- At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
- Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
- Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
- Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
- Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
- In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
- Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
- Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
- We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
- We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
- Our regulatory specialists work alongside Kemp Littles corporate and commercial professionals to help meet their compliance obligations.
- With a service that is commercial and responsive to our clients needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
- At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
- We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
- Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
- We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
- We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
- For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
- Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
- The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
- Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
- Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
- We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
- Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
- Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
- Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
- Kemp Little is trusted by some of the worlds leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
- HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
- FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they dont give away to get you started.
UK Patent Box
a) What will the rules apply to?
The rules will apply to “Qualifying Income”, being a wide range of royalty income, including profits arising from the sale of not just patented products, but products which include patented inventions. Also included are profits from supplementary protection certificates (which extend the protection afforded by qualifying patents) and certain non-patentable rights, such as regulatory data protection.
The 10% rate will also apply to profits arising in respect of products developed, and patents obtained, before that date.
To qualify, the patents must have been granted by the UK Intellectual Property Office, the European Patent Office, or under the law of certain specified EEA states.
b) Who will the rules apply to?
To “Qualifying Companies” – broadly companies which hold (or, in certain circumstances, held) the relevant IP rights or an exclusive licence in respect of such rights.
The rules will also apply to acquired and collaboratively developed IP.
As would be expected, having regard to the stated purpose of the new regime, the rules will only apply to companies or groups who actually create and develop. Those who do no more than finance innovation are not included.
c) How do you determine which profits will fall within the patent box?
- Stage 1 – identify that portion of a company’s profits that are attributable to qualifying income. Luckily, this involves identifying income from patented products rather than attempting to identify income from individual patents. There is also a streaming method for when this standard formula would produce distorted results.
- Stage 2 – identify “residual profits” by deducting a return equal to 10% of certain costs and expenses (to reflect the fact that a certain level of profit would have been realised even without the valuable IP).
- Stage 3 – determine what portion of this residual profit is attributable to the relevant patent (as distinct from profit attributable to other IP, such as the brand). That amount qualifies for the Patent Box.
There is also a simplified regime for companies with residual profits below a certain threshold.
3. The Positives
The general consensus at an industry level appears to be that the new regime is a positive step towards encouraging innovation within the UK (or, perhaps more importantly, keeping IP-rich companies within the UK). Indeed, HMRC claim that they are already getting increasing numbers of multinationals looking at the UK as a preferred place to do their high value investment.
HMRC seem to have shown a different, more inclusive, approach to the consultation process, and have genuinely listened to industry concerns. They made a number of changes to the rules following the initial consultation process. For example, they lowered the multiplier used to determine routine profits from 15% to 10%, which increases the amount of profit which will benefit from the reduced rate.
And although there are a number of advantageous regimes in Europe for business to choose from, comparative to its European equivalents, the new UK regime is quite flexible in certain respects. For example, although the types of IP that qualify are restricted, the patent box will encompass all types of income which relate to that IP.
4. Any negatives?
One concern is that companies who could benefit from the patent box regime are unaware of the administrative requirements involved. For example, for a company with a large portfolio of patents granted by a number of patent offices, simply identifying all of its patents (ones it owns as well as ones over which it has an exclusive licence), and ascertaining which of those patents has been granted by a qualifying patent office, could be a huge undertaking. As could identifying the income from the sale of products incorporating qualifying patents.
These administration requirements could necessitate liaison between corporate departments, with other companies and with outside advisors. This process is inevitably going to take time.
The message here, is not to underestimate the amount of work it will take to be ready for the introduction of the regime next April. To do so could mean missing out when the rules come into force.
Complexity of legislation
This is in many ways linked to the above. The concern is that the (perhaps necessary) complexity of the legislation, and the familiar but ever so slightly different rules regarding, for example, groups and the treatment of losses, will catch companies out, or may in fact deter companies from electing into the regime.
For example, (other than in a group situation) patent box losses are to be carried forward to set against future patent box profits. This leads to the situation where it may be better for a company to delay entry into the regime until such time as it has patent box profits. By way of illustration, for a company with patent box losses in year one, that loss will be carried forward to, at least in part, reduce any patent box profit in year two which would otherwise be able to benefit from the reduced rate.
Again, companies need to be taking advice now on how the new rules are likely to apply to them, and what needs to be done to be ready. The concern is that many companies are not doing that.
Limitation of scope
The regime does not apply to copyright or trademarks in isolation. Design rights would also seem to fall outside the scope of the rules, although they are not specifically mentioned. Furthermore, profits from unpatented trade secrets and most un-patented technology are excluded. This is disappointing, and it has been noted that, in particular, this limitation could make the new rules less accessible to SMEs, whose IP is often unpatented. The hope is that once the new regime is bedded down, there may be scope for its application to be broadened somewhat in this respect.
In the meantime, companies should consider whether to seek patents for items which are currently unpatented. It would also be worth checking whether there is any know-how bundled together with patented products, as this know-how may constitute Qualifying IP.
The requirement of exclusive licensing may also be problematic for some industries, such as Telecomms, in which licensing is generally non-exclusive. It would, therefore, be worth considering drafting licensing contracts to provide, where possible, for exclusivity.
Tapered tax reduction
The 10% rate will only apply to 60% of the qualifying profits in 2013/14, rising to the full 100% in 2017, which seems to be the Government’s way of managing the impact on tax receipts as required in the current financial environment. In fact, this feature does seem to have been accepted as a necessary evil, although undoubtedly it would be more beneficial for the full benefit to be available from day 1.
The introduction of the patent box is undoubtedly a welcome development, which should help UK firms compete with their European counterparts.
Of course, the Patent Box is only part of the story. R&D tax credits remain, and can be used in conjunction with, the new regime. They have also been made more generous, particularly for smaller firms, and are now simpler to obtain.