Intellectual Property and FinTech: How do they interact and how can IP help FinTech startups and companies?
What is FinTech?
Derived from the words ‘finance’ and ‘technology’, FinTech relates to the technology used in the financial industry, more precisely any technology that is able to decrease manual work and increase the automation of financial services. The industry is commonly described as disruptive and rightfully so, given that FinTech thrives on the latest and most innovative technology in order to provide an even more streamlined financial service experience for the end user than before.
FinTech includes but is not limited to digital currencies, cryptocurrencies, blockchain technology, mobile banking, cyber security, machine learning, artificial intelligence, investing, borrowing, lending, open banking and so on.
IP and FinTech
Staying ahead of the FinTech game is just as important as protecting the innovation you are building upon. Players in the FinTech industry, especially startups, ought to know that having a plan of action to protect your technological innovation is critically important in preventing third parties from stealing your technological assets. When players in the industry are constantly competing to one-up each other in order to develop and execute the best FinTech service, retaining your competitive edge can mean protecting your intellectual property with legal documentation. This is crucially important for individuals or businesses who are looking to innovate with third parties to ensure proper intellectual property licensing and to avoid potential IP infringement.
The landscape of IP can be confusing and difficult for FinTech pioneers but individuals and businesses must learn, understand and most importantly utilise the IP protection related to their FinTech service in order to thrive in the industry.
Firstly, let us go back to the basics: FinTech businesses, like any other business, should think about protecting their brand identity. This can include trademarking the name, logo, icon, colour, sound in relation to the brand of the business. The competitive landscape of the FinTech industry means businesses will need to distinguish themselves from their competitors in order to make their offered services distinct from a competitor’s service. Furthermore, should a FinTech business build a considerable reputation through innovative services and exceptional customer service, they ought to protect their hard earned reputation by registering their marks to establish trust and recognition in the consumer space. For example, established financial services company MasterCard takes trademark violations seriously in order to protect the recognisability of their circular red-and-orange logo (source). The cut-throat nature of the industry means that customers will be looking for businesses providing the highest quality of service, therefore it is paramount for FinTech businesses to establish and maintain their brand identity by trademarking the elemental aspects that constitute the image of the business.
FinTech businesses specialising in computational science or user experience design will find copyright to be a key intellectual property protection for them. Copyright can protect program code including source code, user interfaces, related audio or graphics and further works. Individuals or businesses can obtain a copyright license to protect the assets listed above to ensure proper usage by the end user and that infringements do not occur, such as stealing original computer software or code. Furthermore, FinTech businesses can place digital locks on their assets to control violations of copyright by preventing access to their work where they see fit. It is punishable by law to circumvent a digital lock. For example, Nintendo successfully won a copyright case that saw a third party circumvent a digital lock placed on Nintendo consoles. Nintendo walked away with a grand total of $12.7 million from the lawsuit (source).
However, it must be taken into consideration that copyright will only prevent third parties from copying your computer code, but it does not prevent others from developing and improving upon your software or design. What copyright does not protect in this event, patents will. […]
In our next article, we will discuss Industrial Design and Patent protection for FinTech services.
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