FinTech – Financial Technology Patents, Blockchain Technology and Bitcoin

Mobile based payments using smartphone applications and handheld devices has resulted in a striving competition between financial institutions (banks), technology corporations (Apple, Google, Samsung) and startups (PayPal, PayTM, MobiKwik). Consequently, number of patents filed in FinTech sector have increased exponentially across the globe indicating strong propagation of innovative FinTech solutions worldwide.

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As per views of FinTech patent experts, patent attorneys, corporate law firms and technology lawyers, extensive investment has been done in the research and development (R&D) to bring new technology and products to the market across the globe. FinTech patents have been filed in aplenty by both tech startups and conventional financial institutions (financial service firms, banks etc.).

Launch of new and innovative smartphone applications (mobile apps) in financial technology sector indicates a dynamic shift in consumer behavior while availing financial services across broad range of sectors, such as, for example, banking, investment management, insurance, lending, digital and mobile payments, capital markets, credit risk assessment, financial advisory, accounting, taxation etc.

Analysis of FinTech patent landscape reveals that major patent filers are from US, China, UK and Europe, while leading patent players include traditional financial institutions like Visa, Mastercard, Bank of America, Barclays, Vodafone etc, and technology companies like Facebook, Apple and Google.

After reviewing relevant patent classifications, it can be determined that most of the innovations for which FinTech patents are filed include customer identity verification, biometrics, digital currencies, cryptocurrency, mobile applications, mobile apps, mobile platform, cloud computing, blockchain, Internet of things (IoT), artificial intelligence (AI), big data, P2P transfer, mobile wallets, and the like.

What are Blockchain and Bitcoin?

Blockchain is world’s leading software platform for digital assets that includes a decentralized digital database to facilitate secure online transactions. Multiple legal issues can impact the Blockchain technology at present and in near future. With regards to cryptocurrencies like bitcoins, Blockchain provides a safe digital ledger for the bitcoin network. Hence, bitcoin can be termed as a digital currency (cryptocurrency) experiment resulting from Blockchain innovation. In May 2017, bitcoin surged to record high of $2900.

In coming years, majority of banks and financial institutions will use Blockchain technology for commercial contracts and transactions. For example, Dubai Blockchain Strategy aims to establish a roadmap for issuing all government documents on Blockchain by 2020.

This has led to inception of another term, “Internet of Agreements”, which implies use of technology to deliver machine-to-machine handling of agreements for international business transactions. Accordingly, Blockchain is bound to impact technology solutions for banks, insurance companies and financial corporations.

Bitcoin Laws – Role of Bitcoin Lawyer

Bitcoin’s evolution from Blockchain technology has resulted in certain laws and regulations, however, case laws and regulations for virtual currency (digital currency) are emerging with time as no fixed laws exist at present. Consequently, entrepreneurs, fintech startups and businesses have to focus on compliance, money laundering regulations, etc.

Blockchain Laws – Role of Blockchain Lawyer

Applications can be used to determine ownership, chain of transactions, authentication, identity validation, digital evidence and discovery. Accordingly, multiple legal issues can arise pertaining to data security, criminal activity, prevention of theft, black marketing, malware, money laundering, data privacy, protection and infringement of intellectual property rights, including, software patents, mobile app patents, hardware patents, bitcoin patents, fintech patents, Blockchain patents, copyrights, trademarks and design patents.

What is a patent?

Patent is a legal right granted by government for an invention. The patent rights are granted to inventors and applicants for 20 years from the date of the filing of first patent application. The right granted to patent owners is a negative right, which implies that the patent owner has the exclusive right to prevent patent infringement, i.e. to stop third parties from making, using, selling, offering for sale and/or importing any product or technology protected by the claims of the patent.

What are patent claims?

A patent application includes multiple elements, and patent claims form the heart of the patent invention as legal protection is granted for features included in the patent claims. Generally, patent claims are drafted by experienced patent attorney to describe the invention being protected. To ensure that patents are registered after passing the legal eligibility test of patentability, patent attorneys ensure that the claims are drafted in a manner such as to describe an invention that is new, useful and non-obvious in view of the “prior art”, wherein prior art refers to all the public knowledge and inventions that existed before the filing date of the patent application.

What does a patent protect?

A patent protects the functionality of an invention, which is extremely crucial in case of technology solutions embodied over Internet by way of handheld devices, such as, smartphones and tablets. In case of mobile app patents, execution of novel applications across the communication network can be protected by way of patents by focusing on a combination of software and hardware implemented aspects of the invention, which are written in the requisite details in the patent description along with a strong set of patent claims drafted thoroughly by the patent lawyer.

Why are patents important for technology companies?

Patents form a valuable component of a company’s intangible assets and investors consider patents as true strength of innovative technology companies. Patents signify that companies have strong and defensible business model that cannot be easily replicated by the competitors. A proactive and well formulated patent strategy results in robust investment prospects for early stage technology companies and tech startups.

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Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at info (at) techcorplegal (dot) com & @rdpatentlawyer on Twitter

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