What protections can a fintech use in your jurisdiction to protect its intellectual property?
Intellectual Property protection in Bermuda is available for trademarks, patents, copyright, and design. The available relief for infringement are injunctions (permanent or emergency), Anton Pillar orders, discovery upon oath, damages, delivery up of infringing article and/or destruction, and enquiry as to damages or an account of profits.
Trademark law in Bermuda is largely based on the United Kingdoms’ (UK), however Bermuda operates an independent trademark register at the Government of Bermuda Intellectual Property Office. The Bermuda Intellectual Property Office currently requires that a national patent application be sent to the UK for search and examination. Additionally, any UK patent or European patent designating the UK can be reregistered in Bermuda within three (3) years of the original grant.
Many multinational and blue chip companies have benefitted by selling or licensing their intellectual property rights to their company in Bermuda to capitalise on advantageous tax benefits. Bermuda-based companies collect fees and other revenue associated with their intellectual property and are able to repatriate funds in accordance with favourable tax considerations.
The Cayman Islands updated its copyright laws in 2015 and 2016 to bring the laws in line with the most recent developments under the UK Copyright, Designs and Patents Act 1988, these expressly include computer programs and databases within the definition of “literary works” and protect them, as such, for a duration of 50 years.
Copyright is the right to prevent others from, among other things, copying the software and vests in the author on creation. In the fintech space, copyright is relevant in respect of rights to software.
Fintech companies will generally own a combination of an established brand or trade name, which can include logos or icons, these can be protected as registered or unregistered trade marks.
Trade mark rights give registered owners the right to prevent others using identical or confusingly similar marks to their registered mark. Brand owners can also rely on unregistered trade mark rights through the law of passing off. This allows the owner to prevent others from damaging their goodwill with customers by using branding or get-up that is identical or confusingly similar to its own. The Trade Marks Law 2016, allows fintech companies to obtain trade mark protection in the Cayman Islands.
Patents and industrial designs registered in the UK or at the European level can also be protected in the Cayman Islands by extension with the Cayman Islands Register of Patents and Trademarks. The patent regime provides innovators with additional protections against abusive challenges to their rights by entities that obtain patents for the sole purpose of taking legal action against those who innovate and develop new products. The Cayman Islands patent laws also prohibit bad faith infringement claims by “patent trolls”.
The following intellectual property (IP) protections may be available in Cyprus:
- Making a national application for a patent, namely to file an application for a national patent certificate with the Patent Registrar. The application will be forwarded to the European Patent Organisation (EPO) for further examination who will then issue a search report. Should the application be successful the Registrar will accordingly publish the patent certificate of registration, followed by the search report.
- Protection at an international level can be sought through submission of a single application under the provisions of the Patent Cooperation Treaty 1970 in a large number of countries which are signing parties to the treaty. Following submission of the application, its contents will be publicly disclosed after the lapse of 18 months.
- An online application can further be made in order to secure protection at a European level, using the EPO Online Filing service. Fintech could enjoy IP protection in some or all of the countries which are signatories to the Convention on the Grant of European patents (EPC). The applicant may choose to indicate which countries the patent is to be protected in.
- A further consideration in cases of companies dealing with certain fintech products would be industrial registered designs.
- Copyright: A further option would be copyright protection, as Cyprus law provides protection to Cypriot nationals for globally published work, as well as nationals for published work in Cyprus. The relevant copyright does not require registration, albeit it should be noted that there is nothing preventing a competitor to achieve the same outcome but use a different method. Cyprus is a signatory to the Berne Convention for the Protection of Literary and Artistic Works which guarantees protection to all the Convention Member States with no further process being required.
- Trademarks: Protection of trademarks can be effected in over 80 countries through an application to the Office of the Registrar of Companies and Official Receiver.
All relevant EU Directives and Regulations relating to IP protection apply and have been introduced into Cyprus domestic legislation.
Software as well as specific design elements or text on a website or in an app can be copyright protected if they are original. Design elements can also be protected as unregistered design rights or as a registered design, if such ele-ments fulfil the requirements of protection in that regard.
