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Trends in Financial Services Patents

Armed with a well-stocked patent portfolio, a company can effectively corner valuable markets for a limited amount of time. While this concept is second nature for most makers of tangible products, pharmaceuticals, or even software, it is only now becoming widely accepted in the financial services sector. As a result, another battlefield is emerging in which patents are becoming the weapon of choice, and trading floors and back-office processing centers have become the new settings for patent disputes.

As financial institutions moved business processes from paper to computers, technology became a cornerstone of marketplace success. A landmark Supreme Court decision in the late 1990s ' State St. Bank and Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) ' confirmed that financial instruments, as well as the underlying business activities of financial institutions, fall within the boundaries of patent law. As a result, savvy financial institutions began to file patent applications on ways of processing financial data and handling trades. While tentative at first, these efforts have recently skyrocketed as companies realized both the offensive and defensive benefits of patent protection. Not only could large, established companies now prevent competitors from offering financial instruments or processing services similar to their own, but smaller companies found themselves able to secure a particular market niche against powerhouse rivals.

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