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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`—————————————
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`—————————————
`
`LIBERTY MUTUAL INSURANCE CO.
`Petitioner
`
`v.
`
`PROGRESSIVE CASUALTY INSURANCE CO.
`Patent Owner
`
`—————————————
`
`Case CBM2012-00003
`Patent 8,140,358
`
`—————————————
`
`PATENT OWNER’S RESPONSE
`PURSUANT TO 37 C.F.R. § 42.220
`
`CLI-2116165
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`

`TABLE OF CONTENTS
`
`
`Page
`
`
`I. 
`PRELIMINARY STATEMENT .................................................................... 1 
`THE ALLEGED GROUNDS FOR UNPATENTABILITY ......................... 1 
`II. 
`III.  BACKGROUND REGARDING DETERMINATION OF AUTO
`INSURANCE PREMIUMS ........................................................................... 5 
`A.  General Considerations ........................................................................ 5 
`B. 
`Actuarial Classes, Risk Factors And Rate Factors ............................... 6 
`IV.  THE ’358 PATENT AND CLAIM CONSTRUCTION ISSUES .................. 8 
`A. 
`Background Of The Invention .............................................................. 8 
`B. 
`The Invention Of The ’358 Patent........................................................ 9 
`C. 
`Claim Terms ......................................................................................... 9 
`1. 
`Rating Factor .............................................................................. 9 
`2. 
`Selected Vehicle Data .............................................................. 10 
`3. 
`Database ................................................................................... 10 
`4. 
`Records ..................................................................................... 11 
`V.  NAKAGAWA DOES NOT ANTICIPATE CLAIM 1 OF THE 358
`PATENT ....................................................................................................... 11 
`A. 
`The Legal Standard For Anticipation ................................................. 11 
`B. 
`Nakagawa ........................................................................................... 14 
`C. 
`Claim 1 Of The ’358 Patent Is Not Anticipated By Nakagawa ......... 20 
`1. 
`Nakagawa Does Not Disclose That “Selected Vehicle
`Data” Is Retained Within Memory Or Transferred To A
`Distributed Network And A Server ......................................... 20 
`Nakagawa Does Not Disclose The Claimed Database ............ 23 
`Nakagawa Does Not Disclose A Server Configured To
`Generate A Rating Factor ........................................................ 27 
`Conclusion ............................................................................... 29 
`4. 
`D.  All Of The Remaining Grounds Of Unpatentability Fail As
`Well .................................................................................................... 30 
`
`2. 
`3. 
`
`
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`-i-
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`b. 
`
`2. 
`
`3. 
`
`
`VI.  CERTAIN OF THE ’358 PATENT CLAIMS ARE ENTITLED TO
`PRIORITY TO AT LEAST THE ’650 APPLICATION ............................. 30 
`A. 
`Priority And Written Description ....................................................... 30 
`B. 
`Entitlement To Priority ....................................................................... 32 
`1. 
`Support For Claim 1 In The ’650 Application ......................... 33 
`a. 
`The Wireless Transfer Of Selected Vehicle Data
`Limitation ...................................................................... 33 
`The Server Limitations .................................................. 38 
`(i) 
`The Server Is Operatively Linked To A
`Database .............................................................. 40 
`(ii)  The Server Is Configured To Process
`Selected Vehicle Data ......................................... 43 
`(iii)  The Server Is Configured To Generate A
`Rating Factor ....................................................... 47 
`Support In The ’650 Application For Claims 9, 19, and
`20 .............................................................................................. 49 
`a. 
`Claim 9 ........................................................................... 50 
`b. 
`Claim 19 ......................................................................... 51 
`c. 
`Claim 20 ......................................................................... 52 
`Support In The ’076 Application for Claim 1.......................... 53 
`a. 
`The Preamble ................................................................. 54 
`b. 
`A Processor That Collects Vehicle Data ....................... 54 
`c. 
`A Memory That Stores Selected Vehicle Data ............. 56 
`d. 
`A Wireless Transmitter .................................................. 57 
`e. 
`A Database ..................................................................... 58 
`f. 
`The Server Is Configured To Process Selected
`Vehicle Data .................................................................. 58 
`Server Generates A Rating Factor ................................. 60 
`g. 
`Support In The ’076 Application For Claims 9, 19, And
`20 .............................................................................................. 61 
`a. 
`Claim 9 ........................................................................... 61 
`
`4. 
