IP in the Financial Sector
‘Many of the patents filed by major institutions were outside the US’
An interview of
Robin Fry
Partner
Beachcroft LLP
IP Summit Newsletter, 10 July 2008
 Is there something new under the sun in the financial services sector? Why should IP issues arise?
There is constant innovation - particularly in relation to derivatives, indices and trading platforms. And even for consumer products there is occasionally significant innovation. Unit Trusts and wrap accounts were new at one stage. This year innovative products based on longevity rather than death have been launched eg by Life Trust in the UK.
Isn't this just about business methods?
Well, we are currently in the throes of the Re Bilski litigation which is considering whether the seminal State Street and the AT&T v Excel decisions should properly reflect what should be patentable in the US. However, our recent 2008 survey on IP in Financial Services** noted that many of the patents filed by major financial institutions were outside the US - with strong activity here by CitiBank, Goldman Sachs and UBS.
It's easy to focus on patents - they're, of course, the most visible expression of IP activity. However, financial services businesses need an informed portfolio approach and be comfortable in using copyright, trade marks, confidentiality and unfair competition to put up the barriers around any new product or service that is created. This must be examined at the product development stage, and new products, services or methodologies must, in part, be built – and launched – with a constant weather eye to intellectual property protection in every possible form.
It's lamentable that the financial services sector encompasses some of the most astute and intellectual individuals in business but there are very few IP lawyers who are brought in by management to work at the heart of this sector. To my mind, there is a tragic attrition of value.
Why do we hear so little about this area?
None of the intellectual property rights we have were designed with any regard to financial services. For trading algorithms, for instance, you may need to draw on copyright cases relating to sets of instructions or circuit diagrams. And for financial indices (on which over 900 exchange traded funds depend) we have to pull together protections in contract, database right and even concepts such as "parasitic copying" under the French Civil Code or the protection of "hot news" following some older US cases.
So it’s a difficult area but, given the size of the market is to be had, some speculative investment could be of enormous value to a major financial services institution.
If you see that Chicago Mercantile Exchange has almost 90 patent filings worldwide but the London Stock Exchange has none, you begin to realise that some institutions have this very right – and many others have this very wrong. Every corporate in this sector should ask themselves at CEO level: are we serious – or negligent – in examining our intellectual capital?
Robin Fry is head of intellectual property at Beachcroft LLP. He is chairing a 3-hour afternoon session on the second day (Friday Dec 5) of the pan-European Intellectual Property Summit 2008, with outstanding speakers at financial services companies such as Goldman Sachs, UBS, Barclays, and Swiss Re, who have already confirmed their venues.
**The report on "A Careless Attrition? IP in Financial Services 2008" is available from the Beachcroft website.
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