"Fraud with donations of patents"
American companies donate small-value patents to universities and then deduct large amounts of money from these taxes. This says patent expert Gregory Aharonian. The American tax authorities have now tightened the rules. Aharonian makes his statements in the New York Times. He is the publisher of a newsletter (Internet Patent News) and is characterized as an authority in the field of software patents
American companies donate small-value patents to universities and then deduct large amounts of money from these taxes. This says patent expert Gregory Aharonian. The American tax authorities have now tightened the rules.
Aharonian makes his statements in the New York Times. He is the publisher of a newsletter (Internet Patent News) and is characterized as an authority in the field of software patents. The donation of a patent by SBC Communications to the University of Texas last month aroused Aharonian's interest. This patent was valued at 7.3 million dollars and related to anti-virus software.
According to Aharonian, "this patent stinks like a dead cow in the Houston canal on a hot summer's day". He says that the patent should never have been granted because earlier inventions were not included in the patent application. According to Aharonian, the Dutch company Tunix already sells similar anti-virus software, which was previously invented.
Aharonian is not alone in his suspicions about donating patents that are overvalued. For example, the Internal Revenue Service, the American tax authorities, has recently tightened the guidelines for donating patents. There will be more restrictions, according to the IRS. The tax benefit for companies that donate a patent can increase significantly. Anyone who gives away a patent worth ten million dollars will receive 3.8 million dollars back from the tax. The tax benefit that SBC would book, according to Aharonian, is around two million dollars.
The problem with such donations is that it is difficult to determine the value of a patent. The University of Texas has the SBC patent for a dollar in the books, until the commercial value is proven, it says, while the company itself appreciated the knowledge at 7.3 million dollars. In a reaction SBC says that the patent is "accurate and valid".
Several companies - including Eastman Chemical and General Motors - have donated patents to non-profit institutions in recent years. Its value would be "hundreds of millions of dollars, " according to the New York Times. In 2000 the university also received a donation from Shell, consisting of equipment and patents, valued at 83.5 million dollars at the time. Since then, the technology has been licensed to TerraTherm, which has paid 335 thousand dollars to the university to use the technology to date.
In the Netherlands it is not possible to donate patents to non-profit institutions and then deduct the value of this donation from the tax, reports the Bureau for Industrial Property, the Dutch patent office.