An interesting
working paper from the Federal Reserve Board of Philadelphia which suggests that disputes over Intellectual Property rights pose a risk to the development of the Single Euro Payments Area (Sepa) and subsequent innovations in banking and retail payment
media in Europe.
The authors argue that the lack of a proper intellectual property policy may seriously hamper adoption of the new Sepa payment instruments. In particular, they suggest, it seems likely that some patents encompassing future standards in Sepa payment methods
will be owned by third-party suppliers rather than by European financial participants. This could make standardisation more complex and increase the risk of hold-up problems.
“This examination suggests that a well-designed intellectual property policy is critical for successful standard setting in network industries such as payment media,” states the paper. “Finally, we review the intellectual property policy of the EPC, Sepa’s
standard-setting body. To our surprise, we find that they have none.”