Flogging a Dead Horse – Fintech Patenting

The Australian financial sector is the single largest contributor to the national economy. New ways to legally organise, distribute, invest and hide funds so that profits are maximised, whilst minimising taxation and associated risks, has been popular since people started using coinage and other symbolic value representations for trade.

With so much money in the financial sector – and with the rapidly evolving technology we see developing before us – it was inevitable that computerised products would be developed to support and enable financial products and processes to supplant the people that performed these financial jobs previously. These computerised products and processes eliminate human error, are ready and willing to act around the clock, and do not require a wage or other employment benefits.

These financial products and processes have not been possible before due to the technology not previously being up to the task. Now that they are possible, the developers of these products and processes have looked to intellectual property protection to restrict competition and maximise profits that can be realised. As they are typically offering a product or process, patenting tends to be the area looked to for intellectual property protection.

Unfortunately, from a patenting perspective, the fact that this non-productive element of the economy has been around for so long, and has such a large value, makes finding new and inventive aspects to it difficult.

Relevant Patent Framework

Whilst the rules in different countries are slightly different, in order to patent something it must be considered to consist of patentable subject matter. In Australia, the following have generally been held to be outside the field of patentable subject matter:

  • discoveries without a means to implement them
  • mere ideas
  • mere plans
  • scientific theories, and
  • mathematical algorithms themselves.

There is a further requirement that to be patentable, something needs to be an artificially created state of affairs in the field of economic endeavour – and that must involve a physical phenomenon or transformation. In a computer, the electrical signals used to operate the computer are a physical phenomenon or transformation.

This may lead you to think that any financial product utilising a process or system applied to a computer would be considered patentable subject matter as there is a physical phenomenon or transformation taking place in the computer, but this is not the case.

There is case law that sets out the requirements for an invention to be considered patentable in the realm of computer implemented inventions. It specifies that the invention must meet at least one of the following requirements:

  • The contribution of the invention must be technical in nature.
  • The invention must solve a technical problem within the computer.
  • The invention requires more than just generic computer implementation.
  • The computer must add something more than just being an intermediary tool.
  • The ingenuity of the invention must not solely relate to the scheme.

Basically, there must be something patentable in the way the computer itself is being used, not just being used as a tool.

When we look at the above noted financial processes or systems applied to a computer, there must be a technological improvement in the way the computer operates. In other words, making a financial process or system more efficient or cost effective is an improvement to a non-patentable scheme or plan, but it is not considered a patentable technological improvement.

There is further case law in Australia that gives some guidance on what may or may not be considered patentable in this area.


An applicant filed a Fintech patent application related to investing in securities and creating and using passive portfolios and indexes. The invention layered algorithms to enable the computer to interpret data and index a securities market. This has not been done on a computer before, previously requiring significant human input. It was held that the invention merely used a computer as computers are commonly used to implement a scheme that has typically been conducted by an analyst.

The question to ask here is, where is the technical contribution to computing needed to make this scheme happen? The answer is that there was no new and patentable technical contribution. If the invention had created new ways to index the securities data that were foreign to a computer, then it may have been considered patentable. Similarly, if the invention had created new efficiencies or pathways in the computer structure for indexing securities, the invention may have been considered patentable. However, without these, there was no new and patentable technical contribution.

Take Away

If you have a new way to implement a financial process or system, in most instances, it doesn’t matter how much money your process or system can make or how good your process or system is from a patentability perspective. It remains a process or system and therefore is not considered patentable.

If you want the monopoly benefits of a patent, your financial process or system needs to have a new technological element that is itself patentable.

This may sound daunting, but the difference between a patent application in this space being considered patentable or not can come down to the way in which the new process or system is framed in the application. With this in mind, the guidance and assistance of a relevantly skilled patent attorney can be the difference between patentability and rejection. This relevantly skilled patent attorney knows the system and can frame your process or system in terms of technological implementation to give you the best chance of obtaining patent protection.

Wrays Industry Insights, Insights