IP Defense for Fintech Businesses

Introduction

Technology advancement has led to a boom in the fintech sector in recent years. Fintech is the term for the technology used in the financial industry. Indian fintech is predicted to generate $200 billion in revenue by 2030, according to a report titled "$1Tn India Fintech Opportunity" by Chiratae Ventures and Ernest and Young. The report also highlighted the market for digital lending, which is predicted to grow to a book size of $515 billion by that time.

Pay Tech, Lend Tech, Digital Banking, Insur Tech, Wealth Tech, Finance, and Regulatory Tech make up the majority of the Fintech categories in India; as a result, Fintech businesses own important intellectual property. Trade secrets play a significant part in the protection of invention, including patents, although software, which is a grey area, can be protected under two different headings. In addition to protecting ideas, a strong and substantial IP portfolio shows how well-developed a company's unique business strategies are.

Protecting Inventions with Patent

Due to the Fintech sector's dynamic nature, protection of ideas during the concept stage aids in ensuring uniqueness. The industry is becoming more customer-centric as a result of the innovation boom brought on by the development in bitcoin and blockchain patents, which is difficult to dispute.

Though trade secrets don't require formal registration, confidentiality measures like signing NDAs and CDAs must be used in order for secret information to remain private and not be disclosed to rivals. The underlying core technology is frequently protected by a combination of patent and trade secret rights, which must be developed from a global perspective. In the quickly evolving business, the framing of the invention and existing art provide two significant obstacles to patentability. So, one of the most crucial components to safeguarding ideas is the filing of method and product patents during the concept stage.

Copyright Protection

According to Indian patent laws, it is expressly prohibited to patent "business processes" or "computer programmes" in and of themselves, although computer programmes that are connected to or are a component of other innovations are given considerable leeway. Hence, if a computer programme is claimed together with novel functionality, there is a good chance that it will be granted a patent. Unlike to copyright legislation, however, patent laws lack an analogous clause granting employers ownership of innovations developed by their employees while they were working for them.

Branding and Trademark

For a business to successfully market its identity, draw in clients, and deliver high-caliber services, branding is essential. Financial organisations may differentiate their products from those of their competitors by using a strong brand. It also makes it possible for fintech businesses to merge, buy out, or be acquired based on the intended use of their trademark, offering them economic value and competitive benefits. Despite the fact that brands can be registered as trademarks even before they are launched, there may be issues if other businesses are already using similar names if the brand is descriptive.

Branding is global, as opposed to trademarks, which are regional. Because FinTech company ideas are frequently not patentable, there is little to stop rivals from using the same business approach and platform. Established companies' names and trademarks, which are connected to their market reputation for reliability, customer service, and cybersecurity, are their sole means of protection. Yet, reputational and commercial losses may occur very immediately when a competitor uses the same or a name that is similar. Businesses must thus dedicate the resources required to quickly identify any usage that may be infringing on those trademarks and take appropriate action.

The FinTech startup mobile banking firm Current did just that when Facebook presented the design for its digital Calibra wallet for the company's Libra cryptocurrency, which was eerily similar to Current's logo. In addition to registering their trademarks, FinTech businesses must aggressively go after trademark infringers. If purportedly innocent infringers do not cease immediately, industry efforts to resolve infringement accusations peacefully and out of sympathy for them may only result in irreparable harm. As the economy changes to COVID-19 and market players focus on monetizing the growing demand for FinTech solutions that customers are prepared to accept, trademark enforcement and prosecution are ever more important.

Conclusion

A strong IP portfolio not only protects ideas but also demonstrates the effectiveness of innovative business models in real-world settings. An IP strategy is essential for businesses looking to raise capital from investors who need guarantees that the Product they are buying is protected. A strong IP portfolio will also be more desirable to potential buyers if the owner ever decides to sell their business. All financial organisations, especially start-ups, should place a high priority on safeguarding their intellectual property via proper paperwork, registration, and due diligence since it gives the owners of such property leverage and a host of financial advantages.