Examining the Intellectual Property-Relevant Provisions in the ‘Big Beautiful Bill’

H.R.1, the “One Big Beautiful Bill Act” (OBBBA), passed the House on May 22, 2025. Congress.gov provides a Summary of this mammoth piece of legislation: “This bill reduces taxes, reduces or increases spending for various federal programs, increases the statutory debt limit, and otherwise addresses agencies and programs throughout the federal government. It is known as a reconciliation bill and includes legislation submitted by 11 House committees pursuant to provisions in the FY2025 congressional budget resolution (H Con. Res. 14) that directed the committees to submit legislation to the House Budget Committee that will increase or decrease the deficit and increase the statutory debt limit by specified amounts. (Reconciliation bills are considered by Congress using expedited legislative procedures that prevent a filibuster and restrict amendments in the Senate.)” See Summary and Text of the OBBBA here.

There are several intellectual property-related provisions in this 1,118-page, 237,327-word bill. In order of appearance:

Clean Tech Innovations

Elimination of the 2020 American Innovation and Manufacturing Act, which phased down hydrofluorocarbons to address climate change and to stimulate invention of new substances and technologies that can be patented. See Title IV, Energy & Commerce, Subtitle B Environment, Part 1 Repeals and Recessions, Sec. 42109

AI: $500 Million for the Commerce Department and a Ban on Regulation (Sort Of)

With only four months left in FY2025, the U.S. Department of Commerce gets a new lump of cash (half a billion) to spend on modernization of IT systems with AI-related solutions. This could flow into the U.S. Patent and Trademark Office (USPTO). The money can be spent from now through 2035. The focus will be on automated decision systems, increasing operational efficiency and service delivery, and cybersecurity

This AI modernization provision also bans states, counties, cities and other non-federal governments from regulating AI for 10 years. But there are exceptions: existing laws or regulations that already remove barriers to AI are ok; laws or regulations that streamline permitting and open the way for AI are ok; and laws and regulations that apply to any technology and are not specifically discriminatory to AI are ok.

There has been some commentary stating that this “ban” prevents the enforcement of copyright law. Specifically, critics of this ban argue that the proposed moratorium shields AI developers from liability wen using copyrighted materials to train models.  I do not know how this proposed moratorium can apply to federal copyright law being enforced against AI when the text of the moratorium says it applies just to a “State or political subdivision.” However, the moratorium also goes on to say the ban does not apply to any law or regulation that “does not impose any substantive design, performance, data-handling, documentation, civil liability, taxation, fee, or other requirement on artificial intelligence models, artificial intelligence systems, or automated decision systems unless such requirement – (i) is imposed under Federal law….”  We are seeing debates in the copyright and patent contexts about the scope of human contribution or involvement necessary for an AI to obtain a copyright or patent. This moratorium language may complicate resolution of these debates.

See Title IV Energy & Commerce, Subtitle C Communications, Part 2 Artificial Intelligence and Information Technology Modernization, Section 43201 Artificial Intelligence and Information Technology Modernization Initiative.

Accounting, Audit, Disclosure, Recording, Standards for Valuation and Reporting of Intellectual Property

Merging the Public Company Accounting Oversight Board (PCAOB) into the Securities & Exchange Commission (SEC), including the intellectual property. This could imperil the quality and confidence in intellectual property audits and valuation processes for public companies in several key ways:

1. Loss of Specialized Inspection Expertise
   a. The PCAOB’s inspection division is its largest and most experienced unit, with ~500 employees dedicated to examining the quality of audit work, including complex asset valuations like intellectual property (IP), goodwill, and intangible assets.
   b. Transferring this function to the SEC risks degrading audit scrutiny, especially for highly technical and subjective areas like IP valuation, where expertise is critical.
2. Breakdown in International Cooperation
   a. The PCAOB has negotiated bilateral audit inspection agreements with dozens of countries, including a landmark deal with China enabling inspections of Chinese company audits listed in the United States.
   b. These agreements do not automatically transfer to the SEC. Their loss would compromise audits of foreign-based firms, which often include large, IP-heavy multinationals.
3. Uncertain Future for IP-Intensive Standards
   a. If the SEC lacks the capacity or will to maintain PCAOB’s standard-setting function, those responsibilities could revert to the AICPA, a professional group that last set public auditing standards decades ago.
   b. Critics argue that AICPA standards are industry-friendly and outdated, posing a risk to rigorous audits of high-value IP assets that are central to modern public company valuations.
4.  Weakened Enforcement
   a.The PCAOB has a dedicated enforcement mechanism for holding firms accountable for audit failures—including those involving the misstatement or improper valuation of IP.
   b. SEC leadership has stated it would need substantial new resources to maintain equivalent enforcement. Without them, the deterrent against manipulation of IP valuations may weaken.
5. Audit Independence and Market Integrity
   a. Critics warn that merging PCAOB into the SEC could increase political and corporate influence on audit oversight, reducing the independence of auditing standards and inspections—particularly harmful for investors relying on fair value estimates of IP-heavy companies.

The dismantling of the PCAOB threatens to undermine the specialized infrastructure, international agreements, and inspection personnel that ensure accurate auditing and valuation of intellectual property—a key component of many public companies’ market capitalization. If the SEC cannot replicate this system with sufficient independence and resources, investors may lose trust in the reliability of reported IP asset values.

The language for this change is located in the bill at Title V, Committee on Financial Services, Section 50002, Public Company Accounting Oversight Board.