It is recommendable to make sure that relevant trademarks for the specific company are protected. In Denmark, trademarks can be both unregistered and registered, however, registered trademarks are often the preferred op-tion, since such rights are easier to enforce.
While "concepts", e.g. a specific business idea, can generally not be protect-ed as intellectual property rights, the Danish Marketing Practices Act regu-lates among other things unfair marketing practices, which supplements the protection provided under many of the other intellectual property rights (de-sign, copyrights, patents, trade secrets etc.). Thus, a business may be pro-tected under this act against e.g. discrediting or impairment as well as imita-tion of products etc.
A relevant protection for many businesses is also the protection of trade se-crets, which is regulated by the Danish Trade Secret Act.
As with other type of companies, fintechs are likely to have several types of intellectual property which they should aim to define and protect, especially when they are working with several third parties in creating such IP.
Copyright is an important IP asset for fintech companies, as fintech businesses rely significantly on software. Software code is automatically protected by copyright, as well as e.g. related possible visual interface features. In Finland, if a computer program and a work directly associated with it has been created in the scope of duties in an employment relation, the copyright in the computer program and the work shall pass to the employer.
As trust is an important asset of companies dealing with financial assets and confidential information, brands and trademarks are of great importance for fintechs in differentiating their services from those of others. Trademark registrations are a cost efficient way to protect brands against dilution and copying by third parties. As an EU country, Finland is covered by the EU trademark registrations (EUTM). Design registrations can also be used to protect different features used in business, e.g. debit cards and computer interfaces.
Trade secrets can form an extremely important part of the fintech company's business core. There is no formal registration process, but the company should take reasonable steps to keep them secret. In Finland business secrets are protected against unauthorized use by the Unfair Business Practices Act (1061/1978, as amended) and criminal law.
Technology companies and different financial institutions are racing to secure patents to different fintech innovations around the world. Patents are very useful tools of trade as they can be used to protect the functionality of the invention, regardless of the copyright protected code. Investors also tend to view patents as valuable assets and indications of a strong position in the IP landscape. However, not all fintech inventions are patentable and the related jurisprudence is constantly evolving.
The French Institut National de la Propriété Industrielle (INPI) acts in favour of economic development through its actions to promote innovation, including registration and issuance of industrial property titles, receipt and processing of applications for geographical indications, etc.
First of all, Fintech are protected by Trade Secret Regime. Indeed, trade secrets apply to any legal person whenever it is carrying on its activity, in whole or in part, in a competitive environment. It may be the same as a private company or an association or a public institution (Conseil n° 20065044 of 21 December 2006, Conseil n° 20092103 of 2 July 2009).
It has three dimensions (for a reminder see Conseil n° 20045291 of 6 January 2005):
- The secrecy of processes: protects information that can disclose a company's know-how, in particular manufacturing techniques and research, as well as all the information on technical and human resources mobilised.
- The secrecy of economic and financial information: covers information relating to the economic situation of a company, its financial condition and the level of credit, which shall include all information likely to reveal the level of activity.
- The secrecy of financial strategies: refers to the strategic decisions of a company and its positioning in its competitive environment: prices and discounts; list of suppliers; export development policy; level of improvement of the medical service rendered by a pharmaceutical laboratory; reasons for the withdrawal of the bid from the company to a tender; and dates of opening stalls of second-hand dealers.
In another hand, Fintech are protected by law through patents, copyrights and trade mark registrations, which allows creators to derive recognition or financial benefit from their inventions or creations. Reference should therefore be made to the following answers.
Depending on the specific activity carried out by FinTechs, and generally speaking, in the sense of industrial property the patent protects technical inventions, ie products or processes that bring new technical solutions to a given technical problem. To be patentable an invention must be new, involve an inventive step and be susceptible of industrial application.
