Monday, January 01, 2007

Financial Times on patents covering methods in financial area

MoneyCentral (via Financial Times) has a story on patents in the financial area, including US 5,910,988 to Claudio R. Ballard.

The story includes the text:

John Squires, Goldman's chief intellectual property lawyer, says one of the big worries is the way US courts grant injunctions to force companies found guilty of patent infringement to stop using the disputed technology. Such injunctions can have a big knock-on impact on other companies.

Mr Squires says that Wall Street got a warning of what could happen this year, when Research in Motion, the maker of the BlackBerry handheld e-mail device, faced the possibility, if it lost a patent infringement suit, of an injunction that would have shut down its service. It would have shut down much of Wall Street too, given its dependence on BlackBerrys. In the end, RIM blinked and settled for $600m.

William Cook, an intellectual property partner at lawyers Simmons & Simmons in London, says the situation is different in Europe, where financial and software patents are only granted where they can be shown to have some "technical effect".

Although there are patents for trading systems and financial instruments in Europe, Mr Cook says they are not often enforced in the courts. "It is much easier for individual and small inventors to get patents in the US to threaten the banks and other big companies."

It is not just small companies that get controversial patents.

There was a storm of protest earlier this year over a patent issued to Fannie Mae, the secondary mortgage finance giant. The patent covers software that matches borrowers with the best mortgage.

Fannie Mae, which is not allowed to originate loans, last month agreed to license the technology for free after industry groups complained that the patent covered an activity from which Fannie Mae was barred by law.

Despite the problems, Mr Adams says there is no doubt that the ability to get patents stimulates innovation at companies such as Citigroup, which holds more financial services patents than any other.

Mr Squires says that Goldman, which has about 30 patents, gets a modest amount of licence revenue from them. It also gets better deals when it goes into a joint venture bringing know-how covered by patents.

There is one other snag with the patent process – the time it takes.

Six years after it filed, Goldman has just been issued with a patent for a system that tracks orders on a trading floor exchange. Unfortunately, most of the trading floors have now closed and even the New York Stock Exchange's may not be long for this world.


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