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Computer Law Review and Technology Journal

Abstract

Electronic exchanges and electronic trading are the future of the futures industry. Since the landmark case State Street Bank & Trust Co. v. Signature Financial Group, Inc., the volume of trading on electronic exchanges has grown at ten times the pace of open outcry trading.4 Institutions and brokerage houses have rushed to the patent office to protect business methods, and an industry of Independent Software Providers ("ISPs") has sprung up to meet the demand for new trading technologies. These developments have reshaped the commodity and futures landscape. In response, the Commodity Futures Trading Commission ("CFTC") passed regulations regarding order routing and issued no-action letters to foreign exchanges, embracing the concept of real-time, twenty-four hour a day exchanges that operate seamlessly across time zones, leading the commodity and futures industry into a new era of increasing globalization. All of these developments are based on a need for speed, efficiency, and innovation that is intricately tied to technological development. This note will argue that the future of the futures industry lies in efficiency enhancing patents. Part I suggests the CFTC should adopt even more liberal rules for electronic exchanges and standardize order uptake procedures, while the Federal Circuit Court of Appeals should continue to uphold patent grants for innovative business methods in the financial industry. Part II of this note discusses recent litigation regarding financial innovation patents. Part III reviews the prior decisions on the patentability of business methods. Part IV describes the regulation of electronic exchanges. Part V argues that the CFTC, the United States Patent and Trademark Office ("USPTO"), the judiciary, and Congress should all adopt liberal rules creating low barriers for electronic exchanges and products entry, while vigorously upholding the exclusionary rights of innovators.

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