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IBA: Indiana Patent Owners Not Interested in Saving Money?

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By Cedric A. D’Hue, D’Hue Law, LLC

Indiana Code § 6-3-2-21.7 aims to encourage innovation by giving Indiana entrepreneurs and small businesses a break on Indiana state income tax. Several articles and blog posts initially notified the public about this unique Indiana tax benefit. A recent posting argued that all indications suggest this law is underutilized, essentially saying that Indiana patent owners are leaving money on the table. While I agree with some of the initial indications, I am encouraged by increased use of the law.

In my devotion to this law, I researched Indiana-based patents which may qualify for the Indiana patent income tax exemption. My search criteria involved identifying U.S. utility patents issued in the year 2008 to at least one Indiana individual or Indiana based business. My search criteria sought to exclude patents owned by large Indiana businesses or non-Indiana based businesses.

From this labor of love, my informal research identified two hundred and thirty seven (237) relevant Indiana based patents. It is reasonable to hypothesize that the law is underutilized when there are 237 potentially relevant patents and only ten Indiana taxpayers taking advantage of the law.

There are several reasons why so many patents might qualify for the exemption but only ten Indiana taxpayers took advantage of the law. First, it is unknown how many Indiana patent owners are aware of the tax law advantage. Second, I don’t know if each of the ten Indiana taxpayers utilized one or more patents when claiming their exemption.

Several factors might cause Indiana patent owners to not take advantage of this tax law. Not all U.S. patents immediately generate income. Another reason could be the cost associated with compliance of this law. For example, determination of fair market value of the licensing fees or other income generated from the sale of a product covered by the patent could easily exceed the tax savings provided by the first years of patent income. Intangible asset valuation firms may choose to charge $7,500 to $8,000 for an uncertified patent valuation and $20,000 to $25,000 for a certified patent valuation. A third reason is there can be a several year lag between filing a patent application and issuance of a U.S. patent. After notification about this unique tax benefit, Indiana entrepreneurs or small business owners may have filed for patent protection but have yet to receive an issued U.S. utility patent.

As illustrated in the Table, the sum of claimed exemptions almost doubled from 2008 to 2009 during one of the most challenging eIBA-chart-2col.jpgconomic environments since The Great Depression. The increase has been encouraging. In my opinion the almost doubling indicates increased utilization in this unique Indiana tax benefit. I am interested to see if a pattern emerges and the increase continues upward for 2010.

In conclusion, the initial number of Indiana taxpayers utilizing this unique tax benefit seems to be small. Immediate and optimal use of this law would provide maximum benefit. Realistically, we may not see the full impact of this unique Indiana law for several years. Let us make the most of this opportunity by: (1) ensuring that all Indiana entrepreneurs and small business owners are aware of this exemption, (2) increasing our reporting on this law and continuing to evaluate its benefit to Indiana, and (3) assisting Indiana patent owners to take advantage of this unique tax benefit.•

Cedric D’Hue is a patent attorney and sole member of D’Hue Law LLC (www.dhuelaw.com). The opinions expressed in this article are those of the author.
 

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  1. Video pen? Nice work, "JW"! Let this be a lesson and a caution to all disgruntled ex-spouses (or soon-to-be ex-spouses) . . . you may think that altercation is going to get you some satisfaction . . . it will not.

  2. First comment on this thread is a fitting final comment on this thread, as that the MCBA never answered Duncan's fine question, and now even Eric Holder agrees that the MCBA was in material error as to the facts: "I don't get it" from Duncan December 1, 2014 5:10 PM "The Grand Jury met for 25 days and heard 70 hours of testimony according to this article and they made a decision that no crime occurred. On what basis does the MCBA conclude that their decision was "unjust"? What special knowledge or evidence does the MCBA have that the Grand Jury hearing this matter was unaware of? The system that we as lawyers are sworn to uphold made a decision that there was insufficient proof that officer committed a crime. How can any of us say we know better what was right than the jury that actually heard all of the the evidence in this case."

  3. wow is this a bunch of bs! i know the facts!

  4. MCBA .... time for a new release about your entire membership (or is it just the alter ego) being "saddened and disappointed" in the failure to lynch a police officer protecting himself in the line of duty. But this time against Eric Holder and the Federal Bureau of Investigation: "WASHINGTON — Justice Department lawyers will recommend that no civil rights charges be brought against the police officer who fatally shot an unarmed teenager in Ferguson, Mo., after an F.B.I. investigation found no evidence to support charges, law enforcement officials said Wednesday." http://www.nytimes.com/2015/01/22/us/justice-department-ferguson-civil-rights-darren-wilson.html?ref=us&_r=0

  5. Dr wail asfour lives 3 hours from the hospital,where if he gets an emergency at least he needs three hours,while even if he is on call he should be in a location where it gives him max 10 minutes to be beside the patient,they get paid double on their on call days ,where look how they handle it,so if the death of the patient occurs on weekend and these doctors still repeat same pattern such issue should be raised,they should be closer to the patient.on other hand if all the death occured on the absence of the Dr and the nurses handle it,the nurses should get trained how to function appearntly they not that good,if the Dr lives 3 hours far from the hospital on his call days he should sleep in the hospital

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