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`-ii-
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`Claim 19 ......................................................................... 61 
`b. 
`Claim 20 ......................................................................... 62 
`c. 
`VII.  CONCLUSION ............................................................................................. 63 
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`
`TABLE OF AUTHORITIES
`
`
`CASES
`Eiselstein v. Frank,
`52 F.3d 1035 (Fed. Cir. 1995) ............................................................................ 31
`
`Page
`
`Hazani v. U.S. Intl. Trade Commission,
`126 F.3d 1473 (Fed. Cir. 1997) .......................................................................... 13
`
`In re Robertson,
`169 F.3d 743 (Fed. Cir. 1999) ............................................................................ 13
`
`Kalman v. Kimberly-Clark Corp.,
`713 F.2d 760 (Fed. Cir. 1983) ............................................................................ 12
`
`Koninklijke Philips Electronics v. Cardiac Science Operating Co.,
`590 F.3d 1326 (Fed. Cir. 2010) .................................................................... 31, 32
`
`Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co.,
`730 F.2d 1452 (Fed. Cir. 1984) .................................................................... 11, 12
`
`Lizardtech, Inc. v. Earth Resource Mapping, Inc.,
`424 F.3d 1336 (Fed. Cir. 2005) .......................................................................... 31
`
`Lockwood v. American Airlines, Inc.,
`108 F.3d 1565 (Fed. Cir. 1997) .......................................................................... 30
`
`Motorola, Inc. v. Interdigital Tech. Corp.,
`121 F.3d 1461 (Fed. Cir. 1997) .......................................................................... 12
`
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) .......................................................................... 32
`
`Trintec Ind., Inc. v. Top-U.S.A. Corp.,
`295 F.3d 1292 (Fed. Cir. 2002) .......................................................................... 26
`
`Vas-Cath Inc. v. Mahurkar,
`935 F.2d 1555 (Fed. Cir. 1991) .......................................................................... 31
`
`Zenon Envtl., Inc. v. U.S. Filter Corp.,
`506 F.3d 1370 (Fed. Cir. 2007) .......................................................................... 32
`
`
`
`
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`-iv-
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`STATUTES
`
`125 Stat. 330 (2011) ................................................................................................... 3
`
`35 U.S.C. § 102 .................................................................................................... 2, 11
`
`35 U.S.C. § 103 ................................................................................................ 2, 3, 11
`
`35 U.S.C. § 112 .......................................................................................... 4, 5, 31, 32
`
`35 U.S.C. § 120 .................................................................................................... 4, 32
`
`REGULATIONS
`
`37 C.F.R. § 42.65(a) ................................................................................................. 26
`
`OTHER AUTHORITIES
`
`M.P.E.P. § 2111 ....................................................................................................... 32
`
`M.P.E.P. § 2163 ....................................................................................................... 31
`
`Microsoft Press Computer Dictionary, Third Ed. (1997) .................................. 10, 11
`
`U.S. Patent No. 8,090,598 .......................................................................................... 4
`
`
`
`
`
`
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`-v-
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`

`Case CBM2012-00003
`Patent 8,140,358
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`I.
`
`PRELIMINARY STATEMENT
`
`Patent Owner Progressive Casualty Insurance Co. (“Progressive” or “Patent
`
`Owner”) opposes the Petition of Liberty Mutual Insurance Co. (“Liberty” or
`
`“Petitioner”) for covered business method review of U.S. Patent No. 8,140,358
`
`(“the ’358 patent”). As demonstrated below, the Board should issue judgment that
`
`all claims of the ’358 patent are patentable over Nakagawa, alone or in
`
`combination with other references. Liberty has failed to prove that the cited
`
`references meet the limitations of any of the ’358 patent claims. Further, certain
`
`claims of the ’358 patent are entitled to a priority date of at least May 15, 2000,
`
`and, therefore, Nakagawa, which is relied upon in each of the pending grounds in
`
`the present proceeding, does not constitute prior art for those claims.
`
`II. THE ALLEGED GROUNDS FOR UNPATENTABILITY
`As originally filed, the Petition in this case raised in excess of 400 grounds
`
`of alleged unpatentability. Most of Liberty’s grounds were denied in the Board’s
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`Orders of October 25, 2012 (Paper 8) and November 26, 2012 (Paper 12), leaving
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`21 grounds for consideration by the Board after Progressive filed its Preliminary
`
`Response. In the Institution Decision (Paper 15), the Board denied eleven of the
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`remaining grounds and instituted covered business method review on ten grounds.
