Protecting intangible assets in the context of “Fintech” (Finance & Technology)
New technologies are an up and coming feature in every sector of our economies, bringing with them a radical transformation of services. One area of activity considerably affected by this upheaval is banking, where new financial, payment and investment services have increasingly been emerging, and have become known collectively as “Fintech” or financial technology.
This broad concept covers all those start ups, banks and credit institutions that have incorporated these new technologies to improve their traditional services: investment banking, consumer and business credits, foreign currency investments, property investment and payment brokering etc.
The business models of these companies and their competitive advantage is, among other things, based on the development and use of new software, algorithms or massive data analysis methods known as big data. As a result, the legal methods of protection available to these intangible assets is crucial to ensuring that the sector is properly maintained and continues to develop apace.
Algorithms are one of the key tools used by Fintech, which are basically complex methods used to resolve problems and manage financial processes, based on a series of variables such as credit history, interest rate, risk or viability. Attempts have been made to use patents as a way of protecting algorithms, as this is one of the most reliable protections afforded by the legal system. However, both current regulations and European case law are extremely restrictive in this regard and have rejected “protection of mathematical methods”, nonetheless, this has not prevented businesses in the sector such as the Finnish company HOLVI (recently acquired by BBVA), from filing patent applications in order to protect their financial methods. Conversely, in the US, case law has tended to be more permissive, that is, until the recent Alice case (October 2014), which laid down doctrine stipulating tougher requirements for algorithm patentability.
Despite the fact this method in its abstract form cannot be protected, it is however possible to patent its materialisation in the form of source code, as an integral part of a software programme. In this case protection is obtained through copyright of the software’s source code, which prevents third parties from copying a particular code, although not the algorithm itself.
Computer programs or software play a key role in the concept of fintech. In Spain and Europe, software can be protected through copyright. This protection covers the source code and the program object code. Protection through patent, which is desirable because it has greater legal force, is only possible for those inventions implemented by computer – inventions which require the input of a computer– and which resolve a technical problem with inventive step. If the software passes the patentability test it can be protected by patent.
One of the more lucrative activities that a finance-technology company can develop is analysis of the big data generated by its clients. We need only consider the amounts of information that one bank account contains about our lives and consumer habits to realise that an analysis of this information is immensely valuable, and therefore it is essential to ensure that the databases of this type of company are protected in order to guarantee their income. These databases are currently protected by copyright and by a specific right known as sui generis, which basically protects the investment made in creating the database, preventing extraction of its content for reuse without the owner’s authorisation.
Finally, the importance of a company’s ideas, methods, and information – in short –its knowhow– is another extremely significant asset. Companies usually resort to requiring their employees and businesses associates to sign confidentially agreements, and they also make use of Competition Law which provides protection for business secrets and valuable commercial information.
Finally, it is appropriate to recall that trademarks can be extremely helpful in ensuring that a company differentiates its goods or services in the market. In this regard it is important to register a trademark prior to initiating the actual activity.
In short, companies in the fintech ecosystem need to be particularly aware of the different types of protection available in our legal system in order to ensure their value and guarantee income.
For further information, contact Ignacio González Royo
Garrigues Intellectual Property Department