Section 101 uncertainty is not stopping financial services companies from filing patents at the USPTO, according to in-house counsel at yesterday’s Protecting Innovations in the Financial Services Industry conference in New York.
Giving their personal views, patent lawyers at Wells Fargo, Capital One and the Clearing House Payments Company spoke about how the most important filing consideration is whether there is a clear business case for patent protection, despite the difficulties of getting patents for ‘abstract ideas’ under the post-Alice eligibility framework.
Patent eligibility considerations, they added, have a bigger impact on the decision on how their businesses will go about filing a patent rather than whether they will apply for protection.
“Uncertainty around 101 has changed our filing strategies, but we conduct patentability investigations and much of the time you can build a case on 101 grounds,” said David Easwaran, senior IP counsel at Wells Fargo in New York. “When making the determination on whether to file, we look at whether the business is interested in the technology and whether there is a clear space in the prior art to develop it.”
He adds: “Section 101 influences what we are going to do with a patent application rather than if we are going to file for one.”
Brandon Bludau, senior manager and patent counsel at Capital One, added that he thinks about patent eligibility in the same way.
He explained that it is easy to dismiss patents for some inventions when they are purely business methods and thus very unlikely to be patent eligible. But lots of times, he added, an invention can offer real business value. In those instances, he said, the IP department will look at how the invention is implemented and can change the narrative of claims submitted to emphasise where the innovation lies, to give it a better chance of surviving 101 scrutiny – either at the USPTO or later during an invalidation proceeding.
Keeping costs down
Spending more time on patent applications to make them 101-rejection-resistant, however, is not cheap. Panellists pointed out that making applications longer and more detailed and going back and forth with patent examiners to explain why a particular invention is patent eligible costs time and money.
Easwaran at Wells Fargo added that it is generally more complicated for him and other attorneys in the financial industry to draft claims, which now have to be more considered. He said that it is important to outline a problem-solution approach in a patent application that is likely to face 101 scrutiny – which is a divergence from the pre-Alice era when the industry generally did not outline the invention’s real world benefits.
“Doing this will make a patent more likely to stand up because courts like to see the features and benefits of an invention,” he said. “There is an expectation that more detail will help to combat a 101 assault.”
Sean Reilly, associate general counsel at the Clearing House Payments Company, a payment system infrastructure, said he has similarly found that putting more meat on the bones of a disclosure is important for fighting off 101 rejections. That need also puts more pressure on outside counsel to draft applications correctly, he added.
Bludau at Capital One said he was becoming more concerned with the cost of prosecution because of the need for financial services companies to put more into their applications.
Trade secrets v patents
With the growing uncertainty surrounding Section 101 and the resulting rise in prosecution costs, panellists pointed out that trade secrets might start to become a more popular form of protection in the financial services industry.
Charley Macedo, partner at Amster, Rothstein & Ebenstein, pointed out that a popular argument for why fintech innovations should be patent eligible is that protection encourages organisations to disclose their inventions rather than keep them confidential.
There was concern among some panellists that relying too heavily on trade secrets would be counterproductive unless the business was confident that it could treat all of its confidential inventions with the quality of secrecy.
“I think about trade secrets and obviously one concern with that route is whether they will stay secret,” said Easwaran. “It is very easy for businesses to say they will keep inventions secret and then really not do anything to keep them as such.”
He added that trade secrets are preferable to patent protection in instances where there is a strong 101 case against approving an invention, there is little value to be gained in disclosing an invention or if it will be too difficult to enforce the patent.
Bludau said he will similarly look to see if something could qualify for trade secret protection and whether it would be considered patent eligible by the patent office and the courts.
Reilly pointed out that there will always be areas of technology that will benefit more from trade secret status than from patent protection. But ultimately, he added, there has been an uptick in patenting in the financial space and a move towards using open source technologies that cannot be kept secret.