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`Case CBM2012-00003
`Patent 8,140,358
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`Each of those grounds is based on Liberty’s argument that claim 1 of the ’358
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`patent is anticipated by U.S. Patent Application No. 2002/0128882, published
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`September 12, 2002 (“Nakagawa”; Ex. 1005).
`
`The Institution Decision sets forth the following alleged grounds for
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`unpatentability in this proceeding:
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`F.
`
`G.
`
`Claims 1, 19, and 20 as anticipated under 35 U.S.C. § 102(b) by
`Nakagawa;
`
`Claim 2 as unpatentable under 35 U.S.C. § 103 over Nakagawa and
`Chang;
`
`Claims 3, 6, and 7 as unpatentable under 35 U.S.C. § 103 over
`Nakagawa and Stanifer;
`
`Claim 4 as unpatentable under 35 U.S.C. § 103 over Nakagawa and
`Beaverton;
`
`Claims 5 and 8 as unpatentable under 35 U.S.C. § 103 over Nakagawa
`and Scapinakis;
`
`Claim 9 as unpatentable under 35 U.S.C. § 103 over Nakagawa and
`Hunt;
`
`Claims 10, 11, and 13-15 as unpatentable under 35 U.S.C. § 103 over
`Nakagawa and Lowrey;
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`H.
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`I.
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`J.
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`Case CBM2012-00003
`Patent 8,140,358
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`Claim 12 as unpatentable under 35 U.S.C. § 103 over Nakagawa and
`Qualcomm MSM6500;
`
`Claims 16-18 as unpatentable under 35 U.S.C. § 103 over Nakagawa
`and Bouchard; and
`
`Claims 19 and 20 as unpatentable under 35 U.S.C. § 103 over
`Nakagawa and Kosaka.
`
`(Institution Decision at 24-25.) No other grounds were authorized for review.
`
`In the Institution Decision, the Board briefly addressed aspects of the alleged
`
`grounds for unpatentability for which review was instituted.1 The Board stated that
`
`
`1 The Board instituted covered business method review of all claims of the
`’358 patent in this proceeding after concluding that just one of those claims (claim
`1) was directed to a covered business method. (Institution Decision at 7-16.)
`Progressive objects to this conclusion as to claim 1 but also to the determination
`that the Board may review the other ’358 claims based on the conclusion that claim
`1 is a covered business method. Progressive submits that this determination is
`contrary to the statute. Section 18(a)(1)(E) of the AIA, 125 Stat. 330 (2011), limits
`the authority of the Director to institute review “only for a patent that is a covered
`business method patent.” Further, in Case No. CBM2013-00009, this Board noted
`that “[a] determination of what constitutes a technological invention is made on a
`case-by-case and claim-by-claim basis.” (Paper 10 at 17.) Accordingly,
`Progressive requests dismissal of the proceedings as to all ’358 claims in dispute
`other than claim 1, since their review exceeds the Board’s statutory authority to
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`it had reviewed Liberty’s assertions for the above-identified grounds and that “the
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`Case CBM2012-00003
`Patent 8,140,358
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`accompanying analysis. . . appear[s] to have merit.” (Institution Decision at 16.)
`
`The Board further found that Progressive’s priority claim chart failed to
`
`establish that the ’358 patent is entitled priority to its grandparent, application no.
`
`09/571,650 (“the ’650 application”). The Board first objected to the priority claim
`
`chart for not citing to supporting disclosure in intervening application no.
`
`10/764,076 (“the ’076 application”) filed on January 23, 2004 (now U.S. Patent
`
`No. 8,090,598, issued January 3, 2012), stating that to “gain the benefit of the
`
`filing date of an earlier filed application under 35 U.S.C. § 120, each application in
`
`the chain leading back to the earlier application must comply with the written
`
`description requirement of 35 U.S.C. § 112, first paragraph.” (Institution Decision
`
`at 17.) With regard to the portions of the claim chart addressing support in the
`
`’650 application, the Board further identified certain limitations of claim 1 for
`
`which it believed support was lacking in the ’650 application:
`
`1)
`
`2)
`
`the wireless transfer of “selected vehicle data”;
`
`a server operatively linked to a database;
`
`
`(continued…)
`
`
`institute review of any patent claim which the Board has not determined to be
`directed to a covered business method.
