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US IRS’s request may motivate Japanese government to increase value of Japanese patents

Tax payment

Reportedly, US authorities are pressing Japanese companies to pay taxes on profit from intellectual properties such as data and brand value gained in America. 

US pushes Japan Inc. to pay taxes on IP profit from America

When the idea of such market approach is advanced, patent may also likely become part of the discussion before long. 

In patent practice, we review originating-country and residence of the assignee (owner) of the invention. It is for deciding the first filing country in accordance with export control regulations. We may become to use such information also for deciding tax payment country and amount of the tax. 

For example, how do you think about taxing countries for revenues from patent portfolio sales or licensing? If half of the patent portfolio consists of US patents, should we pay US tax for the half of the sale or licensing? In fact, a patent pool generally considers patented countries on calculating the royalty share for each of licensors. 

There also may be discussion that US patents should be valued higher than Japanese patents, because of their higher value in the patent transaction market. Furthermore, it may be discussed that a US subsidiary should own the US patents, and the revenues from such patents  should attribute to the US company. 

Such an idea is likely to motivate Japanese government to promote or enhance the value of Japanese patents. IP assets in a country where are difficult to use should be valued less. So, we should seriously consider increasing the value of IP assets in our country. 

Thank you for reading. You may be interested in the related article below.

Japan to Strengthen Oversight of Overseas Transfer of Patents

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