FinTechIntellectual Property RightsIP Legal Disputes and Challenges Arising in Fintech Industry

January 24, 20220


FinTech is an amalgamation of “finance” and “technology,” and it refers to any company that employs technology to improve or enhance financial services and operations. FinTech refers to a fast-expanding industry that serves both customers and companies in a variety of ways.

FinTech offers a seemingly limitless number of uses, ranging from mobile financial services to cryptocurrency and investing apps. Concerns about cybersecurity in the FinTech business have increased as the industry has evolved.

Technology is so deeply engrossed in making financial goods and services available to the end customer that now safeguarding Intellectual Property (IP) assets has become a top priority for FinTech organizations who are looking to optimize their commercial value and establish a digital transformation plan.

FinTech corporations and institutions either invent the technologies in-house or purchase it from third-party vendors, collaborate with suppliers and rivals, or invest in FinTech-related enterprises.

Designing an efficient IP protection plan for FinTech companies might be difficult due to the complexity of FinTech services. The most crucial thing for businesses, particularly start-ups, is to identify their IP and attempt to appropriately safeguard it.


FinTech may be acquired in a variety of ways by financial institutions, including in-house development, third-party vendors wherein all of the FinTech development work is done outside of the financial institution and the solution is given to, or executed by, a third-party vendor, mergers with vendors and main competitors, and by acquisition of FinTech-related firms.

It is just as crucial to be the best in the FinTech market as much as it is to safeguard the innovation that has been created. Companies in the FinTech business, particularly startups, should be aware that having a strategy in place to safeguard the technical innovation is vital in preventing other competitors from infringing upon the company’s IP.

When companies in the business are continuously striving to design and implement the greatest FinTech solution, the FinTech companies should protect their companies’ IP assets.

Having a strong IP portfolio not only helps to protect technical advances, but also helps to improve the company’s image and value, which is important for procuring investors. It is critical for people or enterprises wishing to collaborate with other parties on new ideas to obtain the required IP licenses in order to secure the companies’ IP assets and avoid potential IP infringement.


Amidst all the business activities and other affairs, key IP safeguards are overlooked.

Patent protection, for example, is one of those subtle but important aspects that may easily go unnoticed under the radar of a FinTech corporation. The outcomes might be disastrous for companies attempting to maintain market share against rapid copycats as everyone wants a share of a brilliant concept.

Without patents, the company that has spent a considerable amount of time and money creating innovative FinTech solutions would always be at a disadvantage to the early adopters. In many situations, this is the result of inadequate patent filing and defense.

As FinTech is all about technology, patents trump copyright and trademark rights. Patents restrict others from creating, using, or selling protected technology. These regulations help to keep market share while recouping Research & Development costs.

It should be noted that if FinTech businesses’ inventions aren’t patented, competitors or rivals can utilize the same business model and platform to enhance their businesses. The only saving grace for established organizations is their industry-wide reputation for reliability, customer support, and cybersecurity. However, if a rival uses the same or identical name, image and business losses may follow quickly. Companies must thus devote resources to rapidly identify and act on any suspected trademark infringement.

FinTech companies need to put utmost efforts in the approval and registration procedure if they wish to avoid infringement. The companies must also take into account the fact that, as the market grows, it will become much difficult to come up with a distinctive product title that can be registered in the first place.

In this regard, traditional banks have thrived, building a massive IP empire. An example of the same is the term “cashpoint.” While many individuals in the United Kingdom use this term interchangeably with the term ATM, it is officially a trademark of Lloyds, a United Kingdom High Street Bank. As a result, their cashpoints are the only ones that can really be termed “cashpoints.”


Big businesses understand the value of IP rights (IPR) and take all necessary precautions to prevent unauthorized usage. However, many start-ups neglect or overlook their IPR protection approach; in the haste to join the market, several start-ups fail to secure their IP.

Many rivals unfairly use the ideas and goodwill of the well-known companies and brands. Therefore, step-by-step protection of intangible assets helps start-ups safeguard their important intangible rights.

Most start-ups must have an IPR strategy with regards to financing and sales, and furthermore, the companies must evaluate all the essential principles and aspects pertaining to the same. To protect the IP assets, the FinTech companies might consider signing Confidentiality and Non-Disclosure Agreements, Joint Development Agreements, Collaboration Agreements, etc.

Subsequently, any entity willing to use a company’s IP can do the same by obtaining licenses vide Licensing and Transfer Agreements. Often, a start-up discloses its basic idea and innovation to investors in order to attract funds. The investor or any other third party involved may try to obtain an unfair advantage if the innovation is not appropriately safeguarded. Therefore, early legal guidance can help the start-ups secure their IP, which can later become assets.

The following are the ways in which IP of the FinTech companies can be protected:

Patent law provides protection for basic technology developments in the FinTech sector. Patent prevents rivals from developing, creating, or using patented or comparable technology. This offers the technology owner a competitive advantage and may be used as a powerful marketing and negotiation weapon.

Copyright plays a pivotal role in sectors wherein computers, systems and codes form the crux of the business.  Source code, pseudo code, machine code, & specifically created hardware or firmware are all examples of computer code. The program’s coding, graphical interface features, audio and video instructions, application programming interface (API), and related Research and Development solutions are all protected by copyright.

Websites/applications/software are the backbone of most start-ups, especially the FinTech start-ups and the FinTech industry as a whole. Therefore, such websites/applications/software must be secured against rivals and competitors.

In the FinTech business, branding is critical for distinguishing a company’s brand and position in the marketplace, as well as providing high-quality customer service.

FinTech companies should use a distinctive and unique trademark to set themselves apart from their competitors’ offerings. It also enables FinTech businesses to be acquired or be invested in depending on the anticipated use of their trademark, providing them with economic and commercial benefits.

Trade secrets cannot be registered in India under any specific law. However, corporations must take reasonable precautions to keep their business affairs and sensitive information pertaining to their company confidential.

Safeguarding the company’s trade secrets should be practiced as it ensures complete secrecy of the confidential information as long as adequate confidentiality procedures are adopted.


One of the most valuable assets of any FinTech company is its IP. It is the foundation for market supremacy and profit. As a form of business strategy, FinTech organizations that wish to develop their income, market exposure, clientele, and stock portfolio should preserve and protect their IP portfolios and IP strategies. IP offers a corporation a competitive economic and social advantage over its competitors.

In addition, third-party licensing and assignment of these IP rights also generate substantial revenue. Having a robust IP portfolio boosts a company’s worth when evaluating it for a possible merger or investment.

Therefore, in addition to preserving the company’s actual assets and technological financial services, the company must also protect its IP. A firm can use one or more of the aforementioned IP protection methods to defend its business.

-Team AMLEGALS assisted by Mr. Amitosh Dubey (Intern)

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