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IP Information & News

30 November 2017

Can an online payment system be patented?


The European Patent Office (EPO) has traditionally take a dim view of inventions in the field of finance and particularly the processing of financial data – so online payment systems are always likely to have a tough time. However, a recent case has shown that it may be possible to obtain patents in this area. 

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With growing interest in fintech and the growing number of financial transactions conducted in the virtual world, European patent law is in danger of becoming dangerously out of touch with the commercial environment.

What is the problem?


European patent law excludes business methods (as such) from patent protection in that the law sets out that they are excluded subject matter, i.e. subject matter which cannot be patented. Systems related to conducting financial transactions online will often be classified in this way.

In order for an invention to be considered patentable, it must be novel and inventive relative to what has gone before and it must not relate to excluded subject matter.

In assessing whether an invention is inventive, the EPO will compare the invention to what has gone before to use the new technical aspects of the invention, i.e. the novel aspects of the invention, to formulate a technical problem solved by the invention. Non-technical aspects cannot contribute to the formulation of the technical problem.

The EPO will then examine whether the novel aspects of the invention are merely an obvious modification of what existed before. If they are not deemed obvious then they are considered inventive.

When applied to online payment systems, the assessment (by the EPO) of whether an invention is inventive will often determine that the only novel aspects of an invention are non-technical features. Non-technical features cannot contribute to the assessment of inventive step as they allegedly do not contribute towards the solution to a technical problem – this is established EPO case law.

Why is this frustrating?

Inventors in this field often contribute significant time, energy and expense to the development of these systems only to be told that what they have contributed to their field is not technical. This means that innovators are less likely to file patent applications and rely on less secure forms of intellectual property such as non-disclosure agreements and copyright.

Additionally, the cost of prosecuting patent applications in this field can be disproportionately high especially when the success rate is so low.
Is there light at the end of the tunnel?

The EPO has recently considered a case related to a platform for payment authentication in T 1658/15 where the pertinent novel feature in the claim was the outsourcing of the authentication of an online purchase transaction to another computing device. A feature which the Examining division during prosecution had said to be non-technical and could not contribute to inventive step.

The EPO held that this feature cannot in all cases be assessed as non-technical because it may encompass technical aspects such as the use of plug-ins and servers.

The EPO also held that if a technical prejudice existed against the outsourcing of a commercial transaction such as the authentication of an online purchase transaction to a different computing device, then this would likely be inventive.

So, can an online payment system be patented and how can it be patentable?

T 1658/15 suggests that the answer to this question is yes.

T 1658/15 relates specifically to online payment authentication – which sits broadly in the field of online payment systems. Inventive step in T 1658/15 was demonstrated as it was shown that there was a technical prejudice against using plug-ins in an online payment system in the way defined by the invention. In summary, the invention used plug-ins in a way previously thought undesirable. This is a typical indication of inventive step.

This is obviously a boon for the applicant, Cardinal Commerce Corporation and a boon for the industry overall as it is suggests that it is possible to patent these systems like any other form of technology.

How do we move forward after this decision?

More and more transactions are conducted online and it is entirely expected that patent activity in this area will increase.

After T 1658/15 it seems that it is possible for online payment systems to be patented provided it can be shown that the implementation of the features would be a job for the technically skilled person and not the business or administrative professional.

Moving forward, patent applications need to focus on features which have a technical prejudice associated with them so that technical arguments can be formulated without the need for extra evidence.

UDL Comment

The EPO had initially rejected the patent application as the only novel features were said to relate to a business method which did not solve a technical problem.

The EPO then changed their mind after it was shown that the novel feature was technical and addressed a technical prejudice. However, this was only after the expense of going to the appeal stage of European patent proceedings and submitting evidence that a technical prejudice existed.

Innovators in the field of online payment systems should take encouragement, but should also take lessons from this case.

The key lesson is that chances of a patent for an online payment system are increased if we can show a technical prejudice existed. It therefore seems sensible to include information about technical prejudices during the drafting process so that it is included in the application as filed.

The identification of such technical prejudices can aid the formulation of technical argument during prosecution and provide a boost to the chances of success. These prejudices should be conveyed to the patent attorney at the initial stages of the drafting process.

For more information on this article and patent applications where excluded subject matter is expected to be a problem, please contact Terence Broderick.