To be new, the invention must not be known to the public (previous patent applications, newspaper articles, marketed prototypes) without limitation of duration or place. To be inventive, the invention must not be evident from the state of the art for a person skilled in this art. An obvious improvement or modification of what is known is therefore not patentable. The inventive step in France is left to the judges’ discretion and is in any case a complex criterion to be assessed. In order to be industrially applicable, the invention must be technically feasible and have a technical function that meets a technical problem. An abstract idea or concept is therefore not patentable.
Depending on the specific activity carried out by FinTechs, and in order to be protected by copyright, the work must result from creative activity, be formatted and be original.
Copyright protection does not require any formality to be carried out as it is automatically triggered by the creation of work meeting the three abovementioned requirements. The work is protected as of the day of its creation. However, the work bearing the mark of its author will need to be able to provide proof of the date on which the work was created in the event of a dispute.
In the case where several authors are at the origin of the work, the French Industrial Property Code, in its Article L.113-2, distinguishes three types of work:
- Collaborative: creation to which several natural persons have concurred (L.113-2 al.1). It is necessary and sufficient that the authors have contributed, ie realised a single work together and at the same time. The contribution of each individual cannot be individualised. The work of collaboration is managed under the undivided co-ownership (L.113-3), that is to say that it requires the unanimous agreement of all co-owners (co-authors) of the work to be used.
- Composite: a new work incorporating a preexisting work without any collaboration between the two authors (L.113-2 al.2). In order to realise a composite work, the agreement of the author of the preexisting work is necessary, as for any other exploitation of this work (L.113-4).
- Collective: a work created on the initiative of a natural or legal person who publishes and disseminates it under his direction and name in which the personal contribution of the various authors participating in its elaboration is based on the whole for which it is conceived without it being possible to attribute to each of them a distinct right over the whole realised.
If a company does not use the protections offered by the French Industrial Property Code, it could act a posteriori on the ground of “parasitisme,” ie the forbidden act of using someone else's notoriety or know-how.
In Germany the law on intellectual property can be divided into three categories.
First, there is the copyright, which is conferred to the creator by completing the creation of his work. It protects intellectual creativity (e.g. source code of a soft-ware) and is not transferable as such. Only rights of use can be granted to third parties. The copyright is regulated by the German Copyright Act (Urheber-rechtsgesetz).
Second, there are rights, which come into existence through registration (Register-rechte). An example is trademarks, which are regulated by the German Trade-mark Act (Markengesetz). For trademarks the principle ‚first come first served‘ regarding the protection of trademarks is applied in general. A registered trade-mark protects the owner of the right against the identical or very similar use of it by a competitor. A trademark is often registered for a name and a brand logo.
Third, there are barely protectable rights, like the Know-How of a company.
Gibraltar relies on English law for the protection of its registered and unregistered IP rights. Most fintech is software-based and so copyright, patent (where the technical innovation goes beyond software ‘as such’ having technical effect), and trade-secrets are perhaps the most relevant forms of protection for the technology itself. Trade marks remain, of course, fundamental for the protection of businesses’ brands.
While it is possible to enforce patents’ and trade marks’ rights through Gibraltar’s courts, first registration is done through the dedicated UK offices. Once the UK registration of the right is successfully obtained, applicants can then seek extension of the right so as to include the territory of Gibraltar. As in the UK, copyright arises automatically provided the work qualifies for protection and information that is confidential, identifiable as such and disclosed in circumstances imparting the need of confidentiality acquires the status of trade secret – both copyright and trade secrets are enforceable through the UK or Gibraltar courts.
Fintech business and solutions are subject to the same intellectual property (‘IP’) laws applicable to any other business in Malta. There is no tailored IP framework targeting fintechs. In this regard, Malta as an EU state, upholds European standards of IP protection and complies with a plethora of international treaties and harmonisation measures, thereby ensuring that it offers the most advantageous position to prospective IP rights holders. The Patents and Designs Act (Chapter 417) governs the protection of patents and designs while the Trademark Act (Chapter 416) regulates trademarks. Copyright owners enjoy automatic protection in terms of the Copyright Act (Chapter 415) without the need of any formal registration. IP rights, in general, are also subject to the Intellectual Property Rights (Cross-Border Measures) Act (Chapter 414) and the Enforcement of Intellectual Property Rights (Regulation) Act (Chapter 488).
