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When should financial services institutions assert business method patents?

In the close-knit financial services industry, where a company’s competitors are also frequently its customers, when should financial services institutions assert business method patents against competitors?

At a lively panel discussion at the 10th Annual Patent for Financial Services Summit last week, speakers talked about some of the complications specifically faced by financial services institutions in relation to enforcing patents.

For example, how would a decision to pursue a patent infringement suit against a customer who is also a competitor impact a company’s revenue streams and reputation?

Panellists agreed that in addition to assessing the strength of the patents, lawyers should consult key personnel in sales and other departments as soon as possible about whether the lawsuit is wise from a business perspective.

Moderator Charles Macedo, a partner of AmsterRothstein & Ebenstein, said counsel should clarify with businesspeople the conditions under which they would be willing to settle or abandon the litigation. If the company decides to proceed with the claim, consultations are advisable as market conditions and the lawsuit’s likelihood of success may change over time.

“You may have this decision come out and your likelihood of winning the case goes from 80/20 to 50/50,” he said. “You may have the CLS v Alice decision come out, then it’s who knows what. Congress may pass a law. All those things can impact what you do.”

The latest instalment in the long-running CLS v Alice case was delivered in May, when the Federal Circuit sitting en banc invalidated Alice’s patents for a computerised trading system which acts as an intermediary between traders. It was the second time that the Court had considered the case, having vacated its previous panel decision to uphold the patent claims. In a 135-page decision, the judges appeared deeply divided over questions such as when, if ever, computer implementation can make an otherwise abstract idea eligible for patent protection.

Patent attorneys have previously voiced concerns that the case makes it difficult to advise clients on the likelihood of success in lawsuits involving business method patents. Alice is now considering whether or not it will appeal to the Supreme Court.

“If the Supreme Court takes that case on what’s patent-eligible subject matter, that affects everyone in this room,” said Macedo.

Some considerations for business people in the midst of a trial may include: Do reasons for action continue to exist? Are you getting what you hoped for? Are there reasons to change strategy? What options exist? Should you seek, or accept an offer, to settle? Have risks changed?

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