Patent-Protection Tips for Financial Services Firms

By Schreiner, Stephen T. | American Banker, February 10, 2006 | Go to article overview
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Patent-Protection Tips for Financial Services Firms


Schreiner, Stephen T., American Banker


Millions of people are still typing on their BlackBerries, and it's still uncertain if the legal battle between Research in Motion Ltd., which makes them, and NTP Inc. will result in a network shutdown or an enormous settlement.

But one thing is clear: Good patents have become an extremely valuable commodity.

There has been an increase in patent filings, licensing agreements, and high-stakes litigation over the past year, and significant changes may be on the horizon. There is movement on the Hill to revamp the patent system, and the Supreme Court is set to hear arguments in MercExchange v. eBay in late March.

This confluence of factors is pushing more financial services companies to recognize the importance of filing patent applications that are in line with four strategic considerations:

*Protecting their inventive products from being copied by competitors.

* Amassing an arsenal of patents to be used for a patent countersuit against aggressors who might otherwise find them a tempting target.

*Enabling cross-licensing arrangements to settle future patent squabbles with competitors.

*Generating future licensing revenue along the lines of what IBM, Texas Instruments, Motorola, and Wang accomplished in the computer industry.

If your company is planning to file for patents, here are a few basic practices that can help avoid some common pitfalls:

Require technology employees to assign inventions. Managers frequently assume that patent law, like copyright law, has a work-for-hire doctrine that requires employees and consultants to assign rights arising out of work performed for the company.

This is not the case. The usual rule in patent law is that inventors own the rights even if they were doing company work, on company time, using company resources. Managers usually learn this when an important invention has been created and the inventor balks at assigning the rights.

Therefore, financial services companies should have all employees (including officers) sign standard duty-to-assign invention agreements.

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