The UK government has proposed a new initiative called the “Patent Box,” designed to foster UK-based innovation and development, and enhance the competitiveness of the UK tax system. And, as an advantageous bonus for clean technology companies, the Intellectual Property Office is fast-tracking clean technology patents through to grant in 12 to 18 months, allowing companies to start claiming the tax relief sooner.

Mintz Levin Attorneys Anne Campbell and David Wraige recently published an article on the implications of the Patent Box in Cleantech Business News. As Anne and David explain in “How You Can Claw Some Money Back from the Taxman,” the key benefit to those businesses eligible to take advantage of the Patent Box initiative is a significant reduction in corporation tax paid on qualifying profits. Specifically, profits earned from patented products developed in the UK will be subject to taxation at an effective rate of 10% by 2017, rather than the current 22%.

The tax relief will be applicable to the profits on a whole product, rather than just the aspect of a product covered by a patent. For example, “relief might be given for profits on a whole wind turbine even if only the blades themselves are patented.”

Mintz Levin identifies the Patent Box initiative as a potential “game changer” in the realm of IP law and business development. It introduces new ways to gain value through patents, even if the patent does not cut out market competition but instead has been drafted more narrowly purely for Patent Box purposes, thereby possibly lowering costs. As long as the reduced exposure to corporation tax covers the cost of obtaining the patent, then the patent has paid for itself. Of particular note, companies operating in fast-moving markets where a technology could become obsolete shortly after a patent is granted will not lose out. The tax relief could still cover the cost of obtaining a UK patent, despite the short lifespan.