Why to protect IP in Fintech industry?

                                                                                                               -Rishiraj Chandan

INTRODUCTION

The word "fintech," which was first used by Peter Knight in 1980, refers to financial technology that improve the marketing and provision of financial services. Retail payments, virtual currencies, internet banking, cash transfers, and mobile payments are a few instances of fintech. Securing a monopoly on innovative product features and making commercial use of them requires IP protection in the financial industry. IP helps safeguard intellectual technological investments by guaranteeing them protection.

Additionally, it boosts bargaining power and helps attract investment, especially for startups. An advantage in fund-raising is offered by protected awarded patents and copyright trademarks, while cooperation and licensing enable cooperation with bigger organizations. The ultimate objective is to safeguard fintech businesses' intellectual property rights so they may profit from their innovations.

IP AND FINTECH INDUSTRY:

Getting investment, gaining bargaining power, working with bigger companies, and guaranteeing the protection of intellectual property rights all depend on preserving IP in the fintech industry. Since the advent of paper, plastic, and virtual currencies, the fintech industry's technological environment has been continuously changing. Filing intellectual property (IP) in categories including utility patents, design patents, trademarks, copyrights, and trade secrets is crucial to protecting this technology.

While design patents protect the look and feel of tangible objects, such as electronic automobile transaction gadgets, utility patents cover concepts pertaining to machinery, equipment, processes, and goods. Conversely, trade secrets are safeguarded by maintaining the idea's confidentiality and avoiding submitting an application to a PTO or government agency.

Traditional financial institutions including banks, Visa, Mastercard, and Bank of America, as well as digital businesses like Facebook, Apple, and Google, are the main filers of patents in the fintech space, along with the US, China, South Korea, and Japan. It is crucial to remember that if someone reverse engineers and develops the same concept, they cannot prevent others from using it. The US, China, South Korea, Japan, and conventional financial companies including banks, Visa, Mastercard, Bank of America, Facebook, Apple, and Google are among the top patent applicants. When it comes to fintech technology, IP has the most patents, around five times as many as banks and payment businesses.

To sum up, in the ever evolving world of technology, safeguarding fintech in IP is essential to preserving intellectual property rights. Fintech firms' rights and important ideas may be safeguarded by filing utility, design, trademark, copyright, and trade secrets. The difficulties of IP protection in fintech, particularly with regard to patents, are the main topic of this blog.  Because they are business method patents or software in general, intellectual property (IP), including design patents and copyrights, is often regarded as patent ineligible or non-patentable.

PATENTS IN FINTECH: MAIN ISSUE

The main issues are with patents, which are often regarded as non-patentable or patent ineligible subject matter since they are classified as either software in general or business method patents in particular. Different jurisdictions have different views. For example, according to Article 52 of the European Patent Attraction Convention, 101 software applications in the US are considered abstract ideas, whereas Indians believe that algorithms or computer programs in general are not patentable.

These restrictions make it especially challenging to secure fintech technologies. The significance of having enough bank balances for transactions to occur was brought to light by the Alice v. CLS Bank case in 2014. Both parties in this case needed to have sufficient bank accounts in order to do business, and Alice had many patents in their names that protected against settlement rates.

 

The sales bank attempted to invalidate the patent when Alice sued CLS Bank, but the earlier rulings were against Alice Corporation. According to the ruling in the case, every known technique that was previously used by computer users must be carried out in a computer-based procedure, rendering it an abstract concept. The connection between fintech and intellectual property protection is an intriguing feature of the Alice v. CLS Bank case. The number of patents filed in the fintech industry has significantly increased in the past, and many of them have been issued without any applications being submitted.

Safeguarding intellectual property in the finance industry is a difficult and intricate procedure. To safeguard your intellectual property and guarantee the success of your company endeavour, you must have a solid plan and strategy in place. Western Express Bank was the owner of a US patent pertaining to a bank card money transfer technique. A countersuit invalidated the patent, and significant rulings such as Alice against CLS Bank have made it difficult to patent fintech technologies.

There are, nonetheless, methods for obtaining a patent grant in finance technology. One such assertion is the use of ATM (automated trailer machines) for port-based or open-based transfers. The patent was issued in 2021 after the applicant submitted it in 2018. The goal of the idea was to transfer money between individuals without requiring a bank account or a smartphone app. The claim was created in the first filing as a straightforward concept to transfer money from an ATM without requiring a mobile app or bank account.

The examiner concluded that the limits without the strong elimination effort encompass the execution of the limitation as a specific technique of arranging human activity within the widest reasonable interpretation, and the claim was ultimately approved after a non-final election. Since this was a human action, the examiner believed it did not qualify as patent-eligible subject matter.

