Experts Warn Patent Tax Plan May Undermine Innovation, Investment

Bita Rahebi spoke with Daily Journal about the Administration's proposed patent tax plan, which would impose an annual fee of 1% to 5% of a patent's estimated value. Bita noted, "As taxes necessarily increase the costs of doing business, enactment of this proposal likely will discourage investment in patent rights." She further noted that the plan could decrease innovation or push companies toward alternative forms of intellectual property protection, such as trade secrets. Bita also observed that the proposal might incentivize patent holders to undervalue their portfolios, potentially leading to lower investment and, as a side effect, fewer infringement cases if lower valuations result in reduced damages awards.

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