http://www.abanet.org/tax ABA Section of Taxation Homepage en-us http://www.abanet.org/tax/images/abatax06logo.gif http://www.abanet.org/tax 90 36 http://www.abanet.org/tax/patents/articles/taxstrategypatents.pdf There have been several important developments with respect to tax strategy patents this year, including: the settlement of the so-called SOGRAT patent case (Wealth Transfer Group v. Rowe); the call by the American Institute of Certified Public Accountants (AICPA) for legislation to "eliminate the harmful consequences of tax strategy patents;" the recommendation of the American Bar Association Section of Taxation that a new category of "reportable transaction" be established for transactions that use patented tax strategies; and the introduction of legislation by Senators Levin, Coleman, and Obama that would prevent the U.S. Patent and Trademark Office (PTO) from issuing patents for "inventions designed to minimize, avoid, defer, or otherwise affect liability for Federal, State, local, or foreign tax." As these developments unfolded, the number of published tax patent applications increased to 84 and the number of tax patents granted increased to 53.2 These figures may, however, significantly understate the actual number of applications and grants due to the rules governing publication of applications and the manner in which granted patents are classified by the PTO.3 The settlement of the SOGRAT patent case is of particular interest given the case's role in bringing the issue of tax strategy patentability to the attention of tax practitioners. Prior to this case, few practitioners had given much, if any, thought to the fact that tax strategies were being patented or that the advice they provided to clients in the normal course of practice might infringe upon a patent thereby exposing themselves and their clients to potential liability. The settlement came as a disappointment to those who had looked to the case as a vehicle for reexamining the issue of the patentability of tax strategies and has, as a practical matter, reinforced the in terrorem affect of the SOGRAT patent.