Patent Exchange

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Strategic Property
Exchanges, LLC
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1031 Exchanges of Patents

Intellectual property has become tremendously important in recent years. Some of the most important assets for many public and private companies are intellectual assets such as patents, trade secrets, copyrights, trademarks and software.

Patents are exchangeable under federal tax law. However, a 1031 exchange of patents is part of a larger corporate strategy to effectively utilize R&D budgets, reorganize the mix of technology within the portfolio, reduce (non deductible) federal income tax expense, reduces the overall cost of developing and maintaining the patent portfolio, boosts shareholder value and creates a sustainable competitive advantage for corporations.

In this example, suppose the hypothetical case that adding one million dollars to TF2 will move it slightly to a medium/high relative patent growth position (a) while the same investment in TF1 will shift it from a weak to a medium relative technology share (b). Also, the same investment amount will shift TF3 and TF4 to a slightly low/medium relative patent growth and weak/medium relative technology share position (c).

With respect to the example, the best value creation for the company is the investment in TF1. In the same way, this map could be helpful to determine where to disinvest or license R&D. For example, if investing the same one million dollars in TF3 or TF4 will produce a little change in its relative patent growth and relative technology share, then Company A might decide to redirect the investment to another, more profitable, technology field, such as TF1 or TF2.

Depend upon Strategic Property Exchanges LLC and our Board Certified Tax Attorneys to guide you through your exchanges of patents, including purchase and sales as part of an ongoing trade or business, or as a separate transaction, licensing, deferred payment sales and contingent payments for patents.

Kind thanks for the above example to THE PATENT PORTFOLIO: A STRATEGIC MANAGEMENT TOOL

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