EUROPE - European banks and securities houses may have to prepare for a more widespread, US-style, application of patent rights in the financial sector, according to a report by the Zurich based International Securities Market Association (ISMA).

The report by Julian Walmsley points to the differences between European and US developments in business and software patents, and the lack of certainty over what will happen judicially in Europe.

The report notes: “The broadening reach of ‘financial’ patents in the US is also being driven by insufficient understanding of business methods and software on the part of patent examiners.”
For example, Walmsley highlights the possibility of patenting a particular kind of stock exchange or bond market – something that is of increasing relevance, as investment through electronic trading platforms is getting more popular.

The European union excludes computer programs from the reach of patent regulation and requires patents to have a “technical character;” a clause that has helped grant patents for software that solves technical problems or involves technical considerations, says the report.

Walmsley follows the outcome of the European Patent Convention’s (EPC) conference last November in Munich, where the members agreed to defer a decision on expanding the EPC to include business processes and software.
Prior to a draft directive on patents, the European Commission has published a consultation document discussing whether or not software could be patented.

Hence, ISMA warns European firms to keep an eye on developments on both sides of the Atlantic. First of all, companies should consider whether their business methods can be affected by US patents, especially in the area of global electronic commerce.

Secondly, firms should consider assessing US patents in light of their own business in the event that it becomes necessary to object to parallel patents being filed in Europe.
Thirdly, he says, documentation should be saved to demonstrate when a specific business method and an associated computer system were implemented or ‘invented.’