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Lawsuit Against UBS Has Far-Reaching Implications For Advisors

Sent to me by Allen Lewis, CFA, a post from Financial Advisor magazine about a financial planning patent. Who says software patents or patent trolls are the main problem in the patent system, or that business method patents are dead?

Business method patents were approved in the 1998 case State Street Bank & Trust Co. v. Signature Financial Group Inc., which I wrote about in “A New Traffic Cop at Intersection of Patents and Financial Inventions” (Duane Morris website version), The Legal Intelligencer [Philadelphia], Thurs., Sept. 3, 1998. As I wrote then:

As a result of this decision, more innovations of economists, accountants, bankers and the like will be protectable by patent. Thus, the financial services and related industries will start to adopt some of the patent-related practices of the electronics industry and other technology-intensive industries.

For example, proposed new financial products and customer services will be reviewed for potential patentability, and will be the subject of patent applications. Financial services companies will be in the position of reviewing employment agreements with their creative employees to ensure that patent rights are properly vested in the company.

New developments will also be reviewed for possible infringement of existing patents. Patent licensing and infringement litigation will likely become commonplace.


However, in 2010 the Supreme Court’s Bilski decision, while not explicitly overruling State Street and business method patents, Bilski rejected State Street‘s “useful-concrete-tangible test,” arguably causing many or mostbusiness method patents to be invalid. So, expect the defendants here to rely heavily on Bilski in arguing that the patents asserted against them are no longer valid.

Here’s an excerpt from the post:

Lawsuit Against UBS Has Far-Reaching Implications For Advisors

UBS Financial Services Inc. is being sued for two patent infringements in a case some experts say could affect the entire financial planning industry.

Wealthcare Capital Management, which serves individual investors, financial advisors and institutions, filed suit against UBS in U.S. District Court in the Southern District of New York for using what it contends are its own  proprietary processes for financial planning.

The two patented processes involved in the suit assess a client’s long-term financial goals and then use a capital-market modeling technique to determine how these goals can be achieved.

Wealthcare has offered in the past to license the company’s advisory system to UBS, but the Switzerland-based UBS has declined, says David B. Loeper, founder and chief investment officer of Wealthcare Capital Management. Loeper is chairman of Financeware Inc., the parent company for Wealthcare and its intellectual property rights arm, Wealthcare Capital Management LP LLC.

The suit seeks monetary damages and an injunction banning UBS from using the financial advising systems that are part of programs, including MoneyGuidePro.

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