Israel is very similar to other countries in the legal regime for intellectual property protection. This includes patents, trademarks, trade secrets, copyrights and more. In addition, most companies sign non-disclosure agreements with those who will have access to their confidential information.
There are no specific Intellectual property regulatory provisions applicable solely to fintech businesses. Such businesses are protected under the Patent Act, the Trademark Act, the Copyright Act, the Design Act and the Unfair Competition Prevention Act.
In accordance with the Mexican Industrial Property Law (Ley de la Propiedad Industrial), inventions and processes are patentable. The inventor of a utility model or an industrial design, shall have the exclusive right to exploit it for his/her own benefit or by others with his/her consent, this right will be granted through patent in the case of inventions and registrations in the case of utility models and industrial designs.
The right to obtain a patent or a registration shall belong to the inventor or designer, as the case may be. The patent will have a validity of twenty non-extendable years, from the date that it was filed and will be subject to the payment of the corresponding fee; the registration of the utility models will have a validity of ten non-extendable years, and the registration of the industrial designs will have a validity of five years. Computer programs are also subject to copyright registration.
In addition to local provisions, Mexico is subject to the provisions of the Paris Convention for the Protection of Industrial Property, Chapter 20 of the United States-Mexico-Canada Agreement and Chapter 18 of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
British Virgin Islands
The BVI Trademarks Act is the legislation governing the protection of intellectual property in the BVI. A fintech can utilise the process provided via this Act to protect their intellectual property rights.
SSEK: The following are the intellectual property rights that are recognized under Indonesian law:
- Industrial design;
- Trade secret;
- Geographical indication; and
- Integrated circuit topography.
Generally, fintech providers would seek protection under copyright and trademark, although, depending on the service provided, other intellectual property rights may also be available. Aside from the above mentioned intellectual property rights, no special protection is afforded to fintech providers.
Protection of fintech technology can take place by various means. The protection of software seems to be the most relevant, as fintech technology usually translates into computer systems and applications. Software is protected in Portugal under the same legal rules that apply to copyright protection (according to Decree-Law no. 252/94, of 20 October, as amended). Copyright does not require a registry to exist, but this can be done in the General-Inspection for Cultural Activities (IGAC). Software per se cannot be protected by a patent, unless it meets the criteria to be considered a computer implemented invention, which is an invention whose implementation involves the use of a computer, computer network or other programmable apparatus. In addition, computer-implemented business models can also be patented, to the extent that they are claimed as a technical solution for a technical problem (for instance, automating a response considering the data collected) and involving technical considerations (e. g., the reading of the database). Otherwise, business models are not patentable. All in all, a case-by-case analysis is necessary to determine if protection by patent is feasible.
Technology developed in the context of a fintech business can also be protected as a trade secret. Trade secrecy protects against any act of a competitor that discloses, uses or acquires, without consent, information that is secret, which has a commercial value due to that fact and which has been subject to considerable steps to keep it secret (for instance, the execution of non-disclosure agreements). Note that current national legal provisions on trade secrecy, which are included in in the Industrial Property Code (approved by Decree-Law No. 36/2003, as amended), are now under revision, which is mostly related to the transposition of Directive (EU) 2016/943 of the European Parliament and of the Council, of 8 June 2016, on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The Directive brings substantial changes to the trade secrecy regime, notably on the protection criteria and the enforcement regime, which is expected to become clearer and more effective with the mentioned legislative change.
Software is protected by U.S. copyright laws and international treaties. Registration of copyright is available (and required for enforcement proceedings), but copyright protection attaches from the moment the work is fixed. The source code to software, if properly maintained in confidence, may be treated as a trade secret. Software may also be eligible for patent protection; however, the patent-eligibility of software has been narrowed significantly by the courts in recent years.
