This article is written by Khushi Kumari who is a first year law student in Lloyd School Of Law . 

IPR Strategies For Fintech Companies To Expand Globally

Abstract :

The article address about identifying technologies which is unique to the Fintech , and which can be patented. This also protects the innovation and can be lucrative source of revenue through licensing agreements. When planning to operate globally, Fintech companies should obtain patent in the main markets outside their home country, in order to protect the IP rights. Trade secrets such as confidential information is also another way in which companies can protect their IP’s. These may include algorithms, methodologies, data bases which have an edge over the competing companies. Companies need to register their trademarks, trade names and distinctive product names. This could assist in reducing market confusion and brand association. This includes periodic verification and audits to make sure that all IP’s are well registered and maintained. For example, the search for legal expertise is vital as countries have diverse laws that are challenging to understand. This will also assist in implementing the rights effectively. Fintech companies may also find the collaboration to be useful in cases where they can share their technologies or license their IP’s to other businesses. Additionally, Fintech companies can also make use of copyrights to protect their software, websites and marketing materials. Companies should also sensitize their staff on what is IP and the laws governing it to avoid accidental infringement. Likewise, training must be given to the staff to know the importance of keeping confidentiality to safeguard trade secrets. 

Introduction :

The intellectual property is referred to as product that stems from any creative thinking process or procedure like, a piece of art, song recording, story writing, invention, design, among others. The intellectual property rights (IPR) are the rights allocated to the inventor or developer and allows ownership to protect the invention or works of an individual for some period of time. It is very well known to understand that IP plays a vital role in the modern economy. It has also established that labour who are associated with the invention should be given due importance. IPR helps in the economic development of a country with the help of promoting healthy competition and encouraging industrial development and economic growth. 

European history stands behind regulations and management of intellectual properties (IPR). Granting patents has been a trend since the 14th century. In some respects, England was ahead of other European countries and used to lure artisans with favourable conditions. The first copyrights known were registered in Italy. In India, patent act is more than 150 years old. Firstly, only industrial activities, patent and trademarks were protected but now the term ‘Intellectual Property’ has a much wider meaning. 

Examples of intellectual effort that deserve IP protection :

1.Patent

2.Industrial designs relate with features of any shape, configuration, surface pattern, combination of lines or colour combinations, two-dimensional i.e. textiles or three -dimensional i.e. tooth brush.

3.Trademarks relate to any mark, name, or logo used in commerce to identify a producer of goods or services. Traditionally, trademarks are considered to be intellectual properties that can be purchased, sold, and licensed. There is nothing unique with trademark other than its connection with the good will associated with a given product or service.

4.Copyright deals with expression of ideas in material form such as literary works, music, dramatics, artwork, cinematography work, tapes and audio tapes in addition to computer software.

5.Geographical indications refer to indications that indicate that the goods originate from within a particular territory of a country or a certain region or specified place in the territory and their distinctness, fame or other characteristic is associated with this quality. 

There are a lot of strategies for Fintech companies to expand globally. Some of them are :- 

1.To identify Patentable technology :-

If we want to identify patentable technologies or process, the first step is to be aware of what can be patented or what not.

What can be patented under patent law? 

• Any new or useful process
• Machine
• Article of manufacture
• Composition of matter
• Any new or useful improvement thereof

What cannot be protected under patent law? 

• Any sort of artistic work (they can be copyrighted) 
• Abstract concepts
• Laws of nature
• Mathematical models
• Physical phenomena 

A new developing industry called ‘The Financial Technology’ or shortened to ‘Fintech’ has emerged. It utilizes digital technologies to increase efficiency in the areas of money, financial management services, and settlements using a variety of assets such as digital assets, distributed registries, digital markets . The Patent office ensures that the solution is patented in such as manner that technology will not be able to be made, used and sold commercially without the authorization of the patent holder. The owner of the invention enjoys the exclusive rights in the country where the patent was granted, lasting for twenty years. A patent should be sufficient in providing technical details of an invention to make the ‘person skilled in the art’ able to manufacture it again, without any new innovative activities (Article. 83 EPC) ( Liďen & Setŕeus 2011 ). The minimum content required in a patent, which must be understandable and reproducible, so as to make an invention disclosable . That is why juridical language has been used in the document in accordance with the laws which make it legal and give protection for the invention. 

What are the reasons to have patents for Fintech software ? 

Fintech sector has grown over 700 percent in the last few years with global investments in the Fintech topping $ 44 billion in 2020. All the banks and Fintech startups are in race  to build their portfolios in patent by acquiring disruptive technology in blockchain . The payment companies as financial institutions and banks are quickly understanding the role of Intellectual property in their business and monetization strategies. Without the proper safeguards directed toward your software implementation or your business method, you might get caught up in the so-called “second mover advantage”. That is what we call a scenario where a company follows the pioneer in an industry adopts their patented technology and proceeds to develop. 

