Hillary Clinton agrees patents be suspended until corporations pay their taxes

Last week The Hill reported that Hillary Clinton promised to use patents owned by giant technology companies as leverage to get them to pay higher taxes. If you listen to the actual exchange between Clinton and a supporter it goes deeper than promising to leverage patents to ensure payment of taxes, rather Clinton agreed that patents should be suspended until companies repatriate foreign profits held in offshore accounts.

The exchange came thanks to a question from the audience at a campaign stop in Sioux City, Iowa, on Tuesday, January 5, 2016. Here was the question and response.

QUESTION: We have major corporations in this country— GE, Apple, many others— that are salting money away offshore. Can’t we use their patents as leverage to make them pay their taxes?


QUESTION: Is that possible?

HILLARY CLINTON: Yes, we can and we will. You know—

QUESTION: We should suspend their patents until they pay their taxes.

HILLARY CLINTON: You are right. You know, American companies have, I think, a couple trillion dollars stashed overseas. Now technically it’s on their books, but they park it somewhere they don’t want to pay their taxes. And I think we have to reform our whole tax code because the way it is working now it is driving companies away, and its driving companies to engage in all these really gimmicky tax games that they are playing. And we have to get a fair, consistent tax program so that corporations pay their fair share just like the wealthy, and that’s what I’m going to try and do.

According to the report the Clinton Campaign did not elaborate on what Secretary Clinton might have meant when she responded that patents would be used as leverage.

hillary-clinton-300It is impossible to know whether or how Hillary Clinton would leverage patents in order to force companies, such as GE and Apple, to repatriate money from overseas and thereby incur enormous tax liability. This may be nothing more than Clinton not properly hearing the question, or all of the question, but it could be much more and should be at least somewhat disconcerting to those in tech companies who are generously funding her campaign (see here and here). Nevertheless, it is deeply troubling that Clinton agreed with the person asking the question when he offered the suggestion that patents should be suspended until taxes are paid.

Is it possible that the United States Patent and Trademark Office in a Clinton Administration might stop issuing patents to companies that refuse to repatriate money to the United States? Is it possible that patents would be withheld from those who more generally are not paying their taxes, or paying “enough” in taxes? Is it possible that already issued patents would become unenforceable or somehow otherwise suspended, as suggested by the above Clinton Q&A? These would be extraordinary steps, not to mention ones without precedent.

There is no legal authority to hold patents hostage as a bargaining chip to force corporations or individual patent owners to pay more or higher taxes, and no authority to suspend patents for failure to pay taxes or repatriate foreign profits. To be legal such a move would require a significant amendment to the patent laws of the United States. There would be enormous administrative burden imposed on those seeking patents and on the Patent Office.

In the question and answer above, Clinton says that the tax code is driving corporations away, but suspending patents or otherwise taking them hostage or somehow leveraging them to ensure taxes are paid or foreign profits repatriated would all but certainly do more to drive corporations away than anything the government has ever done. Indeed, a rule that tied paying taxes, or repatriation of foreign profits to the United States, to obtaining a patent would almost certainly create an extraordinary disincentive to seek a patent in the United States, which itself would lead to a nearly unimaginable parade of horribles at a time that the U.S. economy is nearly wholly reliant on innovation and technology. Holding patents hostage to force higher taxes or repatriation of foreign profits would be an ill-advised, shortsighted decision that would risk the destruction of the U.S. patent system.

While Hillary Clinton’s record on patent matters is not extensive, when she was a U.S. Senator from the State of New York she never embraced patent reform despite it being an issue of great importance for the senior Senator from New York, Senator Chuck Schumer (D-NY). In fact, during the 2008 Presidential Campaign Hillary Clinton publicly expressed opposition to patent reform because, in her view, it was bad for innovators. Why would she now be taking a stance that would categorically be bad for innovators and innovation?

Perhaps this rather brief question and answer at a campaign stop in Iowa does accurately reflect Clinton’s view of the patents and patent portfolios of the high tech elite. Perhaps she believes patents are pawns in a game of collecting the tax revenue she believes these companies are illegally withholding by keeping funds offshore and outside of the jurisdiction of the Internal Revenue Service. If patents are to be used as pressure points against patent owners it should cause great concern within the patent community and lead to supporters with patent portfolios asking Clinton some direct questions about what she plans for their future.


