax;
- makes a profit from exploiting patented inventions;
- owns or has exclusively licenced-in the patents; and
- has undertaken qualifying development on the patents 1.
Further details regarding Patent Box eligibility can be found – Use the Patent Box to reduce your Corporation Tax on profits – GOV.UK. We typically recommend discussing Patent Box with your accountant.
What if my company is part of a group?
HM Revenue & Customs’ guidance on Patent Box specifies that if a company is a member of a group, it must:
- actively own the patented invention;
- take a significant role in managing its whole portfolio of eligible patents.
Actively owning the patented invention requires the company to have either developed its IP portfolio itself or be actively managing it 2.
What is a licence?
An owner of a patent (e.g., a licensor) may allow someone (e.g., a licensee) to do something which, if done in the absence of a licence, would render that person liable to a suit for infringement of the right via a licence 3. In other words, a license may allow a licensee to do something which may otherwise infringe the patent of the licensor without the licensee being liable to a suit for infringement.
What is an exclusive licence?
An exclusive licence is a type of licence. In an exclusive licence, the licensee becomes the only person entitled to make use of the patent in the fields specified in the licence. The patent holder themselves will also be excluded, although they may collect royalties 3.
HM Revenue & Customs’ guidance specifies that for Patent Box purposes, the licence must grant exclusive rights in respect of the patentee’s underlying rights. These rights must be real and substantial.
How can we help?
As specialists in patent drafting and prosecution, we can prepare and prosecute patent applications to help you attempt to take of advantage of Patent Box.
Please get in touch with Thomas Measures – Appleyard Lees or Paul Beynon – Appleyard Lees if you would like to discuss whether your organisation could make use of Patent Box.
References:
1 Use the Patent Box to reduce your Corporation Tax on profits – GOV.UK
Click here for part 4 – Patent Box eligibility – patent jurisdiction and qualifying development
