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I have a thick beard, and I need to shave every day. I also have sensitive skin. When I shave, I cut my face, and I bleed. Clients and co-works (I assume) don’t want to see this nastiness. It’s gross, but there’s not much I can do about it. I have to shave because, at the moment, I do not want a beard. Long ago, I started shaving at night.
Pay up!
I still get nicks and cuts, but it mostly heals by morning. I’ve never met anyone else who does this. I’m thinking I should patent the idea: “Shaving at Night to Avoid Grossing People Out”. I’ll draw little pictures and a flow chart, and then I’ll sue anyone who infringes on my brilliance. Now that I’ve shared that, let’s focus on the AIA, and one of its better subparts.
Under a provision in the America Invents Act (“AIA”), patent on a strategy for reducing, avoiding or postponing taxes are disallowed. Yep. Shifting assets up, down, and all around is no longer patentable, no matter how many trusts, partnerships, or offshore accounts you set up. But it wasn’t as obvious to lawmakers as it should’ve been.
Years ago, the Wealth Transfer Group, a Central Florida law firm, actually from beautiful Altamonte Springs (home of the worst eyesore on I-4) patented “a strategy that involved funding so-called grantor retained annuity trusts or GRATs with nonqualified stock options.” (source) Precisely what a GRAT is neither here nor there. Needless to say, it’s a tool to avoid or defer taxes. The Wealth Transfer Group holds the patent for it – just one of the more than 161 tax patents which have already been awarded by the U.S. Patent and Trademark Office (167 more are pending).
When a man used the GRAT method without license from the Wealth Transfer Group, he got served. Not by the IRS, mind you, but by the patent-holding law firm.
Now, most people never heard of GRATs, but lawyers in the field use them all the time. A patent on them seemed so ridiculous that it was paid no heed. But it was enough that the Wealth Transfer Group received a settlement from the tax-avoiding man referenced above. Such business method patents “are designed to protect a unique process or series of steps for executing a service or business strategy.” (source)
I can see the allure of patenting such a practice. Just think, each time someone shaves at night, I could sue for treble damages, attorneys’ fees, and royalties! Now, I just need the right defendant (here’s to hoping the wealthy have thick beards and sensitive skin).
The courts will decide what effect, if any, the AIA will have on already-issued or pending tax loophole patents. But I think we can agree that even in a widely-maligned (and rightfully so) law, this was a good call.