British patent data insights firm Cipher recently released an IP strategy report that provides a look at how many firms are patenting technologies in the hopes of disrupting various industry sectors. Among the various highlights of the report include a look at fintech patents, which shows that tech companies and not banks are leading the way in obtaining patents that cover the future of banking.
Among banks that have been applying for fintech patents, Charlotte, NC-based Bank of America is far and away the leader in that field. In 2017, Bank of America had a total of 2,547 granted and pending patent families, more than 2,000 patent families greater than the total that had been obtained by its next closest competitor, JPMorgan Chase. 999 of Bank of America’s patent families covered banking IT infrastructures, another 546 cover transaction data processing technologies and 517 families were related to online and mobile banking. Bank of America’s only has six e-commerce patent families and yet that’s greater than the total number of patent families held by European banks BNP Paribas and Deutsche Bank. On average, other banks held patent portfolios which only equalled 6 percent of the portfolio held by Bank of America.
However, when compared to technology companies, the fintech patent portfolio of Bank of America isn’t all that impressive. In fact, the 4,697 fintech patent families held by all banks is less than one-fifth of the fintech patent portfolio held by Armonk, NY-based tech giant IBM, which owns 23,864 fintech patent families. The greatest brunt of IBM’s fintech patents are related to optical character recognition (OCR); IBM holds 9,266 patent families covering related technologies.
Other tech companies which are major players in this space include Microsoft (19,670 patent families), Google (9,757 patent families) and Oracle (7,557 patent families). Like IBM, Microsoft has also focused heavily on developing OCR technologies and it owns 7,331 patent families related to that space. The vast majority of the fintech patent portfolios owned by these three companies are related to OCR, transaction and data processing and online and mobile banking technologies.
One reason for the lack of fintech patent portfolios among banks which is contemplated by the Cipher report is the relatively small amount of infringement litigation which plays out between financial institutions. Chart data included in the Cipher report indicates that the vast majority of lawsuits filed against banks are brought by non-practicing entities (NPEs). Most of the patent litigation filed against banks involve patents in the web and mobile sector. For nine of the 11 banks surveyed in the report, at least 25 percent of the patent litigation they’ve faced has involved web and mobile patents. Banks also faced a good deal of infringement suits involving software and user interface patents as well as financial products and trading patents. A few banks had the bulk of the infringement suits filed against them focused in one tech sector. For example, 100 percent of the suits filed against Deutsche Bank asserted financial products and trading patents. Likewise, 75 percent of the suits filed against TD Bank involved data analysis patents.
Other highlights of the Cipher report include some discussion of the evolving technologies which will likely be highly disruptive to industries in the coming years. A survey of legal professionals, academics and company executives determined that artificial intelligence technologies would likely be the most disruptive. Internet of Things and blockchain technologies also scored high in the survey. Along with fintech, the report also includes breakdowns of the aerospace & defense, automotive, technology and advanced manufacturing. Although the data in the Cipher report seems reliable, it suffers somewhat from the unfortunate association that many commentators make between NPEs and the mythical, non-existent “patent troll.” Three times in the report, it’s noted that NPEs are also known as trolls. Although the report doesn’t seem to take much of a religious stance on the subject, it is discouraging to see a report which is trying to be authoritative on patents engage in the type of rhetoric which has been deleterious to the U.S. patent system in recent years.