Protecting FinTech

Disruptive financial technologies, such as blockchain, new electronic payment systems and transaction authentication technologies, are changing financial services, raising a number of legal issues FinTech companies should consider.

In this post we address the issue of the legal protection of FinTech, taking into consideration the main intellectual property rights protecting innovative technologies and software relating to finance.

1. Copyright

   New financial technologies are in large part software-driven. Therefore, the first intellectual property right to consider in relation to such innovative technologies is copyright.

   Indeed, software is typically protected by copyright and the protection begins as soon as it is created, without any registration or other formalities being necessary.

   On the other hand, certain issues should be considered when relying on copyright protection.

   More precisely, copyright protection extends to the source code, as the expression of the idea underlying the software, whereas the idea itself or the function of the software are not eligible for copyright protection. For this reason, copyright grants protection against the copy or use of the source code, but does not prevent third parties creating different source codes in order to replicate the functionality of a FinTech software.

   Moreover, where the software is developed on the basis of third parties' software, the relating licences must be taken into account. In particular, if the relevant FinTech software consists of a "derived work" resulting from a modification to an existing open source software, then it is possible that a copyleft license establishes the obligation to distribute the derivative software under the same license, disclosing and making available to the public the source code.

   In light of the above, in order to take advantages of copyright protection in the field of financial innovations, it is fundamental to clearly establish the ownership of the software, as well as regulate any rights in software, by means of specific contractual arrangements.

2. Patents

   FinTech companies should also consider using the opportunity to patent certain innovative technologies, provided that the strict requirements set forth by the applicable law are met.

   In particular, unlike copyright protection, patents may under certain circumstances prevent third parties from reproducing the same function of a patented financial technology.

   However, obtaining a patent on a...