Whether or whether these patents come within fake eligible matter often determines their subjectivity. According to USC 101, the topic is deemed highly comprehensible and is given preference over that category. In this instance, the examiner discovered that system constraints, such as computer devices and ATMs, constituted the fundamental elements of the claim. This claim was rejected by the examiner, who concluded that it was an abstract concept that could not be patented.

In conclusion, even if obtaining a patent in fintech technology presents some obstacles, there may be solutions to get beyond these obstacles and get a patent.

The idea behind the patent filing was transaction risk mitigation, which is a basic economic principle. Although the claim was written to solve this problem, the examiners noted that it did not fit within a subject matter that was eligible for patent protection. The applicant contended that the claim was about a system and technique for moving money without a bank account or digital wallet, not about hedging or insurance. Additionally, they said that the concept does not attempt to reduce risk; rather, it makes utilizing an ATM to make cash payments between people easier.

The applicant said that since the invention had a practical application, it was not aimed at any abstract concept. Additionally, they contended that the code creation process was distinct from a typical computer since it was built with a specific machine and needed specialist code co-generation modules. Since the applicant provided a hash version of the code that needed a specific code co-generation module and was implemented with a specific machine, the security issue was also addressed.

Additionally, the applicant said that since the ATM machine lacked a specified purpose for disposing of cash, it was not a generic computer. Although they included a lot of information regarding the ATM machine in their application, they concluded that it was not generic. Following conversations with the lawyer and examiner, the issue was resolved, and the patent was issued.According to the patent study, the claim underwent substantial modifications, including the use of material from the specification to restrict or clarify it. The applicant effectively argued for the patent and did a good job of overcoming obviousness.

INDIAN SCENARIO:

In a different instance, a straightforward Indian patent was granted quickly,Talking about the blackberry case here proves that submitting a fintech-related patent application might result in a 3K direction. This patent focused on utilizing a point-of-sale system, like Walmart or Big Bazaar, to make payments without a card.

The patent focuses on a way for consumers to pay without a card, such utilizing a card reader or point of sale equipment. Payment method possibilities are shown in the program, including utilizing a UPI (United Payment Interface) or a pin on a UPI interface. The non-predictability of the claims under clause K of section 3 and the scope of the program per se algorithm under section 3K of the patent statute were the reasons given by the Indian Patent Office (IPO) for the 3K rejection in this patent.

The applicant contended that since the claims did not fall within the purview of the program or algorithm, they were not patentable under section 3K. They maintained that no changes or further deletions were made to the claim, which had been originally submitted and approved in the same condition. The claim's language was not changed, and its scope stayed the same throughout the award.

According to the CRISPR computer-related invention guidelines, which the applicant cited, determining patentability should prioritize the invention's fundamental ideas above its specific form. In order to determine if the parent has any practical applicability, the team should concentrate on the body of the claim as a whole and the assertion. The petitioner also referenced cases that highlight the technological impact element, such as Erection against Lava, Ericsson versus Intex, and Trade Alain versus Union of India.

According to the application, their innovation has resolved a long-standing issue with carrying off cards or chip issues related to the card, such removing the card with force and stealing money out of the ATM. From a technological point of view, they contended that the POM machine terminal may be used to make the payment and that a card animation does not create a situation similar to a cardless transaction.

CONCLUSION

The quality of the application and knowledge of the rules and regulations are the two main focuses of the conversation, which centers on the fintech patenting procedure. The only instances mentioned are the US application and the Indian Pin application. Artificial intelligence, blockchain, safe transactions, cloud computing, the Internet of Things, open source, serverless, no code, low code, and hyper automation are the main technologies that are anticipated to propel finance technology in the next ten years or near future.Core technologies including QR codes, safe transactions, cloud computing, the Internet of Things, open source, serverless, low code, no code, and hyper automation are all related to fintech. Fintech and these technologies overlap well, but they also overlap well with one another.

Walmart Crypto Coin, Square Real Time Transfer, Palm Print Payment Technology, and other patents are a few noteworthy industry trends. Walmart Crypto Coin is being investigated, Square Real Time Transfer handles the conversion of two currencies, such as Bitcoin and dollars, and Palm Print Payment Technology enables users to make payments without carrying a card.Despite having two awarded patents, these patents are now in a state of abundance since the offer section was not answered and there may have been attorney participation. There is a conflicting perception that certain inventions, akin to zero-to-one patents, will survive the review process and be planted.

I therefore conclude here by highlighting the significance of well crafted patent applications and being aware of the rules and regulations pertaining to fintech. Artificial intelligence, blockchain, safe transactions, cloud computing, the Internet of Things, open source, serverless, no code, low code, and hyper automation are some of the major technologies that might propel finance in the years to come. People must carefully weigh the possible consequences and be aware of the difficulties involved in obtaining a patent in the market.