Intellectual Property Risks; the Corporate Transparency Act Ruling; Final Direct Pay Regulations

This month in Vantage Point, we’re covering intellectual property risks facing energy-transition innovators, a federal court ruling against the Corporate Transparency Act, and final regulations governing the Inflation Reduction Act’s direct pay provision.

IP, Addressed: Getting Smart About Intellectual Property in the Energy Transition

If the race against climate change is to be won, it will be largely on the strength of technology.

Companies bold and innovative enough to develop technologies capable of powering a lower-carbon economy, especially those whose projects produce a breakthrough solution, stand to become energy-transition leaders for decades to come.

Yet pursuing these opportunities is not without risk, and one of the most perilous is one that many companies overlook: failing to protect the intellectual property that they invested enormous amounts of time, energy, and capital to develop.

How can companies protect their valuable investments?

Doing so centers on building a robust portfolio of intellectual property — not just by filing for patents early on their own innovations, but also by looking into opportunities to acquire patents and licenses.

Companies also must be ready to enforce their intellectual property portfolios, whether through licensing efforts or active litigation, to ensure that no competitor can benefit unfairly from their research and development work.

Our intellectual property counsel with more on how energy-transition project developers can protect their intellectual property.

Small Businesses 1, Treasury 0: Parsing the Corporate Transparency Act Ruling

Can mandatory corporate disclosure violate the Constitution?

Far be it from Vantage Point to decide, but that’s the upshot of a US district court ruling that blocks the federal government from enforcing the Corporate Transparency Act — a 2021 law requiring millions of businesses to file information on their beneficial owners with Treasury’s Financial Crimes Enforcement Network.

The suit, filed by the National Small Business Association and one of its members, contended that the law exceeds the Constitution’s limits on Congress’s power — and the court agreed.

So, can businesses that had been preparing to comply with the law now put that work aside?

Not so fast. Under the court’s ruling and a government notice, only the plaintiffs are exempt from compliance. According to the notice, plaintiffs also include the members of the National Small Business Association as of March 1 (about 65,000).

For the time being, everyone else still must comply.

What’s next? The federal government has appealed the district court’s ruling. But it could be some time before the Eleventh Circuit hears the appeal.

Meanwhile, the plaintiffs’ success here could encourage similar challenges in other jurisdictions, potentially increasing the number of businesses shielded from the law’s requirements.

Our attorneys with more on the ruling and its implications.

Direct Pay: Where Did the Final Regs Land?

Nearly two years after Congress passed the Inflation Reduction Act, Treasury and the IRS have released final regulations governing one of the law’s most powerful incentives: the direct pay election.

Through direct pay, nonprofits, governments, and other organizations with no federal tax liability can monetize credits generated by a clean or renewable energy project as a cash refund from the IRS?— a carrot intended to draw more investment into the energy transition.

In many ways, the final regulations mirror those proposed in June. But there are several notable changes that organizations seeking to take the direct pay election will want to understand.

One of the most important involves partnerships: Even though partnerships remain ineligible for direct pay, Treasury and the IRS have proposed a path for organizations that co-own renewable energy projects to elect out of partnership treatment for tax purposes.

Our renewable tax team looks in-depth at the regulations’ most important elements.

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