The International Herald Times has quite an interesting piece on the recent trend of Wall Street financial firms entering an “arms race” over technology and financial product patents.

An intellectual property arms race is escalating on Wall Street, where financial services firms like Goldman Sachs and Citigroup are building up stockpiles of patents on processes like software-based pricing, trading and risk analysis systems and products like credit cards, exchange-traded funds and exotic derivatives.

While there have been no big clashes yet, the question is, Which firm will be the first to try to enforce its growing portfolio of patents?

Do tell? But is there a silliness factor involved?

“Right now, people are figuring out they need some playing cards so that if someone comes to us and says ‘You’re infringing,’ well, we have some patents and we can do a cross-licensing deal and everyone goes away,” says Raymond Millien, a former patent lawyer for American Express who is now the general counsel with Ocean Tomo, a merchant bank specializing in intellectual property. “But there are going to be some companies on the Street who are going to start licensing their products and enforcing the patents to get a revenue stream from them.”

You know I’ve never been a fan of software patents ever since Amazon obtained one for one click checkouts. It left me nonplussed. I think the previously quoted paragraph underscores this fact. I am not a patent lawyer, nor do I play one on TV, but for an industry that prides itself on free markets, hedging on patents seems like an, uhm, wimpy departure from such ideals. Can we all look forward to this eventuality the next time there is a major market crash?

“Right now, because all of the Wall Street banks are showing record profits, there’s not much incentive to sue within the club,” Mr. Millien said. “But three years or so down the road, it’s hard to say.”