To the extent that a patent may be obtained in respect of a proposed invention, there may be considerable advantages in setting up a separate ownership entity for the patent, when granted, and at application stage.

The particular invention can then be licensed either to your own company or to other companies for them to exploit.

If you comply with the taxation requirements and if the royalty fee is commercially justified, the royalty income will be tax free for the holder of "eligible shares" or for the original inventor. This is a very valuable incentive to innovation but it is very important that any developer of an idea (which may become an invention and patentable,) should take early advice in relation to structuring the patent process. This is in order to secure maximum protection, to succeed in obtaining the grant of patent(s) and to derive the optimum tax efficiency from such arrangements.

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