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Does State Street Lead to Europe? The Case of Financial Exchange Innovations

56 Pages Posted: 28 Nov 2009  

Mari Komulainen

National Board of Patents and Registration of Finland

Tuomas Takalo

Hanken School of Economics - Department of Economics; Helsinki Center of Economic Research (HECER)

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Date Written: November 25, 2009

Abstract

We study whether and to what extent financial exchange innovations are in practice patentable in Europe. We find that exchange-related applications initially increased significantly after the State Street decision but subsequently decreased. The clear majority (65%) of applications come from the U.S. investment banks and exchanges themselves being among the most active innovators. But patents were not easly granted in response to these applications (only 3% of them led to valid patent). The high post-grant opposition rate (41%) for granted patents indicated that competitors tightly monitored each other’s patents. The evidence, as augmented with clinical case studies, supports the notion that, for an invention to pass the inventive step requirement for obtaining a European patent, it should have technical features for solving a sufficiently challenging technical problem. Our evidence suggests that patentability standards for financial methods have not weakened in Europe in the aftermath of the State Street decision and that the inventive step requirement constitutes a major obstacle for applicants to overcome in order to obtain a financial exchange patent in Europe.

Keywords: finance patents, financial innovation, business method patents, patent policy, management of intellectual property in financial services

JEL Classification: O34, O32, G24, G28, K29

Suggested Citation

Komulainen, Mari and Takalo, Tuomas, Does State Street Lead to Europe? The Case of Financial Exchange Innovations (November 25, 2009). Bank of Finland Research Discussion Paper No. 22/2009. Available at SSRN: https://ssrn.com/abstract=1513227 or http://dx.doi.org/10.2139/ssrn.1513227

Mari Komulainen

National Board of Patents and Registration of Finland ( email )

Arkadiankatu 6 A
Helsinki P.O.Box 1140
FI-00101 Helsinki
Finland

Tuomas Takalo (Contact Author)

Hanken School of Economics - Department of Economics ( email )

PO Box 479
FI-00101 Helsinki
Finland

HOME PAGE: http://https://sites.google.com/site/tuomastakalo/

Helsinki Center of Economic Research (HECER) ( email )

FI-00014 Helsinki
Finland

HOME PAGE: http://https://sites.google.com/site/tuomastakalo/

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