Congress Trying To Make It Legal To Ignore Tax Planning Patents

from the wrong-approach dept

Tue, Jun 24th 2008 9:25am — Mike Masnick

We've written a few times about the rush to patent various tax strategies. That, by itself, should be evidence enough of some of the problems with the patent system. However, rather than deal with those larger problems, it appears that our Congressional Representatives are trying to take the cheap way out: creating a special exemption that would exempt taxpayers and tax preparers from risking infringement should they use any of these "patented" tax strategies. While this bill may be well-intentioned, like the attempt to allow banks to ignore a questionable patent on check scanning, it's the wrong approach. Rather than dealing with the root causes of problems with the patent system, these bills look to paper over the manifestations of those problems. In the long run, such laws (if they become law) would only make the system worse. It's nice that Rep. Rick Boucher (who often is on the right side when it comes to intellectual property issues) recognizes that tax preparation patents are a problem -- but this isn't the way to solve them.

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Filed Under: congress, patents, rick boucher, tax planning, tax strategies

24 Comments

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paintballbob, 24 Jun 2008 @ 10:29am

It seems they will procrastinate as long as possible to avoid reforming the patent system. Why can't they just buck up and do it already?
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sehlat, 24 Jun 2008 @ 10:30am

Why "papering over" problems benefits Congress
Because that way they can get campaign contributions from the groups affected by the current system. It's rather like being able to demand money for an OS hotfix, rather than cleaning up the screwy W*****s design and code.
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Anonymous Coward, 24 Jun 2008 @ 10:30am

Have you ever seen a patent you believe is new, useful, non-obvious, comprehensive in describing the invention, properly claimed, not abusively asserted, and meets your definition of "promotes progess"?
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Anonymous Coward, 24 Jun 2008 @ 10:53am

"We've written a few times about the rush to patent various tax strategies. That, by itself, should be evidence enough of some of the problems with the patent system."

Why are tax strategy patents "evidence...of some of the problems with the patent system."?

"...deal with those larger problems..."

What larger problems?

"...attempt to allow banks to ignore a questionable patent on check scanning..."

Why is that patent questionable?

"...root causes of problems with the patent system..."

What are these root causes you mention?

"...Rick Boucher (who often is on the right side when it comes to intellectual property issues..."

How can one tell is someone is on the "right" side as opposed to the "wrong" side?
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Steve R. (profile), 24 Jun 2008 @ 11:01am

Face Time
Last night I was listening to talk radio. Evidently, the Mayor of Los Angeles was able to get a quickie certification to perform marriages so he could grandstand the "first" gay marriage in Los Angeles. Needless to say, someone who actually jumped through all the hoops to obtain a marriage certification stated how irritated he was by this "short-cutting".

Politicians claim to tackle the "big" issues, but as Mike and the other posters have pointed out the politicians are not really interested in solving our problems. They simply project an appearance that they are being proactive so they can look good (face time) before a constituency. Smoke and mirrors.
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Chronno S. Trigger, 24 Jun 2008 @ 11:10am

Re:
"How can one tell is someone is on the "right" side as opposed to the "wrong" side?"

It's actually quite easy when one pulls one's head out of one's ass.

"Why are tax strategy patents "evidence...of some of the problems with the patent system."?"

Why would you be able to patent a tax strategy? How can you patent a strategy?

"What larger problems?"

That the patent system is far to easily abused at the moment?

"What larger problems?"

The linked to article makes a vary good argument for that

"What are these root causes you mention?"

Like patents aren't being reviewed by anyone that actually knows what the patents are about. The patents are overly broad and cover things far outside what the original "invention" was. The patents are used on items that were created by others long before the patent was filed. The list goes on.
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Anonymous Coward, 24 Jun 2008 @ 11:24am

Re: Re:
Since mine has never been there, I have never had the need to pull it out. Perhaps you have had a different experience.