Domestic R&D Expense Deduction

Domestic research and experimental expenditures, including software, shall be deductible and the existing rules for amortization are suspended. See Title XI, Committee on Ways & Means, Subtitle B Make America and Main Street Grow Again, Part 1 Extension of Tax Cuts and Jobs Act Reforms for Rural America and Main Street, Section 111002, Deduction of Domestic and Experimental Expenditures.

Sound Recordings Now Included in Tax Benefits

Existing tax benefits for film and TV production and any live theatrical production are now extended to include sound recording productions. See Title XI, Committee on Ways & Means, Subtitle B Make America and Main Street Grow Again, Part 2 Additional Tax Relief for Rural America and Main Street, Section 111108, Treatment of Certain Qualified Sound Recording Productions.

Global Intangible Income Deduction

The 2017 Trump tax law deductions for foreign-derived intangible income and global intangible low-taxed income are extended. Whether the 2017 change has achieved its policy goal of onshoring R&D and U.S. patents which were moved out of the United States to take advantage of so-called patent or innovation box low tax rate regimes remains to be seen. See Title XI, Committee on Ways & Means, Subtitle B Make America and Main Street Grow Again, Part 1 Extension of Tax Cuts and Jobs Act Reforms for Rural America and Main Street, Section 111004, Extension of Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income.

This is expanded to now include activity in the U.S. Virgin Islands. See Title XI, Committee on Ways & Means, Subtitle B Make America and Main Street Grow Again, Part 2 Additional Tax Relief for Rural America and Main Street, Section 111111 Global Intangible low-taxed income determined without regard to certain income derived from services performed in the Virgin Islands.

Copyright and Trademarks for Brands and Logos

When a nonprofit such as a university sells or licenses any name or logo, including copyrights or trademarks, that revenue shall be treated as unrelated business income and included in gross income and taxed at ordinary rates. This is likely a strike at 501(c)3 tax-exempt entities such as universities.

See Title IX, Committee on Ways & Means, Subtitle C, Make America Win Again, Part 1, Working Families Over Elites, Section 112025, Name and Logo Royalties Treated as Unrelated Business Taxable Income.

Ban on Using Foreign Enemy Patents

Credits for clean electricity production are being phased out and restrictions on foreign entity participation in the production of clean energy technologies are being increased. The Ways & Means Committee has jurisdiction over patents for the purposes of taxes and trade and in their portion of this reconciliation bill they tighten existing restrictions on the use of intellectual property and technology from foreign sources. The Inflation Reduction Act (IRA) barred the use of IP and tech from Chinese companies – a compromise Senator Joe Manchin fought for with President Joe Biden in order to obtain passage. Manchin complained that Biden’s Treasury Department made Swiss cheese of these restrictions through their implementation regulations, helping Chinese companies bring their technologies into U.S. car makers to accelerate domestic production of EVs to compete with and to spite non-union Tesla heading into the 2024 elections. The “Make America Win Again” and “Working Families Over Elites” headings for this provision of the bill frame the political narrative.  See Title XI, Committee on Ways & Means, Subtitle C Make America Win Again, Part 1 Working Families Over Elites, Section 112118 Phase-Out and Restrictions on Clean Electricity Production Credit, (d) Definitions Relating to Prohibited Foreign Entities. – Section 7701(a) is amended by adding at the end the following new paragraphs: (52) Material assistance from a prohibited foreign entity.

Franchise Rights?

Also, a part of the “Make America Win Again” and “Working Families Over Elites” provisions is a new limitation on amortization of sports franchises and their intangible assets. This may bring a new perspective to the obscure “franchise rights” language in the Oil States decision authored by Justice Thomas where he said for the narrow purposes of inter partes reviews (IPRs) at the Patent Trial and Appeal Board (PTAB) that patents are public interest and franchise rights while also still existing as private and personal property rights. See Title XI, Committee on Ways & Means, Subtitle C Make America Win Again, Part 1 Working Families Over Elites, Section 112017 Limitation on Amortization of Certain Sports Franchises.

Tax on University Patent Licensing Income

Another part of the “Make America Win Again” and “Working Families Over Elites” provisions is a new excise tax on income generated by colleges and universities from their investments. This provision explicitly overrides established regulatory exceptions to create the tax. It applies to royalty income generated by research and development, patents, copyrights, or other intellectual or intangible property that were subsidized by the federal government. See Title XI, Committee on Ways & Means, Subtitle C Make America Win Again, Part 1 Working Families Over Elites, Section 112021, Modification of Excise Tax on Investment Income of Certain Private Colleges and Universities.

Takeaway

The intellectual property provisions of the OBBBA do not send a clear signal about whether the House Republican majority or the Trump Administration are pro or anti-IP. The AI provisions may signal a bias toward de-regulation of AI at the expense of IP enforcement. And the restrictions on foreign IP use indicate support for stopping China from abusing our legal system or exploiting government programs, obtaining subsidies. OBBBA aims to bolster U.S. technological and economic competitiveness, particularly against adversaries like China. However, changes such as the PCAOB merger into the SEC, new taxes on university licensing, and ambiguous implications for copyrights and franchise rights raise concerns about weakened IP valuation, audit integrity, and creator protections. These provisions could reshape incentives for entrepreneurs, inventors, and industries reliant on robust IP frameworks. As the bill progresses to the Senate, stakeholders must closely monitor its long-term impact on innovation, IP rights, and global market dynamics to ensure it strengthens, rather than undermines, how people create in a free market, democratic society.

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