The UK Government has unveiled a new tax break scheme, Patent Box, for corporations that use patents — either through owning the patent or being the exclusive licensee.

You can only benefit from the Patent Box if your company is liable to Corporation Tax and makes a profit from exploiting patented inventions.

Your company must also own or exclusively license-in the patents and must have undertaken qualifying development on them. You can read more about exclusively licensing-in patents later in this guide.

If your company is a member of a group, it may qualify if another company in the group has undertaken the qualifying development.

The Register reports that there has been some controversy over this with potential beneficiaries ecstatic over the prospect of a windfall from the tax man because Corporate Tax drops from 28% to 23% and revenue from patents will be taxed at only 10% starting in April 2013. Others are, quite reasonably, concerned that this could lead to a wave of trivial patents being filed, favor big businesses over small businesses, and distort research priorities.

Given the cost of filing a patent and the increasing frequency of litigation over patents, they’ve got a point. The dangers are obvious: patents are being increasingly broadly written and the consequences of trolling costs upwards of $29 billion a year in the USA. The epic fights over software between big-name companies like Apple, Google, Microsoft, and Oracle may be amusing to read about but people can and do get put out of business by bad patents. Britain is a member of the European Union, where there is a push to introduce the Unitary Patent alongside a new patent court. This would possibly open the floodgates for the kind of patent insanity we've been seeing in America — and perhaps make things even worse.
The idea behind Patent Box is that businesses will put the tax money they save into R&D, fueling further innovation and further patents, but we all know what actually happens in these cases: they end up litigating over patents and stifling actual innovation because the patent itself is the product. And since there’s very little economic evidence that patents lead to greater innovation, this is just creating massive incentives for patents, not for innovation. It’s a stupid idea to create a tax dodge for big players without doing anything to actually encourage innovation.

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The European Union has been secretly negotiating a free trade agreement with India since 2007 that is worryingly similar to ACTA. Intellectual property rights enforcement would include border detention and seizure measures of goods being imported by India, exported by India or in transit via India’s ports or airports. This could affect the generic drugs that India produces for its people, as we noted last month. The European Union is eager to wrap the agreement up by the end of the year, according to Belgium’s Deputy Prime Minister and Trade Minister Didier Reynders. He wants to gain access to public procurement, chemicals and pharmaceutical products, health care, technologies, life sciences, renewable energy, and urbanization. This sounds peachy till the matter of India’s arbitration notices is considered. As public interest NGO Madhyam states,

All Indian IIAs (International Investment Agreements) contain a broad asset-based definition of investment stating that investment means every kind of asset. This broad definition is then followed by an inclusive or non-exhaustive list of assets, which includes direct investment, portfolio investment, intellectual property rights, rights to money or to any performance under contract having a financial value, business concessions conferred under law or contract. Such a broad definition of investment expands the jurisdiction of IIAs to virtually cover almost all areas of investment.

Fair and equitable treatment (FET) has emerged as one of the most litigated issues in investment treaty arbitration. At the heart of this controversy is the meaning of FET. Almost all Indian IIAs contain the FET principle without providing much guidance regarding its meaning. Thus, determining the content of FET is left to the discretion of investment treaty arbitration tribunals.

This is the problem: foreign corporations go in with promises of investment opportunities and exploit the people till the government pushes back, then the foreign investor takes them to an international trade court.

The stumbling block at the moment is that India wants the EU to ensure free mobility of professionals without restrictions such as experience whereas the EU wants greater commitment by India to allow foreign investment in services such as retail, legal and postal. Allegations of the existence of a ‘Kashmir center’ run by anti-India elements in Brussels aren’t helping. Meanwhile, opposition to the treaty is mounting from unions, international NGOs, and David Martin MEP, rapporteur for the European Union’s International Trade Committee, whose recommendations helped to pull ACTA down in July.

When will they learn to stop negotiating treaties that only benefit big business in secret? Opposition to this treaty will continue to grow as more details emerge.