2.International Patent Protection :-

There are multiple legal frameworks across the world in which an organisation has to operate. Therefore, fintech companies need to seek international patent protection. International patents ensure that a company is given exclusive rights to use or distribute its technology or approach in different areas of administration. Patents enable companies to exclude others from using, selling or manufacturing their invention thus giving them an upper hand in competitions. Sometimes companies decide to seek patents in many countries based on commercial issues like where a company operates or plans to expand.  The process of obtaining international patents requires careful planning, resources, and costs. But, in the long term, such benefits may outweigh the costs by providing a competitive edge and monetization possibilities. The countries in which a company seeks for patent protection are based on where the company intends to operate. In particular, Fintech companies may target patent applications in markets where Fintech is thriving such as the US, Europe, China, and Southeast Asia. This guarantees safety in major aspects of the company’s international activities and prospective marketplaces.

Nonetheless, international patent protection possesses its own challenges. This makes the process difficult as patent laws and processes are varied in different countries. In order to get around the application process, it is necessary to work with legal specialists knowledgeable about patent regulations of prospective countries. It is also important to bear in mind that getting a patent is just one part of the game, while enforcement and keeping the patented products safe, require constant attention and work. Therefore, fintech companies should perceive international patent protection as a continuous business strategy necessary for building and strengthening their global presence.

3.Trade Secrets :-

These types of information can be considered as trade secrets in terms they must be kept confidential and hidden from public. They serve for companies’ protection of their intellectual property (special techniques, processes, algorithms, databases and any other proprietary information). In contrast to patents, trade secrets do not always involve formal registration. They only retain value as long as they stay secret. Competitive advantage is often lost as soon as the secret becomes public knowledge. As such, organizations should enforce stringent trade secret laws and security systems to prevent them from being leaked out by their competitors.

4.Trademark Registration:-

It becomes paramount for firms to register trademarks to protect their brand attributes like logos, brand name, or distinctive names of products. Trademark signifies business personality and differentiation of a firm which translates into their identity and brand name. When these identifiers are marked and legally registered as trademark, the owner has an exclusive right to use them and prevent competitors to copy or misuse them. Furthermore, registration clears the market and gives the customers the right product for their money as they are confused when they see a similar brand name or logo of different counterfeits goods. As such, it builds consumer devotion which also enhances brand awareness. It is a useful marketing tool which enhances a brand’s recognition and thus leads to higher sales and profit generation. In summary, trademark registration is important in ensuring that a business has its integrity, credibility, and guarantee of quality as far as consumers are concerned.

5.Effective IPR Management:-

In such a competitive industry, IPR management plays an important role in business. This entails measures of protection, management, and enforcement of intellectual property rights. Regarding the management system on intellectual property protection, this involves regular checks and audits to ensure all patents, trademarks, and copyright issues have been duly taken care of.

Records must be maintained for IP and other related issues like timely renewal, monitoring infringement, and following up legal actions. This enhances business’s capacity to safeguard their invention, creative works, designs or trademarks in order to continue having an upper hand on the market. It is likewise important in mitigating the dangers of litigation or fines resulting from innocuous infringement.

Legal Expertise :-

Legal knowledge is an area of specialization relating to understanding elaborate statutes which differ between any two neighbouring countries. An individual or a business hires legal specialists or lawyers; this minimizes risks from hefty fines, penalties, or litigation resulting from non-conformity with these complex laws and rules. Additionally, these legal practitioners can assist in the effective execution of one’s rights by offering required legal counselling, representation, and mediations hence guaranteeing one’s property possession and interest as per law.

Collaboration and Licensing :-

Fintech is part of a segment that flourishes through innovation, advancement, and optimization. Thus, there are cooperation and licensing aspects that must be considered in this field. In this regard, collaboration provides the companies with shared technology potentials and the possibility to synthesize abilities leading towards product development and markets’ expansion. However, licensing gives such companies a chance to license the rights of other organizations to apply their IP. Additionally, this creates another source of revenue for the company as well increasing the reach and visibility of their technology in the market. This approach helps Fintech companies specialize in their strengths, develop competitive advantage and expand their presence in the market.

Copyright Protection :-

Differentiating between companies operating within the financial technology industry, also known as Fintech, depends significantly on the application of innovative technologies that are patentable or unique to a particular organization. The core of what makes a Fintech company different is normally in software, digital platforms, or the code that drives them. Thus, they are important intellectual properties. These key assets of a Fintech company are protected under copyright law. Having acquired copyright for a piece of software or a platform, once unauthorised use of that computer program becomes possible through legal proceedings. As a result, a Fintech company will have developed a copyrighted piece of software that may not be reproduced unless explicitly authorized by them.