The linked articles, like many of the comments in your reply, are based upon broad generalizations. Specifics are always a nice thing to have.
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Chronno S. Trigger, 24 Jun 2008 @ 11:43am

Re: Re: Re:
Broad generalisations like what? Like the patent system is too easily abused at the moment? Like it's too easy to get an overly broad patent that covers devices not thought up in the inventing process? Like the fact that the patent system was never intended to protect a strategy?

I may not be siting specific patents but the simple fact that you can patent a tax strategy should point to at least one problem that will probably lead to others.
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Chronno S. Trigger, 24 Jun 2008 @ 11:47am

Re: Re: Re: Re:
PS: Did anyone else notice that this law would leave that patent pretty much unenforceable? If you are using the patented tax strategy you must be a taxpayer or tax preparer.
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Anonymous Coward, 24 Jun 2008 @ 12:00pm

Re: Re: Re: Re: Re:
So the real solution is it invalidate the patent.
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Tony, 24 Jun 2008 @ 12:05pm

Root causes
"Rather than dealing with the root causes..."
That's not just politicians - that's humanity in general.
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Anonymous Coward, 24 Jun 2008 @ 12:18pm

Re: Re: Re: Re:
It is not a "strategy", but a "method", and methods are specified as being within the scope of the patents laws.

If anyone thinks it is easy to get a patent, they have likely never gone through the process. If there is a problem with examining patent applications, it primarily lies with the quantity and quality of information available to patent examiners for them to determine the prior art and consider the patent's claims accordingly.
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Anonymous Coward, 24 Jun 2008 @ 12:21pm

Re: Re: Re: Re: Re:
Proposed legislation reads quite differently, and the "unenforceability" provisions are limited.
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Mike (profile), 24 Jun 2008 @ 12:32pm

Re:
Why are tax strategy patents "evidence...of some of the problems with the patent system."?

Limiting the methods by which people can pay their taxes clearly has nothing to do with promoting the progress.

What larger problems?

Where to begin? The fact that repeated studies have shown the patent system hinders, rather than helps, innovation. The fact that the patent system is used to limit, rather than enhance new innovations. The fact that the patent system distorts the market, often in dangerous ways. The fact that there is no evidence showing why a patent system is actually useful in promoting the progress... and on and on and on.

http://www.techdirt.com/articles/20080318/004156568.shtml

Why is that patent questionable?

Scanning checks is an idea that has been discussed for ages. It was the natural progression of the marketplace. No patent was needed to create incentives for that innovation -- and now that patent is holding back that innovation, by limiting a rather obvious process and extorting monopoly rents for it.

What are these root causes you mention?

Granting widespread monopolies in so many cases, rather than in the rarest of cases, as was originally intended.

How can one tell is someone is on the "right" side as opposed to the "wrong" side?

Those who actually look at whether or not the IP system is doing what it's intended to do: promote the progress. If they're looking at evidence and seeing that it is not, and therefore should be fixed, that would suggest they're on the right side. Those who focus on the legal aspects or assume that any IP system is "good" are on the wrong side.
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Jason (profile), 24 Jun 2008 @ 1:25pm

Re: Re: Re: Re: Re:
Inasmuch as we're talking about a process of tax planning and preparation, one of two things is going on - both of which invalidate any tax strategy/method as patentable:

1. It involves some aspect of game theory, as such, whatever is inventive about it is reduced to strategy, and therefore cannot be reduced to practice, ergo not patentable.
OR
2. It involves no game theory and is nothing more than a the result of a long, methodical process of optimization within an already existing, defined, codified, and volumized system of constraints, which means any qualified accountant could derive the same constraints and perform a duplicate process of optimization, and therefore it fails to be non-obvious, ergo not patentable.
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Anonymous Coward, 24 Jun 2008 @ 1:49pm

Re: Re: Re: Re: Re: Re:
Sir, you have already put more thought into the issue than the examiner that granted the patent.
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Jason (profile), 24 Jun 2008 @ 2:15pm

Re: Re: Re: Re: Re: Re: Re:
Yes, well....I had 4 1/2 minutes to kill.
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Anonymous Coward, 24 Jun 2008 @ 5:44pm

Re: Re:
Maybe I can address some of your points if you give an answer to post #3.
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stv, 25 Jun 2008 @ 12:00pm

larger problems
The “larger problems” you refer to do not exist. Identify them and I will respond in opposition. Referencing Boucher signals your lack of understanding of the matter. He is in part responsible for this patent bill before Congress that will only abet patent theft. Stv
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Mike (profile), 25 Jun 2008 @ 6:54pm

Re: larger problems
The “larger problems” you refer to do not exist.

