Ever been told by an admiring client or colleague that you should patent one of your legal techniques? Perhaps you can.

Though the idea isn't any news to patent attorneys, a patent issued on an estate-planning technique known as a Stock option grantor retained Trust, or SOGRAT, has had

the national estate-planning bar buzzing. The patent holder, a Florida estate-planning company catering to high-wealth clients, sued John W. Rowe, executive chairman of the board and former CEO of Aetna Inc., in federal district court for using the technique with the advice of his financial advisers without first obtaining a license from it.

In March, the court dismissed the suit, Wealth Transfer Group v Rowe, No 3:06CV00024 (D Conn), pursuant to a confidential settlement. But the debate the suit stimulated among accountants and estate-planning attorneys survives.

A patent on how to get a patent

The Patent Act of 1952, codified in Title 35 of the United States Code, details in chapter 10 the conditions that must be met for an item to be patentable. In simplified terms, the item must be new and useful, not obvious to a person having ordinary skill in the area covered by the invention, and fully described in the patent application.

The statute prohibits someone who didn't actually invent the item from obtaining a patent. 35 USC section 102(f). Conversely, anyone who does "invent[] or discover[] any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof," and who meets the other conditions of the statute, is entitled to a patent. 35 USC section 101.

As James Toupin, general Counsel of the U.S. Patent and Trademark office, noted in his testimony before the house Committee on Ways and Means on July 13, 2006, the U.S. Supreme Court has identified three subject areas that may not be subject to patents: laws of nature, natural phenomena, and abstract ideas with no practical application. Diamond v Diehr, 450 US 175 (1981).

But, as Toupin noted, the court has also acknowledged that Congress intended "anything under the sun that is made by man" to be patentable under 35 USC section 101. Diamond v Chakrabarty, 447 US 303 (1980). Congress's policy underlying this broad coverage, said Toupin, was to stimulate innovation. And, he continued, subsequent case law established that ideas that are not merely abstract but do contain practical applications may indeed be patentable.

Such ideas include business methods, applications for which, Toupin noted, are to be evaluated in the same manner as any other claimed invention. Milwaukee patent attorney Barry Grossman, who's made presentations on this subject to organizations of estate-planning attorneys, cites some examples of business method patents, many of which now use computer programs.

They include tax preparation software, online dating services, secured credit cards, an Internet one-click ordering system, an airline seat upgrade system, a brokerage cash management account, and a method of collecting data on customers' internet surfing habits. "They can be as varied as someone's ingenuity." There's even a patent on how to get a patent, Grossman comments.

To a patent lawyer's way of thinking, patenting an estate-planning strategy under the Internal revenue Code--or, for that matter, patenting a method of jury selection or other litigation strategy--is not only not astounding but isn't any different from patenting a method used in any business other than law. Pointing to Google and other well-known internet corporations, Grossman observes, "There are lots of very successful companies that don't make products. They deal in intangibles such as software and methods of doing business." In that category also fall law firms.

A legislative solution?

Should legislation be passed to exempt estate-planning strategies, or, more generally, legal strategies, from patent-ability? "only if you don't like the policy," says Grossman, who notes that surgical techniques have been so exempted.

Some in the estate-planning bar would indeed like to see their subject matter exempted. The better question from Grossman's vantage point, though, is whether the Patent office has the information it needs to properly evaluate applications for patents for estate-planning strategies and other business methods for the practice of law.

"A patent on a business method may issue and people are astounded when they find out, saying 'We've been doing business that way for years.' Did the Patent office know that? Maybe some patents shouldn't be issued because they don't meet the statutory criteria."

Chicago attorney Christine Albright, who chairs not only the trusts and estates practice group of the Chicago law firm of Winston and Strawn but also the American Bar Association's Section of real Property, Probate, and Trust Law, has followed the SOGRAT litigation with concern. Though initially reacting in disbelief to the idea that estate-planning strategies might be subject to patents, she now understands that "there's no area of legal practice that couldn't have patents issued."

"That means challenges for lawyers and their firms," she said. "We will have to become knowledgeable about patents issued in our area of the law, which will mean keeping an eye on patents that are published and granted in our industry."

Commenting that business method patents will likely become simply "another factor that will impact on the economics of legal practice," Albright forsees that a market may arise to notify lawyers and law firms of patents issued in their practice area. Lawyers in the 21st century may find subscribing to such services as routine as subscribing to advance sheets--and an equally accepted cost of doing business.

For more, see the ABA's Section of Taxation Task Force on Tax Strategy Patenting's Web page at http://www. abanet.org:80/tax/patents/ and the archived testimony for the July 13, 2006, hearing on Issues relating to the Patenting of Tax Advice before the house Ways and Means Committee at http:// waysandmeans.house.gov/hearings.asp? formmode=detail&hearing=492.