The U.S. Supreme Court recognized software implemented business processes as patentable in its 1998 State Street Bank decision. After a decade of overly broad software patents were issued by the patent office, the Supreme Court once again ruled on the patentability of software-implemented business processes in Bilski v. Kappos and substantially narrowed their eligibility for patent protection. Subsequently, in Alice Corp v. CLS Bank, the Supreme Court emphasized that embodying otherwise common aspects of business operations in software would not be eligible for patent protection.
A patentee is entitled to damages in the event of infringement, which may include reasonable royalties or lost profits. A copyright owner is entitled to actual damages, or alternatively statutory damages (if the copyright has been registered prior to the infringement). Both a patentee and copyright owner may obtain injunctive relief to restrain continued infringement of the intellectual property.
Trade secrets protect information that derives value from not being known by competitors or readily ascertainable, provided that reasonable measures have been used to keep it confidential. Misappropriation of a trade secret is a tort at common law, and is actionable under the Uniform Trade Secrets Act (enacted in 48 states) and under the federal Defend Trade Secrets Act. Civil remedies for trade secret misappropriation include recovery of damages and injunctive relief to restrain further use or disclosure. In some circumstances, theft of trade secrets may constitute a criminal violation.
Trademark protection may be obtained by federal registration with the US patent and trademark office, or may arise at common law. Unlike many other jurisdictions, trademark protection in the US requires use in commerce, and not mere registration alone.
The Lanham Act prohibits unfair competition through the infringement of another's trademark, trademark dilution and false advertising. Both civil damages and injunctive relief is available for violation of the Lanham Act. In rare circumstances, civil seizures and treble damages are available.
UAE Onshore and the Financial Free Zones
The protections a fintech can use to protect its intellectual property are the same within the mainland of the UAE and the Financial Free Zones. However, implementation measures and procedures effected by the authorities differ among the jurisdictions, in particular, the DIFC and ADGM are subject to common law procedures, whereas the mainland of the UAE is subject to civil law.
The most applicable protection for fintech in the UAE is that for software, applications, and developments under Federal Law No. 7 of 2002 Concerning Copyrights and Neighboring Rights (as amended). The UAE is a member of the Berne Convention for the Protection of Literary and Artistic Works, pursuant to which all member states recognize and protect the copyrights of individuals of other member states. However, for evidentiary purposes, it is advisable to register copyrights under the applicable UAE registrar.
In the UAE, the financial rights of an employee to a copyright are not automatically assigned to his/her employer. A separate agreement must be executed to this effect. Additionally, it is not possible to assign the moral rights to a copyright under UAE law.
The financial rights to a copyright are effective for a period of 50 years from the death of the inventor or, where the identity of the inventor is not identifiable, from the date of publication (or launching) of the copyrighted product.
There are general intellectual property protections applicable to all businesses, for instance with respect to logos, slogans and names. These intellectual property protections are implemented under Federal Law No. 37 of 1992 on Trademarks (as amended), upon registration with the Trademark Office of the Ministry of Economy. Registration with the Trademark Office results in protection for a period of 10 years, renewable upon application.
With respect to patent protections, Federal Law No. 17 of 2002 on Regulation and Protection of Industrial Property of Patents, Industrial Drawings and Designs (as amended), provides for protection of the same for a limited period of 20 years from the date of filing of the protection application with the Ministry of Finance and Industry.
The UAE is also a member of the Paris Convention for the Protection of Industrial Property. The Paris Convention for the Protection of Industrial Property requires, inter alia, that all member states recognize and protect the intellectual property rights of individuals of other member states. Additionally, the UAE is a member of the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), a minimum standards agreement for the protection of intellectual property rights.
Ukrainian law protects such kinds of intellectual property as: literature and artistic products, computer programs, data compilations (data bases), performances, phonograms, videograms, broadcastings, scientific discoveries, inventions, utility models, industrial designs, integrated circuits designs, rationalization proposals, plant breeds; animal breeds, commercial (firm) names, trademarks (signs for goods and services), geographical designations, commercial secrets. As of today, the IP law of Ukraine does not separately protect source code, however, these products can be protected as copyright.
