The topic of financial services patents was a focus of discussion during a panel moderated by Bruce Berman of Brody Berman Associates during this year’s IP Business Congress in San Francisco. The panelists included Michael Chernoff of MDB Capital Group, Andrew Ramer from Cantor Fitzgerald, and Sean Reilly of The Clearing House Payments Company. Each panelist had a very interesting perspective on the future of patents held by banking and financial services firms, where the majority of these patents are primarily business methods and software related.
The panelists seemed to agree that, overall, values for patents in their industry have seen a reduction post-Alice Corp. Michael Chernoff stated that over the years, he has stressed the difficulty in valuing methods patents, and the current environment is no exception. However as history has shown, markets tend to rise and fall with the tides, and the panelists acknowledged that the near future could possibly be a bottom in terms of low valuations for methods patents.
Michael Chernoff presented very interesting research from his firm indicating that financial services companies, as well as major technology companies, are continuing to file-for, and are receiving methods patents, albeit not at the same rate as in previous years. For example, MDB Capital’s analysis of patent applications from 2011 to 2015 shows that eBay owns 585 patent application families related to business methods and software patents relevant to financial transactions and supporting technologies, while Bank of America owns 633.
Andrew Ramer envisioned future patenting activity at his firm, and other financial firms, to continue with regards to financial services related technology. While he believed methods-related claims will still be filed-for, there may be an increase in patent application filings related to consumer and enterprise facing devices and hardware in the coming months and years.
Sean Reilly believed that going forward, the focus at the patent office should be on quality and clarity in terms of business methods patents, and he did not feel that stricter legislation is necessarily the correct way to address issues surrounding the use of software patents.
The overall tone of this year’s conference seemed to focus on a pendulum shift from the high values attributed to patents during the Nortel and Motorola patent acquisitions just a few years ago. Many attendees and speakers seemed to feel that the current environment is an extreme situation caused by an uncertainty in case law, and the legislative issues still pending in Congress. Despite the negative headwinds, some feel this may present a unique buying opportunity – where an increased risk may prove to yield higher returns.
Hopefully once some further clarity comes out of the courts and Congress, there may be a pendulum shift back towards a median, which may signal an increase in overall patent values, especially for software related patents.