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Join the Discussion

18 comments so far.

  • [Avatar for Kevin Murphy]
    Kevin Murphy
    January 15, 2016 06:31 am

    There need be no burden on the Patent Office. You could simply require a statement of compliance with the internal revenue code as part of your 7.1 statement when you file your infringement action. So no enforcement until the corporation pulls its assets into the tax system.

  • [Avatar for nat scientist]
    nat scientist
    January 14, 2016 06:50 pm

    First she comes for the patents, then she’ll come for the copyrights:

    Europe’s Best-Kept Secret: A Tax Haven For Rock Stars And Starbucks To Stash Earnings
    Bono, Bowie, and the Rolling Stones, not to mention Apple, Google and Microsoft keep an address in the Netherlands, which doesn’t tax profits by foreigners. What do locals say?


  • [Avatar for Richard Peterson]
    Richard Peterson
    January 14, 2016 06:41 pm

    Judicial discretion and executive fiat are two quite different beasts. The court of equity and the court of law have merged, but that doesn’t mean the principles of equity are dead.

  • [Avatar for step back]
    step back
    January 14, 2016 01:44 pm

    MK @#14

    In the USA we have this pesky little thing called a Constitution.

    It has these 5th and 14th Amendments prohibiting deprivation of property without due process:
    5th: [N]or shall any person . . . be deprived of life, liberty, or property, without due process of law .


    Patents are both property and contract (quid qou pro bargain) struck with the government. Not to be “suspended” by arbitrary and capricious proclamations of power hungry candidates.

  • [Avatar for Madhav Kulkarni]
    Madhav Kulkarni
    January 14, 2016 06:43 am

    Practically and logically.. Not possible.. Does this mean that in the suspended period somebody is allowed to infringe? Instead suspend the license to make, sell all products of the company till the taxes are paid..

  • [Avatar for Anon]
    January 13, 2016 03:24 pm

    step back,

    But it takes village…


  • [Avatar for step back]
    step back
    January 13, 2016 12:14 pm

    I think too much ado about one slip of the tongue by Hillary.

    There is a much greater problem with President Obama and his notion of a We the People form of American “innovation” as opposed to individual inventors inventing and getting some form of consideration for their individual efforts. (See SOTU 2016)

    “We” didn’t build that when it came to Edison’s improved electric bulb or Morse’s pony express-less method of rapid communication or Chester Carlson’s method of document reproduction. Those individuals did.

  • [Avatar for Bubba]
    January 13, 2016 11:50 am

    “The Congress shall have power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

    Not; “… To promote the current fashion of ideas about income inequality”. Not; “… Inventors who repatriate their profits”.

    Granted, these issues are not on the average Joe’s radar. But is it too much to ask for candidates to have at least a basic familiarity with what they and the Congress might possibly consider?

  • [Avatar for Bubba]
    January 13, 2016 10:26 am

    The Constitutional power given to Congress refers to “inventors”, not to “inventors who repatriate profits”. It is also hard to envision how punitive taxes would “promote the progress of science and useful arts”.

  • [Avatar for Everyman who has a brain and conscience]
    Everyman who has a brain and conscience
    January 13, 2016 09:53 am

    Benny is right, particularly in Hillary’s case. She says whatever she thinks will be appealing to the audience at the time, without regard for “truthiness,” reliability, or future consequences.

  • [Avatar for tim]
    January 13, 2016 09:49 am

    I personally think Clinton will say anything and do anything to get elected and then make life terrible for everyone once in office. She has to go!!! Where? WFC? As long as she is long gone who really cares.

  • [Avatar for Benny]
    January 13, 2016 05:46 am

    Never attribute to malice that which is adequately explained by stupidity. To me, this seems little more than a typical political habit of saying what the voters want to hear, with little regard to reality.
    Curious is spot on with his comment regarding the average Joes’ interest (and comprehension) of IP. We don’t know and we don’t care, as the as the saying goes.

  • [Avatar for step back]
    step back
    January 13, 2016 01:20 am

    My first take on Obama’s SOTU 2016 as it relates to “we” the innovators is here:


  • [Avatar for Richard Peterson]
    Richard Peterson
    January 12, 2016 09:32 pm

    Invalidity through inequitable conduct is an all or nothing game. New idea for patent reform? Unenforceability for a defined term. Maybe at the end of the term, or to foster competition at the beginning of the term, or in the middle of the term.