Ukraine has ratified the core international and European treaties and convention-systems on IP right: Paris Convention, Berne Convention, WIPO Copyright treaty, Patent Cooperation Treaty, Madrid system, Hague system, TRIPs Agreement, etc. Also, Ukraine has 6 laws relating to intellectual property rights in order to protect inventions, industrial designs, trademarks, industrial equipment and author's copyright against any fraud. There is not yet any law against transgressions or counterfeiting on trademarks.
Products and methods (processes) can be patented in Ukraine as inventions or utility models respectively. A utility model must be new and capable of being applied industrially.
Copyright is a set of rights of an individual with regards to a work of art, literature or science Ukraine has an obligation under the Ukraine-EU Association Agreement to introduce such a requirement in relation to photographs and software. Copyright covers only the expression of ideas and concepts. The Association Agreement requires Ukrainian law to recognise that the employer exclusively owns proprietary rights to any software created by an employee during the performance of their duties or as a result of following the instructions of the employer (unless the employment contract says otherwise). Protection of Copyright is awarded from the moment of creation of the work and does not require registration or other formalities. Copyright can be registered with the Ministry of Economic Development and Trade of Ukraine. Proprietary rights are protected for 70 years after the death of the author (some exceptions apply).
Switzerland is a research and innovation centre. Fintech innovations are protectable primarily under copyright and patent laws. Software is usually protected under copyright law as computer programs are not deemed technical solutions per se. A patent may, however, be available if as the computer-implemented innovation solves a technical problem. Copyright protection does not extend to ideas but only protects the individual format and not the content. Algorithms are not subject to copyright protection.
Additional protection may be available by design and trademark registrations which can both protect two or three-dimensional forms.
Fintech innovations may also be protected as manufacturing or trade secrets, the breach of which e.g. by employees or mandatees is subject to criminal sanctions. Non-disclosure agreements are frequently used in particular in the initial phase of a fintech project, when the underlying ideas are presented to investors.
Contractual safeguards can be implemented in IP agreements, such as IP Transfer Agreements or IP Licensing Agreements. Specifically, for Trademarks and Patents (if eligible), fintech service providers can make the appropriate filings with the Office of the Controller General of Patents, Designs and Trademarks. Copyright registration with the Copyright Office is optional and not mandatory to establish copyright in a work. Depending on the specific facts and circumstances, parties can also incorporate arbitration clauses into their contracts. India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention) as well as the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (Geneva Convention). If a party receives a binding award from a country which is a signatory to the New York Convention or the Geneva Convention and the award is made in a territory which has been notified as a convention country by India, the award would then be enforceable in India. Out of the 196 countries in the world only 48 countries have been notified by the Indian Government as reciprocating countries (With major countries such as US, UK, France, Germany, Netherlands, Singapore being notified territories) with the most recent addition being Mauritius.
Fintech companies rely on innovations, usually implemented through software. These assets are almost exclusively protected by intellectual property (IP). Therefore, IP underpins the value of almost all fintech companies. The UK offers a range of IP rights to protect fintech innovations. Some commonly used IP rights of particular relevance to fintech companies are as follows:
The law of copyright protects the results and expressions of creative ability and extends from art and literary works to more technical works, including computer code. It arises automatically; the UK does not have a copyright registration system, unlike some other jurisdictions, so there is no need to register to benefit from copyright. It endures for the life of the author plus 70 years.
For a fintech company, common copyright protected assets include source code and object code, databases, pictures, content, sounds/videos, GUI’s and designs/drawings/plans. In order to qualify for copyright protection, the work must be original, and a minimum amount of intellectual creation / labour must have gone into creating the work. Copyright will be owned by the original author unless the author is an employee in which case the employer will own the copyright. Where contractors are used, it is important to ensure that assignments of copyright (and other IP rights) are included in their contracts.
Copyright gives the owner the exclusive right to exploit the work in a variety of ways. However, copyright does not protect functionality itself. While a company can prevent a third party from copying its software code, it cannot prevent a party writing its own code to do the same thing. Further, legally used software can be observed/studied/tested to understand underlying principles and there are exceptions where a party wishes to achieve interoperability.
