Financial Firms Given Legal Defense against Lawsuits over Patents
Anason, Dean, American Banker
A law enacted this week will reduce the risk of patent infringement lawsuits against financial services companies, but experts warned Wednesday that the industry is not completely insulated.
The American Inventors Protection Act of 1999, which was attached to the federal budget signed Monday by President Clinton, would shield from such lawsuits any company that has commercially used a product or process for at least a year before another company applied for a patent on it.
The new law, which Rep. Howard Coble, R-N.C., wrote to apply to a broad range of industries, is supposed to protect banks, securities firms, and others that have developed financial instruments, information systems, or operational practices and used them for years.
Industry lawyers had long thought such "methods of doing business" did not require patents, but a federal appeals court last year ruled otherwise. This decision sparked concern that the industry may face more than $2 billion of liability to patent holders who could claim ownership of products others had used first.
At risk were a host of inventions, including special types of derivatives and asset-backed securities, software, or unique back-office processes for liquidity management, automated teller machine processing, and on-line banking. Patent holders could demand revenue from these inventions plus royalties.
Experts are still trying to figure out the durability of the law's protections. Lawmakers tried to strike a balance between some patent holders who felt their legal rights were being sacrificed and corporate interests that demanded a legislative remedy. …