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`3)
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`4)
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`Case CBM2012-00003
`Patent 8,140,358
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`a server processing selected vehicle data with data that reflects
`how the selected vehicle data affects a premium of an insurance
`policy, safety or level of risk; and
`
`a server generating a rating factor based on the selected vehicle
`data.
`
`(Id. at 19.) Of these, Liberty had only asserted that the ’650 application failed to
`
`disclose a server configured to generate a rating factor. (Petition at 12.) The
`
`Board further noted alleged deficiencies in the claim charts for the ’650 application
`
`for dependent claims 9, 19, and 20. (Institution Decision at 20-21.)
`
`III. BACKGROUND REGARDING DETERMINATION OF AUTO
`INSURANCE PREMIUMS
`A. General Considerations
`Insurance is often described as the transfer of risk of financial loss arising
`
`from accidental events addressed in an insurance policy. In the case of auto
`
`insurance, the risk transferred to the insurer is the risk of a financial loss arising
`
`from the ownership and operation of the insured vehicle. The premium is
`
`calculated to reflect the total risk associated with the operation of a vehicle. (Ex.
`
`2005, Miller Decl. at ¶ 22.) The insurance premium is determined so as to
`
`reasonably reflect both the degree of risk being transferred and the operational
`
`expenses associated with the insurer. Generally speaking, the greater the risk
`
`being transferred, the higher the premium. (Ex. 2005, Miller Decl. at ¶¶ 24-25.)
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`Case CBM2012-00003
`Patent 8,140,358
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`B. Actuarial Classes, Risk Factors And Rate Factors
`An actuarial class (also called a “risk class”) is a grouping of risks (i.e.,
`
`insureds) with similar risk characteristics and expected insurance claims loss (or
`
`insurance costs). Actuarial classes are associated with risk characteristics, which
`
`are measurable or observable factors or characteristics that have been found to be
`
`predictive of future insurance losses. The future insurance loss (i.e., risk of loss)
`
`being estimated is the product of the probability of an occurrence of an insured
`
`claim times the likely cost of the claim. Because the probability of an insurance
`
`claim occurring is a different value than the probability of an auto accident
`
`occurring, auto insurance rates are typically calculated based on the likelihood of
`
`claim occurrence. (Ex. 2005, Miller Decl. at ¶¶ 15-17.)
`
`An actuarial class for a particular risk characteristic inherently has a risk
`
`factor associated with the risk characteristic. (Id. at ¶¶ 18 and 39.) A risk factor is
`
`a calculated numerical value for that actuarial class and is used to calculate the
`
`expected loss for an insured. (Id.) It is a risk value. (Id.) The numerical value is a
`
`ratio of the expected loss of one actuarial class to another. (Id.)
`
`An actuarial class also has a rate factor inherently associated with it. (Id. at
`
`¶¶ 19 and 39.) A rate factor is a calculated numerical value for the actuarial class
`
`that is used to calculate the premiums for an insured. (Id.) It, too, is a risk value.
`
`(Id.) It relates to the difference in premiums charged to insureds. (Id.) The rate
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`factor reflects not only the differences in the expected losses (i.e., the risk factor),
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`Case CBM2012-00003
`Patent 8,140,358
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`but also the differences in expected expenses and all other components of the
`
`insurance rate. (Id.)
`
`The premium and loss data from each actuarial class are the basis for
`
`determining risk factors (and rate factors). The risk factors derived from the
`
`actuarial class data, in conjunction with an insurer’s operating expenses, become
`
`the basis for determining rate factors that are associated with each risk
`
`characteristic. An insurer’s base rate or base premium, after adjustment using all
`
`the rate factors applicable to a specific insured, results in the actual premium for
`
`each auto insurance coverage, for each specific insured auto. (Id. at ¶ 31.)
`
`The way in which a premium is determined using actuarial classes for an
`
`insured may be illustrated with an example. In this hypothetical example, the
`
`premium for an insured car is determined based on three risk characteristics: the
`
`rated-driver of the insured car is an adult driver, the coverage is subject to a $500
`
`deductible, and the insured is eligible for a claims-free discount. The insurer’s
`
`policyholder records for the insured car will thus reflect a separate code for each of
`
`the three risk characteristics (i.e., adult driver, $500 deductible, and claims-free).
