The US Patent Office

The US Patent Office

June 30, 2011

The US Patent Office is reexamining a patent it issued in 2003 to the Wealth Transfer Group LLC to protect a method the group claimed it invented to reduce gift taxes.

The method involves use of a grant or retained annuity trust or GRAT.

The Wealth Transfer Group sued the CEO of Aetna for patent infringement charging that the insurance company was using the same technique without its permission.

There had been a number of articles in trade papers about how GRATs work before the Wealth Transfer Group applied for a patent. The Patent Office said in a reexamination order in May that it now appears the idea was “prime facie unpatentable.”

Meanwhile, Congress is moving to bar patents for tax strategies. The Senate voted 95-5 in March and the House Judiciary Committee voted 32-3 in April to ban such patents. Patents would still be allowed on software for preparing tax returns and making tax filings.

Keith Martin