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Intellectual Property Issues in Fintech - Olufunmilayo Mayowa

posted 4 years ago


Over the last three
years, there has been a rapid rise in the number of Financial Technology
(“Fintech”) companies in Nigeria. Within the last three years the number of
Fintech companies in Nigeria has grown to over 60. The growth in recent
years is mainly due to the introduction of modern and convenient payment
services which is a much-needed improvement to customer experience in the
digital space.

From transaction payments
to lending, to insurance, virtual currencies and Blockchain, Fintech services
are redefining the way businesses and consumers carry out routine transactions.
The increasing adoption of these trends is positioning Nigeria as an attractive
market worldwide. The industry has also experienced a rise in its
Investment opportunities, for example, Paystack and Piggybank.ng, (two
prominent Fintech companies in Nigeria) recently received both foreign and
local investments worth over $9 million.

There are various
intellectual property (IP) rights associated with Fintech and like every other
business it is essential that Fintech companies adopt appropriate IP strategies
to protect their core innovations. Having a good IP portfolio does not only
assist in protecting technical innovations, it also helps to boost the image
and value of the company which in turn plays a critical role in attracting
investors. Some of the various IP aspects of Fintech companies are briefly
discussed below:


A Patent is an exclusive
monopoly granted by a country to an inventor for his or her ingenuity/invention
for a limited period of time usually 20 years. Patents are considered to
be one of the core assets of technology related companies because it enables
the company to exploit the patented invention exclusively within the stipulated
time before releasing to the public domain and it precludes another person(s)
from exploiting the invention without the inventor’s consent or authorization.

Fintech companies often
utilize patent rights to protect the core of their inventions. It can be used
to protect devices such as ATM, POS, MPOS, tokens, etc. as well
as the inventive steps or methods involved in the invention as well as the
computer programmes that drive these innovations.

One of the major benefits of patenting one’s invention is that
it helps to create market monopoly over that invention thereby providing the
company the avenue to build its brand, attract customer confidence in the
product and simultaneously increases the income and profit margins of the
company. It also helps to boost a company’s profile, making it more attractive
to investors.

In Nigeria, for an
invention to be patentable it must be new or an improvement on an existing
invention; consist of an inventive step; must be capable of industrial
application and must not be specifically excluded under the law. To obtain
a patent, an application will be submitted to the registrar of the patent
registry together with the prescribed fee. Upon careful examination of the
application, if the registrar is satisfied that the statutory requirements are
met, the patent over that invention will be granted. Once granted, the patent
holder can enforce its rights against infringers.


Typically, computer
programs and software are categorized and protected under copyright law. Software
such as computer codes, mobile banking applications, audio and visual guides,
application programming interface structures etc., are some of the copyright
assets of FinTech companies. Copyright over these computer programs subsists
automatically the moment they are created and require no form of registration
before it is enforceable. However, owners of copyright may take further steps
to lodge their copyright with the Nigerian Copyright Commission (NCC) under its
Notification/Depository scheme. This serves the purpose of bringing the existence
of the work to the notice of the NCC and it also serves as proof of ownership
in court when there are competing interests.

Furthermore, in order to
better protect the copyright over their works, Fintech companies are advised to
inculcate the practice of placing digital locks on copies of their works to
provide additional security. Circumvention of digital locks is an offence in
some jurisdictions and may provide relief against unauthorized parties. The
Nigerian Draft Copyright Bill 2015 also prohibits circumvention of
technological protection measures protecting a work and entitles the aggrieved
owner to reliefs such as damages, injunction and accounts for profit. The
companies should take more caution in drafting the provisions of its contracts
with developers especially when incorporating third-party copyright, as this
may affect the ownership of the technology and freedom to operate.


The word mark, logos,
domain names, icons etc., which forms the brand of a business should be registered
and protected as trademarks because a good brand helps to distinguish a Fintech
company from its competitors. Registration of the trademark of a company
enables the company to successfully bring an infringement action against its
competitors for passing off or for damaging or diluting the goodwill and
reputation of the company.

Trade Secrets

Trade secrets are confidential business information that have
economic or commercial value. Confidential backend server processes,
algorithms, business methods, ideas, client details, code and secret recipes
are some examples of trade secrets of a Fintech company. It is pertinent that a
company takes reasonable and deliberate actions to protect its trade secrets
especially those which gives it economic advantage over competitors.

Unlike other IP assets, trade secrets can offer perpetual
protection so long as the secrecy is preserved, because the value of a trade
secret is in its secrecy, and once it is revealed to the public or
independently discovered by competitors, the right is lost.

A Fintech company can protect its trade secrets by entering into
Non-Disclosure Agreements (NDAs) with potential clients, contractors or
investors before providing them with any confidential information. It can also
have confidentiality, exclusivity, non-competition / non-solicitation and
intellectual property clauses in the agreements with its employees. Likewise,
the company can implement an enforceable data security policy which will among
other things restrict access to vital business information to a need-to-know

Industrial Designs

Industrial designs refer to the physical/aesthetic outlook of a
product offered by a company. The designs on electronic cards, computer or
machine interfaces are also protectable IP assets of the Fintech companies.
Industrial Designs may also contribute to the distinctiveness of the brand.


Intellectual property
forms the bulk of the value of any business and is recognized as the most
important asset of a business. It is the foundation for the market
dominance and continuing profitability of leading corporations. Fintech
companies that desire to expand and increase income, market visibility,
clientele and investment portfolio must endeavor to manage and protect their IP
portfolio as a form of business strategy because IP increases the
competitiveness of a company and in turn affords it both economic and social
advantages over its competitors.

The licensing and
assignment for these IP rights to third parties will also provide a significant
and valuable income stream. With the constant rise in M&A transactions in
the Fintech space, having a strong IP portfolio increases the value of a firm
when it is being evaluated during a potential merger or acquisition. Therefore,
in addition to the protection accorded to the tangible assets and technical
financial services of fintech, adequate attention must equally be directed
towards protecting the intellectual property assets of the company. A company
can adopt either one or a combination of the above-mentioned forms of IP
protection for its business.



For further information
on this article and area of law, please contact

 at: S. P. A. Ajibade & Co., Lagos by telephone

(+234 1
+234.810.952.8293 or  234.12703009; 14605091; 14605092)

[email protected]





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