`
`To determine the premium in this example, the insurer will multiply a base rate
`
`against the applicable rate factors. For example, one can conceive of a $400 base
`
`rate that applies to an adult-rated auto with a $250 deductible and no claim-free
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`credit. If the rate factor is .85 for a $500 deductible coverage, and a rate factor of
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`Case CBM2012-00003
`Patent 8,140,358
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`.90 is applied if the insured qualifies for a claim-free credit, then, under this
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`scenario, the insurance premium will be $306 (i.e., $400 base rate x 1.00 adult
`
`factor x .85 deductible factor x .90 claim-free credit). (Id. at ¶¶ 30 and 32.) This is
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`the way actuarial classes are used in the determination of insurance premiums. (Id.
`
`at ¶¶ 30-32.)
`
`IV. THE ’358 PATENT AND CLAIM CONSTRUCTION ISSUES
`A. Background Of The Invention
`The ’358 patent describes conventional methods of determining the cost of
`
`motor vehicle insurance. The ’358 patent notes that those prior “[m]ethods that
`
`determine costs of insurance may gather data from personal interviews and legacy
`
`sources,” where that “data may be used to classify applicants into actuarial classes
`
`that may be associated with insurance rates.” (Ex. 1001 at 1:20-23.) The ’358
`
`patent notes deficiencies in that data:
`
`Some data used to classify risk is not verified and has
`little relevance to measuring risks. Systems may
`accumulate and analyze significant amounts of data and
`yet discover that the data does not accurately predict
`losses. The data may not be validated, may be outdated,
`and may not support new or dynamic risk assessments.
`(Ex. 1001 at 1:24-29.)
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`Case CBM2012-00003
`Patent 8,140,358
`
`The Invention Of The ’358 Patent
`
`B.
`The ’358 patent generally discloses and claims a system for monitoring and
`
`storing vehicle data and wirelessly transmitting the stored vehicle data to a remote
`
`server, where it is stored as records in a database and processed (See e.g., Ex. 1001
`
`at 7:1-5; 13:15-18; 14: 36-47; Figure 4 at 418; Figure 5 at 502, 510, 518, 530).
`
`The server processes the vehicle data with other data which reflects how the
`
`vehicle data affects an insurance premium and generates a rating factor based on
`
`the vehicle data. (Id. at 3:56-65.)
`
`C. Claim Terms
`1.
`Rating Factor
`The Board adopted Liberty’s proposed construction of “rating factor”: “a
`
`calculated insurance risk value such as a safety score or a usage discount.”
`
`(Institution Decision at 6.) Further, the Board “add[ed] the clarification that an
`
`insurance risk value would be a value that reflects an associated level of insurance
`
`risk and, therefore, also a corresponding insurance premium.” (Id.) A person of
`
`ordinary skill in the art would interpret the Board’s reference to “insurance risk” to
`
`mean expected claims losses, and an “associated level of insurance risk” to
`
`describe rating factors associated with actuarial classes. (Ex. 2005 at ¶ 39.)
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`Case CBM2012-00003
`Patent 8,140,358
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`Selected Vehicle Data
`
`2.
`Claim 1 refers to a processor that “collects vehicle data from a vehicle bus
`
`that represents aspects of operating the vehicle.” The ’358 patent provides
`
`examples of “vehicle data” that may be collected. (Ex. 1001 at 7:11-8:32.)
`
`Claim 1 also recites “a memory that stores selected vehicle data related to a level
`
`of safety or an insurable risk in operating a vehicle.” Thus, “selected vehicle data”
`
`comprises certain vehicle data that relates to a level of safety or an insurable risk in
`
`operating a vehicle. (Ex. 2007, Zatkovich Decl. at ¶ 38.)
`
`Database
`
`3.
`The term “database” is used in its ordinary sense in the ’358 patent. For
`
`example, in describing Figure 5, the patent explains that “a database 518 retains
`
`data from many customers and/or potential customers 206 and/or other
`
`drivers/operators.” (Ex. 1001 at 14:39-41.) The algorithms and relationship data
`
`may be retained in databases remote from the vehicle. (Id. at 14:45-47.) These
`
`and other disclosures in the ’358 patent are consistent with the ordinary meaning of
`
`a database as “a file composed of records, each containing fields together with a set
`
`of operations for searching, sorting, recombining, and other functions.” (Ex. 2010,
`
`Microsoft Press Computer Dictionary, Third Ed. (1997), at p. 129; Ex. 2007,
`
`Zatkovich Decl. at ¶ 21.)