Databases can be protected either under the law of copyright, or under the EU sui generis database right. A database is “a collection of independent works, data or other materials which are arranged in a systematic or methodical way and are individually accessible by electronic or other means”.
The database right prevents a third party from extracting or reutilising all, or a substantial part, of a database. To qualify, the author must show a substantial effort in the obtaining, verifying or presenting of the contents of the database. Note that this is separate to creating the data itself. While database right usually lasts 15 years from creating, or making available of the database to the public, as a new right arises where there is a substantial change in the contents, fintech companies often find their electronic databases have protection on an ongoing basis.
Database copyright requires that there is some intellectual creation in the selection or arrangement in the contents of a database; for this reason, it can be harder to show. If database copyright subsists, it gives the same rights and endures for the same duration as other forms of copyright.
Designs can be relevant to fintech companies as they can be used to protect user interfaces. Larger tech companies often obtain registered designs of commonly used user and web interfaces which they associate with their brand / technology. This may be useful if a fintech company has a unique app interface. Designs can be registered cheaply, and with a minimal examination process, and can be a useful tool to ward off competitors who might be minded to copy the “look and feel” of an application. Designs can be registered at the UK and (currently) EU level.
Despite commonly held views, Europe and the UK allows the patenting of software innovations where there is something of technical effect to protect.
Patents protect the functionality of the innovation itself, regardless of the code implementing the invention. This stops a third party from copying the functionality of software. Having patent protection allows the fintech company to exercise a monopoly over the innovation, permitting only that company to commercialise or license the innovation to third parties.
To obtain a patent, certain criteria must be met. In short, a patent must be novel and involve an inventive step (new and inventive over any invention which has been previously disclosed). An application should be completed as soon as possible and before commercial exploitation or publication / marketing of the product. In the UK and Europe specifically, to patent an invention implemented in software it must also make a “technical contribution” of some kind. For example, software which speeds up trading or allows customers to connect to services in a new way.
Patents last for 20 years and are often seen as valuable by investors. The UK also offers a tax saving on profits generated through patent-protected innovations through its patent box tax system.
Trade Secrets / Confidential Information
Patenting requires disclosing how the invention works; some companies prefer to rely on keeping their innovation confidential.
UK common law provides a law of confidence. In addition, the UK is part of the EU Trade Secrets Directive (currently – but note that similar protections already existed in UK law, so Brexit should have a limited impact on the protection available in the UK). To class as a trade secret, the information must not be generally known by the public or persons specialising in the fintech company’s area, it must have commercial value, and reasonable steps must be taken in order to keep the information secret. A trade secret owner can take legal action where there has been unauthorised use of the information to the owner’s detriment.
Fintech companies should look to bolster their legal position by entering into NDAs before disclosing any confidential information regarding their product, giving them an additional contractual protection.
Although not specific to fintech companies, the UK has an exhaustive trade mark registration system for the protection of word marks and logos. It is also (currently) part of the EU trade mark system.
The UK offers a world-renowned justice system with a high calibre independent judiciary. As well as the High Court, the UK has a specialist IP court for lower value claims, called the IPEC. This is particularly useful for fintech companies looking to protect their assets at a lower cost, due to its faster outcomes, more limited process, and caps on recovery of legal costs (the usual rule in UK litigation is that the loser pays a proportion of the winner’s costs).
Ideally, fintech entrepreneurs enjoy the benefit of patent protection. This offers a temporary monopoly on a specific technology and substantiates the innovative merits of the company (an asset often looked at by investors). The Netherlands, like other European jurisdictions, allows certain technological inventions to be protected by patent. The particular upside of a Dutch patent is that the application procedure is relatively cost and time efficient, because the patent is granted regardless whether it meets all the requirements. This means that a Dutch patent also provides an interesting buffer before a company decides to take the international route and apply for patents in other jurisdictions, which can be very costly.