It is also important to point out that apart from creating new software products, Fintech companies spend huge sums of money on the design of their websites, as well as other marketing strategies such as marketing materials. By copyrighting these materials, the company will be legally protected from other individuals using or mimicking them so as to protect their brand and how they present themselves to others. In addition, since they are virtual institutions, Fintech firms have to create fresh content that is mostly shared on their blogs or across other social media platforms. The company can protect this content from stealers and those who will reuse it without credits in order to maintain its worth and return on investments.

IP Education :-

The lifeblood of a fast-moving Fintech company in the marketplace is creativity and original technology. They refer to the IP that form part of a Fintech firm including algorithmic trade secrets and patented programs. Fintech companies should therefore concentrate more on IP education to safeguard such crucial resources. This will cover both teaching them what is IP and the associated laws, and outlining employee roles aimed at keeping IP secure. This means employees must know about various litigations such as suits and reputational damages that can negatively affect a Fintech company’s performance.

Furthermore, in an area such as Fintech were personal data and trade secrets often are handled, confidence should be emphasized at all cost. Therefore, they should educate their employees on how to protect the secretes of trade techniques like procedures, patterns, and algorithms that make them competitive. The organization’s employee training programs should focus on improving the practices that ensure confidentiality of trade secrets by protecting against accidental disclosures, and explaining the role of maintaining secrecy on proprietary information as well as how to react to queries about it. In this case, these measures may be the ones that are most instrumental for the company maintaining its ground in an intensely competitive environment.

IP Valuation :-

IP valuation is to ascertain how much money these rights are worth for a company’s intellectual property. Such assets include various items like patent, trade secrets, copyrights, trademark, brand name, and design rights, etc. Assets provide important leverage for a company’s competitive positioning, survival potential and attractiveness as a target for acquisition. For Fintech companies expanding globally, IP valuation carries several critical implications:

1.Access to Funding: Financing is a crucial element that startups in the Fintech sector fail to get for driving the growth, innovations and expansion. Investors consider their intangible property because it’s hard for them to provide sufficient amount of tangible assets as a guarantee. A true, credible IP valuation testifies for their solutions’ economic strength as well as original technology. It draws investments, improves the image before financers and enhances the probability of financial support.

2.Merger and Acquisition Activity: A credible IP valuation may provide better insight into the overall price of the takeover target when it comes to a Fintech company.

3.Licensing Agreements: Through licensing of intellectual property (IP) assets, Fintech companies aspiring to enter into global business expansion may find it beneficial to leverage such holdings. While licensing is another source of income for a business, it also provides an opportunity for the company to have some presence in a new territory and incur minimal costs.

 4.Risk Management: A Fintech firm’s competitiveness and      value depends on its level of technology innovation. Inadequate protection or valuation for this may lead to patent infringement, counterfeiting, or misuse of the company’s intellectual property assets. It may result in loss of revenues, damage to corporate image and lesser market share.

Conclusion:

Intellectual property (IP) protection and its effective management plays a vital role for Fintech companies planning to expand globally. Strategies such as identifying unique patentable technologies, seeking international patent protection, protecting trade secrets, and trademark registration are imperative in maintaining a competitive edge in the global market. Furthermore, hiring legal experts can mitigate the risks arising from different international IP laws and regulations, and help enforce a company’s rights more effectively.

Licensing and collaboration with other companies can help Fintech firms leverage their IP rights to expand their market presence and generate revenue. Implementing copyright protection measures can also help to prevent unauthorized use of a company’s unique software, platforms, and marketing materials. An educated staff on IP laws and trade secret confidentiality are paramount to maintaining a company’s competitive position in a high-velocity industry like Fintech. Lastly, regular IP valuation is crucial in gaining access to funding, managing risk, and navigating through merger and acquisition activities, while licensing agreements provide an alternative income source and opportunity for expansion into new territories. In sum, the combination of these strategies can facilitate successful global expansion of Fintech companies, ensuring long-term competitiveness and profitability. 

Reference :

1. https://sagaciousresearch.com/blog/identify-technology-process-patent-research/

2.https://www.sciencedirect.com/science/article/abs/pii/S0040162522006813

3. https://arapackelaw.com/patents/fintech/patents-for-fintech-software/
4. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3217699/

5.https://www.sciencedirect.com/science/article/pii/S0014292122000897

6.https://www.sciencedirect.com/science/article/pii/S0014292122000897