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`Case CBM2012-00003
`Patent 8,140,358
`
`Records
`
`4.
`The above construction of “database” confirms that, as used in the ’358
`
`patent claims, the term “record” should also be accorded its ordinary meaning
`
`when used in the context of a database record: “[a] data structure that is a
`
`collection of fields (elements) each with its own name and type.” (Ex. 2010,
`
`Microsoft Press Computer Dictionary, Third Ed. (1997), at p. 399; Ex. 2007,
`
`Zatkovich Decl. at ¶ 23.)
`
`V. NAKAGAWA DOES NOT ANTICIPATE CLAIM 1 OF THE 358
`PATENT
`A. The Legal Standard For Anticipation
`All of Liberty’s arguments are based on the assertion that claim 1—the only
`
`independent claim—is anticipated under 35 U.S.C. § 102 by Nakagawa.2
`
`Anticipation is a factual determination that “requires the presence in a single prior
`
`art reference disclosure of each and every element of the claimed invention,
`
`arranged as in the claim.” Lindemann Maschinenfabrik GMBH v. Am. Hoist &
`
`Derrick Co., 730 F.2d 1452, 1458 (Fed. Cir. 1984). “In deciding the issue of
`
`
`2 In addition, the Board has instituted review under § 103 for dependent
`claims 2-18, based on Nakagawa and one or more additional references. Each of
`these bases for review presumes that Nakagawa anticipates claim 1. Because these
`premises are incorrect, these § 103 bases for review of claims 2-18 should be
`rejected. (See infra, Section V.D).
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`anticipation, the trier of fact must identify the elements of the claims, determine
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`Case CBM2012-00003
`Patent 8,140,358
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`their meaning in light of the specification and prosecution history, and identify
`
`corresponding elements disclosed in the allegedly anticipating reference.” Id. The
`
`burden is Liberty to “demonstrate, among other things, identity of invention.”
`
`Kalman v. Kimberly-Clark Corp., 713 F.2d 760, 771 (Fed. Cir. 1983). The
`
`showing required to prove anticipation is a rigorous one. As the Federal Circuit
`
`held in reversing a district court finding of anticipation in Motorola, Inc. v.
`
`Interdigital Tech. Corp., 121 F.3d 1461, 1473 (Fed. Cir. 1997):
`
`For a prior art reference to anticipate a claim, the
`reference must disclose each and every element of the
`claim with sufficient clarity to prove its existence in the
`prior art. See in re Spada, 911 F.2d 705, 708, 15
`USPQ2d 1655, 1657 (Fed. Cir. 1990) (“[T]he [prior art]
`reference must describe the applicant’s claimed invention
`sufficiently to have placed a person of ordinary skill in
`the field of the invention in possession of it.” (citations
`omitted)). . . . An expert’s conclusory testimony,
`unsupported by the documentary evidence, cannot
`supplant the requirement of anticipatory disclosure in the
`prior art reference itself.
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`For one of the limitations in claim 1 of the ’358 patent (identified in the
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`Petition as element (1f)), Liberty argues that Nakagawa “at a minimum, inherently
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`discloses” the element. (Petition at 25.) “Whether a claim feature is inherent in a
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`prior art reference is a factual issue on which extrinsic evidence may be
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`submitted.” Hazani v. U.S. Intl. Trade Commission, 126 F.3d 1473, 1477 (Fed.
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`Cir. 1997). To establish inherency:
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`the extrinsic evidence “must make clear that the missing
`descriptive matter is necessarily present in the thing
`described in the reference, and that it would be so
`recognized by persons of ordinary skill.” Continental
`Can Co. v. Monsanto Co., 948 F.2d 1264, 1268, 20
`U.S.P.Q.2d 1746, 1749. (Fed.Cir.1991). “Inherency,
`however, may not be established by probabilities or
`possibilities. The mere fact that a certain thing may
`result from a given set of circumstances is not sufficient.”
`Id. at 1269, 948 F.2d 1264, 20 U.S.P.Q.2d at 1749
`(quoting In re Oelrich, 666 F.2d 578, 581, 212 U.S.P.Q.
`323, 326 (C.C.P.A.1981)).