    We’ve been playing with patent duration for so long, a new time dynamic should be in place. District Court says your conduct was bad, your patent is unenforceable for the next three years. I think the lady is on to something.

    But, beware of politicians mucking with the patent system, devil-doomed as it is in formalistics under AIA, instead of principles of equity and fairness. So far, inventors are losing.

  • [Avatar for Curious]
    January 12, 2016 09:15 pm

    at what point do we actually care what politicians really say
    Good question. A politician will say what they need to say to get elected. Staying in office is their “real” job. I’m more concerned about what a politician does than what he or she says. My point was that the question and Clinton’s response was more directed to the overseas offloading of profits — not patents. The questioner was the one who brought it up, and Clinton (from your transcript) focused on the offloading of profits portion.

    If you watch the video when he mentions suspending patent rights of those companies the audience erupts in support
    I’m sure if he suggested hanging the CEO’s up by their thumbs or having the government impose yet-to-be enacted draconian penalties on these corporations, the same reaction would occur. The cheer was for far more likely for making corporations pay their fair share — not suspending patent rights.

    it seems that even to those who care so deeply about patent issues patents do not matter at all as a voting issue
    Patents are ultimately about money, and history shows that voters will not necessarily vote for a party whose positions are in the best monetary interest of the voters. The problem with patents is that their tie to the average person is not readily apprehended by the average person. Hence, they will almost never be a “hot button” issue at the polls.

  • [Avatar for nat scientist]
    nat scientist
    January 12, 2016 07:01 pm

    The Honorable Senator Clinton made one nice fortune in managed futures trading cattle at the time, 1977-79, when buy and sell orders were assigned by the office trader. There was no oversight or individual account fill-print record in batches of similar orders from local accounts and their trades, like at-the-market, or stop-limit orders. From Wikipedia …”she was guided by James Blair, a friend, lawyer, outside counsel to Tyson Foods, Arkansas’ largest employer, and, since 1977,[5] a futures trader who was doing so well he encouraged friends and family to enter the commodity markets as well.[3][4] Blair in turn traded through, and relied upon cattle markets expertise from, broker Robert L. “Red” Bone of Refco,”
    Refco had its own story and faded glory.
    Pulling the chains of arcane financial tools is straight out of the Clinton playbook. If it’s smoke and mirrors finance,or science at the Foundation, she’s all-in when discretion is in the house and facts can be left at the door. The lady really must believe all of the people can be fooled all of the time.
    No, I for one don’t believe it’s innovation v invention on her mind at all.

  • [Avatar for Gene Quinn]
    Gene Quinn
    January 12, 2016 05:35 pm


    I understand what you are saying, but at what point do we actually care what politicians really say? The question was clearly about patents and leveraging patents and she directly says the guy asking the question is right. If you watch the video when he mentions suspending patent rights of those companies the audience erupts in support, which seems far more concerning. I think it is a mistake to minimize this answer. Perhaps Clinton would answer differently in longer form, but it seems a legitimate question that those supporting her who care about patent rights should ask. Sadly, I doubt any supporters who care about patent rights will ask because it seems that even to those who care so deeply about patent issues patents do not matter at all as a voting issue.


  • [Avatar for Curious]
    January 12, 2016 05:06 pm

    Why would she now be taking a stance that would categorically be bad for innovators and innovation?
    If I’m reading the questions and answers correctly, I think the salient issue is more about off-sea parking of profits (to avoid taxes) by large corporations and less about using patents as leverage. If you read the long answer, it says nothing about patents and is focused on tax evasion/avoidance (depending upon which side you support).

    Except for a very small minority of people (just look into the mirror), there is a very low level of interest in patents or intellectual property by the general public (I would argue that copyright infringement and fair use has a greater level of interest to the general public).

    Personally, I’m not worried about an off-the-cuff answer to a question made during a campaign stop. There is a lot more to worry about between certain members of Congress looking to further weaken patents under the guise of “patent reform” and the Courts and the USPTO actively weakening patents through their misapplication of Alice.

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