This from the guy who has repeatedly insisted that any big company accused of of patent infringement is a thief.

Identify them and I will respond in opposition.

Um, how about the fact that study after study after study has shown that patents do not increase innovation? How about the fact that studies have shown how the patent system distorts markets and hinders the efficient market from working.

We can start with those.

Referencing Boucher signals your lack of understanding of the matter.

"Referencing" Boucher? The bill is sponsored by Boucher. Who else was I supposed to "reference"?

He is in part responsible for this patent bill before Congress that will only abet patent theft. Stv

What does that have to do with anything?

I'm amazed at the dittoheads who support stronger patent laws like yourself. To you, everything is black and white: big companies are thieves. Anyone who notes problems with the patent system are in the pay of these big companies. Anyone who supports patent reform of any kind is obviously clueless.

I understand your position, but until you can back it up with actual evidence or relevant facts, please go away.
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Anonymous Coward, 25 Jun 2008 @ 9:38pm

Re: Re: larger problems
I just prepared a detailed response to some of your comments. Unfortunately, I was not aware that your blog appears to have a limit on the legth of responses and, hence, over one half of my comments disappeared.

Since I am obviously limited on what I can say, suffice it for me to note that I have read all of the studies you have cited and found them lacking in several material respects. How nice it would be if before these studies were prepared the authors sat down with longstanding practitioners of the law so that facts, cases, and what the law actually comprises were shared in a professionally respectful manner. In my view that would yield papers that would enable the articulation of accurate and relevant economic principles holding the promise of yielding coherent economic principles that could help guide the meaningful development of public policy. Unless and until this happens, lawyers and economists will continue to butt heads...which I believe you would agree is not particularly helpful in the debate.
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Mike (profile), 26 Jun 2008 @ 2:29am

Re: Re: Re: larger problems
I just prepared a detailed response to some of your comments. Unfortunately, I was not aware that your blog appears to have a limit on the legth of responses and, hence, over one half of my comments disappeared.

Um, what? We do not have a limit on the length of response. In fact, we've had some incredibly lengthy responses.

Can you provide any details on the comment that "disappeared"?
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Crat, 26 Jun 2008 @ 3:25am

Re: Re: Re: Re: larger problems
There was an article in a well-regarded publication (Compensation Planning Journal)that stated Boucher's bill would effectively invalidate all patents because tax planning method is too broadly defined and another article stating the Senate bill would provide foreign countries such as North Korea the ability to veto US patents. No response from the proponents of the bill months later. This shows that Congress does not understand what they are doing and that they just accept money and legislative drafts from lobbyists with no or little critical review.
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Anonymous Coward, 26 Jun 2008 @ 6:51am

Re: Re: Re: Re: larger problems
What fell off the page were some comments illustrating my the points mentioned in my above post. In particular, I briefly talked about the Bessen et al. book, the Moser paper, and one other by co-authors (their names escape me at the moment). I spotted them the accuracy of their math equations and economic analysis of same, but then went on to note that many of the facts about both the law and how businesses go about making decisions were is some instances inaccurate and in others a bit off the mark.

Many of the issues they address concern matters that are well recognized and understood by attorneys and businessmen alike who have been around this "game" for a long time. I truly believe such economists would find it very illuminating and helpful to work hand in hand with such people, perhaps even adding some as co-authors.

BTW, maybe my comments were lost due to some kind of a hiccup with Internet Explorer 7 and/or Vista. Who knows?
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