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`In re Robertson, 169 F.3d 743, 745 (Fed. Cir. 1999). Further, only the basis,
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`rationale, and reasoning put forth in the Petition may be considered, and all
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`vagueness and ambiguity in Liberty’s arguments must be resolved against Liberty.
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`(Case No. CBM2012-00003, Paper 8 at 10.)
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`B. Nakagawa
`Nakagawa disclosed “a vehicle insurance calculation system that calculates
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`the appropriate vehicle insurance by taking into account the maintenance and
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`management status of the vehicle.” (Ex. 1005 at ¶ 2.) In particular, the Nakagawa
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`system “aims to calculate appropriate vehicle insurance premiums by taking into
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`account the maintenance and servicing history of the vehicle.” (Id. at ¶ 5.)
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`Although multiple embodiments are disclosed in Nakagawa, Petitioner has
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`attempted to map the ’358 patent claims onto the first embodiment, described
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`beginning at ¶ 47. Figure 1 of Nakagawa shows the concept of the first
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`embodiment, and a block diagram of its components is shown in Figure 2:
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`Both (1) the on-board apparatus 4 loaded into a car, and (2) the maintenance data
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`management means 5 installed at a contract repair facility, communicate with a
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`server apparatus 6 installed at an insurance company.
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`On-board apparatus 4 includes an operation status detection means 7 for
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`collecting information relating to the operating status of the car, and an installation
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`status detection means 8 for collecting information regarding the installation status
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`of car safety equipment. (Id. at ¶¶ 52-55.) The on-board control part 12 controls
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`the entire on-board apparatus 4. (Id. at ¶ 58.)
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`The maintenance data management means 5 installed at the contract repair
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`factory manages data relating to whether the car has been properly maintained.
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`(Id. at ¶ 59.) Information resulting from an inspection of car components that wear
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`and need replacement, such as the condition of fluids, brake pads, and timing belts,
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`is entered into the inspection information input means 15 and sent to the insurance
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`company using sending means 16. (Id. at ¶ 60.)
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`The server apparatus 6 includes a fixed radio part 18 that receives data from
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`the on-board apparatus 4, and a reception means 19 that receives data relating to
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`car maintenance from the maintenance data management means 5. An insurance
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`premium calculation means 20 calculates insurance premiums based on the data
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`received from those two components of the system. (Id. at ¶ 61.)
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`The operation of the on-board apparatus 4 of the first embodiment of
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`Nakagawa is described in Figure 3:
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`When the on-board control part 12 determines that information collection will
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`start, various sensors begin to collect information about how the user is operating
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`the car and whether certain safety equipment is installed and outputs this as data to
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`the on-board control part 12. (Id. at ¶ 64.) In the next step (S2), “the on-board
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`control part 12 determines whether the operation and installation statuses are safe
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`or dangerous based on data collected from operating status detection means 7 and
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`installation status detection means 8.” (Id. at ¶ 65.) The result of these
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`determinations by the on-board control part 12 is that the vehicle data obtained
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`from the sensors is converted into points, and those point values are then stored on-
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`board in memory as “usage data.” (Id.; Ex. 2007, Zatkovich Decl. at ¶ 14.)
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`Nakagawa describes this aspect of on-board control part 12:
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`When it determines that both the operating and
`installation statuses are safe, the degree of safe operation
`is recorded in point form (step S3). When it determines
`that the statuses are dangerous, the danger status is
`recorded in point form (step S4). The data stored in steps
`S3 and S4 are stored in the memory provided in the on-
`board control part 12 as “usage data” (step S5).
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`(Ex. 1005 at ¶ 65.) The vehicle information collection process continues in this
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`same manner until the on-board control part 12 determines otherwise. (Id. at ¶ 66;
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`Ex. 2007, Zatkovich Decl. at ¶ 14.) The “safe” and “danger status” points provide
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`no indication of the vehicle data on which they are based; a “danger status” point
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`might be based on seatbelt non-use or speeding or something else, but the point
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`value itself does not indicate the basis. (Ex. 1005 at, e.g., Figure 7.)
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`Insurance premiums are calculated by the server apparatus in accordance
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`with the flow chart shown in Figure 5:
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`Before sending anything to the server, the on-board apparatus 4 converts
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`vehicle data obtained from the vehicle sensors to point values that represent the
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`degree of safe operation or danger status. (Id. at ¶ 65; Ex. 2007, Zatkovich Decl. at
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`¶ 16.) These p