<http://www.msnbc.msn.com/id/16397717/> US patents for financial services boost By David Wighton in New York Financial Times Updated: 1:40 a.m. ET Dec 30, 2006
The number of US patents issued for financial services has soared this year as banks have rushed to take advantage of a protection once seen as the preserve of technology and drug companies. Patents issued in the main US financial services category had risen more than threefold to 238 by the end of last week, with General Electric's finance arms heading the field with 11. Many financial companies have stepped up efforts to protect intellectual property in recent years. Innovations that would not have been tried previously are being pursued because they can now be patented. But experts warns that financial services is a fertile area for "patent trolls", who obtain and aggressively litigate patents. Josh Lerner, a professor at Harvard Business School, said large numbers of financial services patents were of questionable quality. "In many cases patents are being used not as a tool to promote innovation but as a tool for extracting 'rents' from companies with deep pockets." John Squires, chief intellectual property lawyer at Goldman Sachs, said a big worry was the way US courts granted injunctions to force companies found guilty of patent infringement to stop using disputed technology. Because of the highly interdependent nature of modern financial services, such injunctions could pose severe problems for the broader industry. The dramatic growth in financial patents comes amid increasing concern about the patent system in the US and attempts to reform the process in Europe. In Europe, financial services or so-called business methods patents, are rare and lawyers say they are seldom enforced in the courts. But in the US, a 1998 court ruling in a case involving State Street Bank made clear that businesses' processes were patentable. A flood of applications followed and these are now feeding through into issued patents. Many financial services patents this year were issued to large US financial companies such as GE, Citigroup, JPMorgan, First Data and Goldman Sachs, or technology companies such as IBM, Hewlett-Packard and Accenture. An increasing number of patents have been issued to individuals. Vergil Daughtery, a Georgia Tech MBA, was awarded patents for the pricing of "expirationless options". This was "despite the fact that perpetual options had been extensively studied in the finance literature since the 1960s", Prof Lerner said. In June, the company to which Mr Daughtery licensed the patents filed a suit against the Philadelphia Stock Exchange for infringement. Financial patents were being litigated at almost 30 times the rate of patents as a whole, Prof Lerner found in a recent study. -- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>