Though the specific process differs from country to country, international agreements are generally negotiated and signed at the highest levels of government, with input from everyone else filtering up (in theory) through the hierarchy—at least until you get something like ACTA, where the public rises up en masse and essentially overrides the whole system. One thing that you don’t often see is municipal governments standing up to take a direct role in international negotiations—but that’s exactly what’s happening now in Canada, where cities are seeking to avoid an ACTA-like situation by asking to opt out of the Canada-EU Trade Agreement (CETA) at the municipal level.

The effort is being led by The Council of Canadians, a social justice group which is working to persuade cities, towns, and municipal authorities all over Canada to request exemption from CETA. Their core concern is about the agreement’s procurement chapter, which sets down rules about how governments and other public bodies can spend money on goods and services, and which they fear will unduly restrict municipalities:

For example, new rules in CETA on how public bodies spend money would:

• Prohibit municipalities from putting buy local or buy Canadian preferences on contracts, or requiring that bidders use some portion of local or Canadian goods, services or labour. This would end the ability of municipalities to use procurement as a local economic or social development tool.
• Prohibit municipalities from using public spending to create or support a market for innovative goods and services, including green technologies, if the effect would favour Canadian producers or attract investment to Canada.
• Prohibit municipalities from spending public money in ways that support sustainability, for example through buy local food policies like the one Toronto passed to reduce emissions from food miles.

As long as municipal governments are part of the CETA deal, these prohibitions will apply to local purchases. We need to make sure cities, towns, school boards and hospitals are not bound by these unnecessary rules.

So far, over 30 local governments representing over 5.5 million people have joined the exemption campaign and another 30 to 40 municipal councils, school boards or associations have asked for more information and more input in the negotiations. Unfortunately, as is common with these situations, such concerns have been largely brushed off in a weak damage control effort by the federal government. Assurances from the Candian Foreign Affairs and International Trade Ministry on the Myths and Realities page are reminiscent of the EU's ACTA Facts, and the Council of Canadians have a page that debunks them. International trade strategist Peter Clark laughs off the fears Canadians have of corporate control of their water services.

CETA is not about diverting Canada’s lakes and rivers – which would not do Europeans much good in any event because we have no common borders… There is no requirement to privatize services which do not compete with private entities and do not operate on a commercial basis.

There are good reasons for the municipalities' concern about the investors' clauses, but Clark just tells them not to worry their pretty little heads about it and run along. Stonewalling and secrecy are not the way to build confidence in the benefits of CETA.

There's always something interesting to read here at Techdirt, so picking out favorite posts, even for one week, is a tough job. The stories I've been following have histories and watching them unfold has been fascinating and fun in equal measure.

On the political front we've had a roller-coaster year so far with the SOPA/PIPA and ACTA takedowns in which we proved that pressure works. Techdirt has been instrumental in explaining the ins and outs in an accessible way — and giving us the heads-up when we needed to know that SOPA sponsor and internet punchbag Lamar Smith was up to his old tricks again, sneaking SOPA into legislation in pieces. Should we call the IPAA SOPA-Stein? It's got the monster's feet sewn on in the form of IP attaches, who would move from USTPO to the Department of Commerce, create a new agency, and spend taxpayer money to expand IPR maximalism via the diplomatic corp.

Meanwhile, the EU Trade commission has been celebrating Greek culture by copying an idea from the ancient poet Homer's account of the Siege of Troy. Good job it's out of copyright! Yes indeed, it seems they've found the story of the Trojan Horse appealing enough to put into practice as CETA, the idea being to sneak thirty warriors the IP chapter of ACTA into the text, as described by Canadian internet law expert Dr. Michael Geist. Thankfully, we weren't caught napping and in the damage control efforts that followed the inevitable outcry, it emerged that although they haven't changed the text of the Canadian-European Trade Agreement, they have, or something. We don't know for certain because they won't let us see the text, but don't you worry your pretty little heads about it. Move along, there's nothing to see here. Apart from the most clueless column of the week, if you want a good laugh.

