Taxes Consolidation Act 1997 section 754

Interpretation (Chapter 1)

Section 754 defines the key terms used in the patent income Chapter and sets out rules for how references to the sale or purchase of patent rights, including licences, are to be interpreted.

• Patent income includes royalties paid for the use of a patent and any amount taxable under the Chapter, while patent rights means the right to do something that would otherwise infringe a patent.
• The grant or acquisition of a licence over a patent is treated as a sale or purchase of part of the patent rights.
• Where an exclusive licence is granted for the full remaining life of the patent, excluding the grantor and all others, the grantor is treated as having sold the whole of the patent rights.
• Where the State (or a foreign government under equivalent powers) officially uses a patented invention, the Chapter applies as if the use were under licence, and any compensation paid is treated accordingly.