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Can I patent a kind of financial structure?

In particular I would like to patent a kind of ETF (exchange traded fund) with certain specific characteristics in terms of the structure. As many of you know, an ETF is a lot of things put together, like:

  1. A specific legal structure for the fund (with different taxation for dividends, e.g. UCITS funds)
  2. A method of replicating the benchmark index, e.g. using a swap with an investment bank
  3. A way of managing the collateral in case of swap replication
  4. A way of managing the dividends, usually reinvesting or distributing them
  5. A way of listing the ETF (e.g. multiple exchanges, one exchange...)

And many other things.

The new structure that I would like to patent is a combination of the elements such as the above, that currently does not exist, and will solve a common problem in current ETFs.

Just to be clear: I don't want to patent a computer system or algorithm, is just a new way of combining elements that exist already.

The question applies to US and Europe.

Thank you!

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2

I will speak to Europe, as I believe the answer is entirely clear there. The US is arguably slightly more murky.

I'm afraid I have to disagree with the conclusions of the accepted answer, which, in my opinion, is entirely wrong and risks misleading further readers. Unfortunately my answer is probably too late to be useful for the OP, but hopefully it will be useful for posterity.

Nothing you mentioned in your question would be patentable in Europe. It is not even in a grey area. Your financial structure would either be excluded subject matter (if claimed as a method in general) or lack an inventive step (if claimed as a method performed on a computer).

Excluded subject matter

EPC art 52 provides:

(1) European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.

(2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1:

    (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;

Your ETF structure is solely a method for doing business, and therefore is excluded subject matter.

Inventive step

EPC art 52 is applied narrowly. If there is any non-excluded feature in a claim (such as the method being performed on a computer), then the claim as a whole is not excluded subject matter. So if your claims were a computer arranged to administer your ETF, then you would pass the low hurdle of EPC art 52.

However, your invention would then lack an inventive step.

EPC art 56 provides:

An invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art.

Your ETF scheme may be non-obvious, and therefore may at first glance appear to meet this requirement. However, under European practice, non-technical features are ignored for assessing inventive step.

All of your ETF structure is non-technical, as it does not solve a technical problem. Instead, it solves a business problem (how to make more money, I guess), which lies solely in the realm of business. Because of this, it does not matter how non-obvious the ETF structure is.

The only technical feature that would be relevant to inventive step would be a general purpose computer. This is notoriously obvious. The claim would therefore lack an inventive step.

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  • Thank you, How about US? – Escachator Mar 10 '16 at 13:23
  • I'm afraid I can't give a confident answer about the US. My feeling is that it would also be unpatentable there, as being abstract (in the sense of Alice v CLS), and therefore excluded subject matter. However, I think the situation is too unsettled at the moment to be able to state that with any certainty. – Maca Mar 10 '16 at 13:29
  • You should get a patent attorney to weight on this. After Alice Corp. v. CLS Bank International, "invention" like yours is very difficult to get a grant in US. Another issue is that you said the problem is common. If the problem is well understood, each and every element is already known, and then the "combination" could be deemed as "obvious to try" and non-inventive (see KSR International Co. v. Teleflex Inc.). For your invention to have a chance in patenting, I suspect that you at least need to have an element that's not already known. – daniel Mar 10 '16 at 14:02
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  1. From my experience in banking and securities, most core intellectual property were copyrighted and/or kept confidential (as proprietary tech) in the form of formulas comprising of derivatives, economic indices, quantitative analysis, and numerous other combinations of data sources.

  2. Any form of securities (stocks and bonds, annuities, etc) is highly regulated and under a lot of scrutiny nowadays. There are many legal issues in regarding full disclosures and waivers to potential investors, such as forward looking statements.

  3. Consult a Securities Attorney. They are not cheap, but it may keep you out of jail or prison. :)

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  • Thanks JM. What I would like to know is if it is possible to patent certain ETF structure (like a specific combination of general benchmark type, type of collaterization for swap backed etf, etc) and after looking to different patents of ETF it seems it may be possible but not 100% sure. I guess the next is for me to know if the generalization of ETF is patented, included the physical and swap replicated ETF... – Escachator Feb 9 '15 at 19:09
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When aiming for an EP, beware of exclusion from patentability as business method under Art. 52 EPC. Be careful how you word your claim so that you do not end up like these guys, e.g.:

https://register.epo.org/application?number=EP06250751&lng=en&tab=doclist https://register.epo.org/application?number=EP07252629&lng=en&tab=doclist

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  • This is a good point. The two patents were rejected on the basis that they don't solve any problem and/or that they are just a specific business setup or organization. If my invention solves a very specific problem through a specific organizational setup, do you think I can patent that? – Escachator Feb 9 '15 at 21:31
  • Will rewrite my question, as I think it should be more specific, given the links provided. – Escachator Feb 10 '15 at 9:52
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Financial structures can be patented subject to patent-ability conditions.

Now in case, all criteria of invention are satesfied like Novelty, Inventive step then certainly these can be patented in US and under certain circumstances in Europe too.

For Europe:- Article 52 (2)

The following in particular shall not be regarded as inventions within the meaning of paragraph 1:

..........

(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;

............

Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.

EP also says

On the other hand, "schemes, rules and methods for (...) doing business" are not patentable; but a new method which solves a technical, rather than a purely administrative, problem may indeed be patentable.

for more information please visit EPO explanation

However I feel that Since Patents are relatively risky to acquire and pretty hard to defend and execute it is recommended that you should also go for copyright and if possible integrate it with logical circuit design. Patents have shorter life span 20 years and have risk of being narrowed by examiner or invalidated by competitor.

please have a look on page 5-6 on book

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  • Hey Pushpack thanks for your answer, but is not an equity trading system, it is a financial structure, i.e. a way of setting up a fund. – Escachator Feb 18 '15 at 0:56
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Any invention can be patented provided that it is novel and non-obvious.

I have gone through the details and yes your method would be patentable in US and EU (also keeping in mind the following).

In Europe, if the invention disclose some schemes, rules and methods for doing business (as specified in Article 52 (2) (c)) and does not solve any technical problem which might have potentially required an inventive step to overcome the same then it would become very difficult to get a patent. If financial structure comprises of calculations or equations which are human driven then it would be very difficult to get a patent for the same. In this case, the person should proceed for filing a copyright, etc.

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  • 1
    Ideas can't be patented; inventions can. Only the implementation that results from an idea can be patented. – Matthew Haugen Feb 12 '15 at 20:07
  • Yes Matthew, I totally agree with you that its the invention that is patentable by law. However, I was referring to the questioner's context. They are asking about patenting a method. – TTConsultants Feb 13 '15 at 10:48
  • Hi, thanks a lot for your answer. In reality I don't want to patent a specific computer system or algorithm. I have clarified my question above, providing more details to make it more clear. – Escachator Feb 13 '15 at 12:16
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    Hello, I have gone through the details and yes your method would be patentable in US and EU (also keeping in mind my original answer). – TTConsultants Feb 13 '15 at 12:48
  • Thanks TTConsultants. I am happy to give you the bounty and the correct answer, although is not already in your answer above. Would you mind to retype it? – Escachator Feb 15 '15 at 17:26

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