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ARTICLE · 28 JUNE 2004

Exploitation of Intellectual Property

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Many exempt organizations own valuable intellectual property rights that can be used by the organization to achieve the exempt purposes for which it was established or to provide an additional source of revenue for the organization. Where the value lies in an organization’s intellectual property will depend to a large extent on the nature of the organization and its activities. For example, many large public charities that are well known and widely supported have valuable trademarks, reflecting

United StatesIntellectual Property
Suzanne McDowell
Suzanne McDowell

Originally published April 2004

TABLE OF CONTENTS

I. INTRODUCTION

II. WHAT IS INTELLECTUAL PROPERTY?

A. In General

B. Patents

C. Trademarks and Servicemarks

D. Copyrights

E. Trade Secrets

III. ISSUES RELATING TO TAX-EXEMPT STATUS

A. Primary Purpose Test

B. Scientific Research

1. Public Interest Requirement
2. Relevance of Ownership of Intellectual Property
3. Exploitation of Intellectual Property as Primary Purpose
4. Exploitation of Intellectual Property as an Insubstantial Purpose

C. Publishing

D. Private Benefit Test

E. Prohibition Against Private Inurement

IV. UNRELATED BUSINESS INCOME TAX ISSUES

A. Overview

B. Imposition of UBIT

C. "Relatedness" of Intellectual Property Commercialization Activities

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