Undeterred by the demise of ACTA, the USTR has been working away on the Trans Pacific Partnership in the teeth of public opposition. Their softening stance on copyright to recognize the exceptions and limitations we need to get things done online may yet be a sign that they're starting to listen to us, but don't hold your breath; they still won't show it to Congress or the new partner nations Mexico and Canada.

The Oatmeal/Carreon punch-up has provided much amusement and we've got through a lot of beer and popcorn watching the saga unfold. Website owner Matthew Inman made good on his promise to photograph the money fans had donated to the Bearlove fundraiser on Indiegogo and send it (the photo, not the money) to Funnyjunk with a hilarious picture of Funnyjunk's mother seducing a bear.

Photo scenes included an image of Funnyjunk's mother literally made of money and the letters FU, which I'm certain mean something to Funnyjunk. To us it means, "Hilarity ensued." Funnyjunk's deluded lawyer Charles Carreon, whose antics have been alternately angering and cracking us up for the last few weeks, will doubtless not be amused, but will probably claim it as a trophy of his Pyrrhic victory.

Kim Dotcom never seems to be out of the news. The colorful internet entrepreneur has been the subject of a botched extradition attempt by the American Department of Justice, who, at the behest of the MPAA, shut down popular cyberlocker Megaupload and froze his assets. In a display of breathtaking arrogance, they've tried to conceal their lack of evidence by refusing to let Dotcom or his lawyers see it — apart from one piece of paper, then using siege tactics to use up all his funds to force him to come to the US. The hearing has been put back till March of next year. Dotcom has gambled on the likelihood of an acquittal or even the dismissal of the charges against him in an American court on condition that his funds are unfrozen to pay for his defense.

This week's feel-good story showed the value of social media for helping people out. Jack Russell owner Deirdre Anglin's pet slipped away on Tuesday evening and ended up on a train. Workers noticed that the owner wasn't aboard and took Patch to Pearse St. Station, then took a photo and tweeted, "Lost dog! Boarded at Kilcock at 06.49 this morning, currently being looked after in Pearse Stn. Please ReTweet."

Twitter users kept retweeting the message until Deirdre discovered it and replied. Barely half an hour after the original tweet, Irish Rail announced that they were in the process of confirming the owner and thanked their followers for the retweets. Later on, they posted a reunion picture. This kindness and usage of social media is probably why they've won the Social Media Awards for this year. They deserve to.

Patents and copyright continue to dominate the news. A curious case, in which copyright and trademark infringement were bundled, arose in a New York court where Robert Carpenter from Poughkeepsie, New York, has been ordered to pay the publisher $7,000 in damages for sharing a copy of "WordPress All-in-One For Dummies" on BitTorrent. According to Judge William Pauley, the man is guilty of both copyright and trademark infringement. It's a default judgement since apparently Carpenter didn't show up at court, but as Glyn Moody pointed out, "That's troubling, because it would seem to open the door for anti-counterfeiting measures aimed at tackling serious trademark infringement to be applied routinely to P2P sharing of copyright files simply because they are exact copies of originals."

On Wednesday, Mike Masnick pointed out the egregious hypocrisy of Hollywood insisting that we not profit off the works of others without fairly compensating them, then apparently not lining up to pay Wikileaks founder Julian Assange for his account of the Wikileaks story. In fact, they're going to everyone except the man himself for material for a proposed biopic.

Finally, the copyright landscape is experiencing seismic shifts as the push-back against rampant maximalism continues. In Canada, the copyright reform bill is very close to becoming law, bringing with it some fantastic new fair dealing provisions (while retaining DRM). On Thursday, Leigh Beadon gleefully reported that the Supreme court published five separate judgements in cases related to tariffs and royalties, and each of which contains significant victories for smarter copyright law.

Meanwhile, here in Europe, the European Commission has proposed bringing in a new directive to reform music licensing. Copyright maximalist Marielle Gallo, who was instrumental in gutting a proposal on orphan works put forward by the EU Commission earlier this year, is going to be the rapporteur for this, but if we put enough pressure on the JURI Committee members there's a good chance we can get some decent legislation through this time.

Well, that's it from me, enjoy the weekend — and the excellent posts here on my favorite tech blog.

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