Patent Box could unlock IP from AI

2 min read

As artificial intelligence becomes increasingly advanced, how is AI-generated innovation considered when it comes to intellectual property, asks Mark Westwood - innovation funding consultant at ABGi.

The issue is more pertinent than ever following the case just a few months ago of Thaler v Comptroller General of Patents, Trade Marks and Designs. After Dr Stephem Thaler submitted two patents naming his AI machine ‘DABUS’ as the inventor, the UK Intellectual Property Office withdrew the patents, citing that the machine did not meet the necessary criteria for an inventor. When taken to the UK Court of Appeal, the Court backed the IPO’s decision.

So why does the issue continue to be a point of contention?

IPO consultation is launched: Can AI hold ownership of new patents?

In the conclusion of the case, the Court acknowledged that the law on inventorship remains open to further development. The Intellectual Property Office (IPO) subsequently launched a consultation into the issue on the 29th of October, stating that “Patents and copyright must provide the right incentives to AI development and innovation, while continuing to promote human creativity and innovation.”

How long until the UK names an AI system as inventor on a patent?

Concurrent to the investigation into patent protection for AI-devised inventions, the National AI Strategy was published this September, making the government’s ambition to become a global leader in artificial intelligence clear.

Countries such as South Africa have recently granted successful patents to artificial intelligence systems; with the UK determined not to be left behind in the AI race, changes to the UK Patents Act 1977 may occur sooner rather than later.

How might this change impact innovative UK businesses?

One of the main ways in which a change in UK regulation regarding AI-held patents would positively impact UK businesses would be in regards to Patent Box eligibility.

The Patent Box regime provides an incentive for UK companies to formalise the IP generated from UK-based R&D and commercialise their IP, repatriating the economic benefits back into the UK.

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The UK’s Patent Box regime is among the most favourable in the world; profits earned from patents and intellectual property rights under the Patent Box regime benefit from a reduced tax rate of just 10 per cent; with the imminent 2023 increase in the standard corporation tax rate in the UK from 19 per cent to 25 per cent, the tax advantage of Patent Box becomes even more significant.

If the change in legislation regarding AI-generated patents comes into effect, IP-protected AI innovation will also be eligible for Patent Box, creating the potential for huge savings on profits generated from AI-generated inventions.

UK companies should ensure all their intellectual property is structured to take advantage of Patent Box with immediate effect, including investigating AI creations – but what does this involve?

Get ready for change and plan ahead

  • Make sure you conduct IP reviews at regular intervals. For each element of IP considered for protection, establish a cost/benefit comparison to decide whether or not it’s worth protecting.
  • Review your R&D plans to establish whether any of your products, services or processes could be patented to receive the benefit of the Patent Box regime both now and in the case of future reform.
  • Educate everyone involved in R&D about the importance of IP protection and the risks related to data leakage.
  • Keep a laboratory notebook recording R&D progress to prove precedence in the case of competing patent cases.
  • Look into Patent Box eligibility even if your patent is pending. Companies with pending patent applications can also qualify retrospectively for the 10 per cent rate once the patent is granted, but the Company has to elect into the Scheme for the accounting period in which profits are generated.

How can UK businesses elect into the Patent Box Scheme?

The idea behind Patent Box is simple enough, but electing into the scheme can be complex and usually requires specialist support. Patent Box support services can help provide clarity on legislative changes and their impact on current or future patent box claims.

Mark Westwood - innovation funding consultant, ABGi