The Patent Box was established by the Finance Act and came into force in April 2013. Its main effect is that the proprietor of a British granted patent can claim a reduction in the UK corporation tax paid against profits attributable to products covered by the patent or processes covered by the patent.

Objections were raised to the Patent Box provisions of the Finance Act under fair competition rules. As a result, the existing Patent Box provisions will be revised and closed to new applicants by June 2016. New claimants will continue to be accepted until June 2016. It is suggested that an applicant wishing to take advantage of these provisions should contact their attorney with the object of accelerating grant in order to achieve entry in time. Companies considering applying for patents for this purpose should consider the benefits of applying without delay and ask their attorney to accelerate prosecution to secure grant as soon as possible.  

Many applicants will apply for a UK priority patent and subsequently take advantage of Paris convention priority to file in Europe and elsewhere. In the process, the original British application is often abandoned as a cost saving measure with the expectation that the European application will lead to grant of a British patent in due course. The EPO procedure is notoriously slow, and if starting from now it would be very unlikely that a granted EP(GB) patent would be achieved before June 2016. For this reason applicants should consider continuing and accelerating the British application. Some enterprises may even have filed first in the EPO or PCT. In these cases it may be worthwhile, rules permitting, to file a separate British application to achieve early grant.

The existing Patent Box regime will continue in force to the benefit of claimants after June 2016 until 2021 when it is expected to close completely. However, it is likely that the existing regime will be replaced with a “Son of Patent Box” which addresses the alleged anticompetitive effects of the existing regime. There is cross-party support for Patent Box, which is likely to continue.

One anticompetitive complaint leading to this requirement for change is that claimants may conduct their Research & Development outside the UK and then simply file for patent rights in the UK. This does not succeed in onshoring all the benefits associated with R&D facilities and it is not what the Government intended. Accordingly, the “Son of Patent Box” may be expected to include a requirement that the patentee has researched and developed the invention in the UK (or perhaps in Europe). For many SME’s this would make very little difference as compared with the existing regime.