Fintechs that do not meet the innovative and technological thresholds for a patent, can rely on copyright and trade secret protection. Both forms of protection are largely harmonized by the EU and will not differ much from other EU jurisdictions. Copyright protects fintechs from plagiarism of its software (the interface and the source code). This protection is granted automatically, although the company will have to be able to proof how and when it acquired the rights to the software it developed. Trade secret protection allows fintechs to protect its knowhow. Such protection largely hinges on the contractual arrangements the business made with its personnel/contractors and the type of measures it has taken to ensure confidentiality.
Lastly, fintechs can and should apply for trademark protection to safeguard the goodwill associated with their brand. The Netherlands, like most other jurisdictions, offers much stronger protection to distinctive trademarks than marks that are considered generic or descriptive.
A fintech service provider can protects its IP through protection mechanisms for copyright, trademark, patents, and know-how, if the IP of the fintech service provider meets the statutory requirements for those concepts under the applicable PRC laws, or the international conventions entered into by China.
Under Taiwan law, the software developed in relation to fintech can be protected by intellectual property rights such as patent, copyright or trade secret. For patent, the subject of a patent right is 'invention' and an invention means the creation of technical ideas, and utilizing the laws of nature. An inventor may file an application with Taiwan’s Intellectual Property Office, and the patent right will be obtained once the application is approved. For copyrights and trade secrets, there are no such registration or filing requirements in order to be protected by law. However, a copyright or trade secret is subject to certain features and qualifications; such as, 'originality' and 'expression' for copyright, and 'economic valuable' and 'adoption of reasonable protection measures' for trade secrets.
FinTech companies will likely hold several types of IP that they can and should seek to protect. Trade marks, for example, provide vital security and protection for a company’s name and branding. In terms of protecting innovation itself, if it’s software-based one option is copyright for the relevant code. However, copyright is limited in that it only protects the specific expression of code that underpins a concept and creates an effect; it does nothing to prevent a competitor achieving the same effect using code that has been developed independently. Ultimately, if your innovation is based on a new technology or process, a patent is the best option for providing strong protection of innovation. With a lifetime of 20 years, it allows a company to safeguard their entire invention for the long-term while they gain a foothold in the market.
Innovations and inventions are protectable under the patent, copyright and industrial design laws as well as confidential information under the common law in Malaysia. In relation to IP related protections that fintech’s are able to use in Malaysia, listed below are the available IP operations that are in effect in the jurisdiction:
Under the Copyright Act 1987, the copyright shall vest initially in the author of the copyrighted work except (subject to any contrary agreement):
a. where the work is commissioned by a person who is not the author’s employer, copyright is deemed to be transferred to the person who commissions the work; and
b. where the work is made in the course of the author’s employment, the copyright is deemed to be transferred to the author’s employers,
*Where the work is made by or under the direction or control of the Government, Government organisation or international body, the copyright shall initially vest in them*
II. Trade Marks
Under the Trade Marks Act 1976, any person claiming to be the proprietor of a trade mark used or proposed to be used by him may apply to the Registrar for the registration of that mark. While the proprietor of a registered trade mark is the person whose name appears on the Register as the owner, the concept of proprietorship for the purposes of an application for registration depends on who is entitled to the exclusive use of the trade mark, i.e. the first person to use the mark in the course of trade and to develop business goodwill in relation to that mark.
Under the Patents Act 1983, the right to a patent belongs to the inventor unless the invention is made by an employee (including Government employees, employees of Government Organisation or enterprise) or pursuant to a commission in which case the right to the invention will be deemed to accrue to the employer or the person who commissioned the work, subject to any contrary agreement.
IV. Industrial Designs
Under the Industrial Designs Act 1996, the author of the industrial design is entitled to make an application for registration except for (subject to any contrary agreement):
a. industrial designs created pursuant to a commission or money or money’s worth, the person who commissioned the work is the original owner; and
b. industrial designs created by an employee in the course of employment, the employer is the original owner,
Except for copyright where registration is voluntary, one must have a patent, trade mark or industrial design registration in Malaysia to enjoy protection of these rights in Malaysia.