` Paper 58
`
`
`
`
`
`
` Trials@uspto.gov
`Tel: 571-272-7822 Entered: January 14, 2014
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`LIBERTY MUTUAL INSURANCE COMPANY
`Petitioner
`
`v.
`
`PROGRESSIVE CASUALTY INSURANCE COMPANY
`Patent Owner
`____________
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`____________
`
`Held: October 21, 2013
`____________
`
`Before JAMESON LEE, JONI Y. CHANG and MICHAEL R. ZECHER,
`Administrative Patent Judges.
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`J. STEVEN BAUGHMAN, ESQUIRE
`
`
`NICOLE M. JANTZI, ESQUIRE
`
`
`JAMES MYERS, ESQUIRE
`
`
`Ropes & Gray
`One Metro Center, Suite 900
`700 12th Street, NW
`Washington, DC 20005-3948
`
`
`
`
`
`
`
`
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`CALVIN P. GRIFFITH, ESQ.
`
`
`JAMES L. WAMSLEY, ESQUIRE
`
`
`JOHN V. BIERNACKI, ESQUIRE
`
`
`Jones Day
`
`
`901 Lakeside Avenue
`
`
`Cleveland, Ohio 44114-1190
`
`
`
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`
`18
`
`19
`
`
`
`The above-entitled matter came on for hearing on Monday, October
`21, 2013, commencing at 12:56 p.m., at the U.S. Patent and Trademark
`Office, 600 Dulany Street, Alexandria, Virginia.
`
`
`
`
`
`
`
`
`
`P R O C E E D I N G S
`
`- - - - -
`
`JUDGE LEE: Welcome to the Board. This is the
`
`20
`
`combined final hearing for two CBM trials. It should be
`
`21
`
`CBM2012-00002 and CBM2012-00004. Now, because this is a
`
`22
`
`combined final hearing, we contemplate that the trial hearing
`
`23
`
`transcript will be usable in either proceeding by either party; and
`
`24
`
`because it is a combined final hearing, we will be lenient as far
`
`25
`
`as the time constraint goes, but formally, it's one hour total time
`
`26
`
`for each party. If we ask a lot of questions, then you will receive
`
`27
`
`extra time at the end. As usual, the Petitioner will present its
`
`28
`
`case first.
`
`29
`
`Before that, let's know who's representing whom.
`
`
`
`
`
` 2
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`MR. BAUGHMAN: Thank you, Your Honor. It's Steve
`
`Baughman from Ropes & Gray, with my colleagues Jim Myers
`
`and Nicole Jantzi on behalf of Petitioner. And we Sean
`
`McSweeney from Liberty Mutual in the courtroom today as well.
`
`JUDGE LEE: Thank you.
`
`MR. GRIFFITH: Your Honor, Calvin Griffith on behalf
`
`of Progressive Casualty Insurance Co., and with me is James
`
`Wamsley, also from Jones Day, and my partner, John Biernacki
`
`sitting in the gallery, also from Jones Day. And from
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`Progressive, two representat ives here today; we have Raymond
`
`11
`
`Ling, in-house counsel, and John Sauerland, a businessperson.
`
`12
`
`13
`
`14
`
`15
`
`16
`
`JUDGE LEE: Thank you.
`
`Any time you're ready, Mr. Baughman.
`
`MR. BAUGHMAN: Yes, Your Honor.
`
`Good afternoon, Your Honors. May it please the Board.
`
`At the outset, we would like to reserve 30 minutes of
`
`17
`
`our one-hour allocation for rebuttal. And just to give the Board
`
`18
`
`an overview of what we would propose to address today, but we
`
`19
`
`are obviously happy to address the Board's questions, there are
`
`20
`
`three issues that we would propose to address, in this order.
`
`21
`
`First, arguments Progressive made for allowance in the
`
`22
`
`original prosecution reexamination and the obstacles that
`
`23
`
`Progressive ran into based on the prior art and the knowledge of
`
`24
`
`a person with skill, because we think this frames the issues that
`
`25
`
`are raised in the trials before us. The second topic would be the
`
`
`
`
`
` 3
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`grounds for rejection based on Kosaka; and the third would be
`
`the grounds for rejection based on Bouchard.
`
`Our plan is to divide today's argument int o issues. I'll
`
`plan to start generally on the first two topics, and my colleague,
`
`Mr. Myers, will address the third.
`
`There's one procedural point we would just like to note
`
`Petitioner's position on for the record. Progressive has submitted
`
`for today's hearing a 72-page set of demonstratives, which it is
`
`our understanding is not evidence, and we simply wish to state
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`that our that while the whole document has been filed with the
`
`11
`
`Board, they are not actually evidence, and only the portions
`
`12
`
`actually discussed today during the hearing are demonstratives
`
`13
`
`and would be available for consideration by the Board. In other
`
`14
`
`words, that it's not a 72 -page reply brief that we don't get an
`
`15
`
`opportunity to respond to.
`
`16
`
`The claims before the Board today in the '970 paten t are
`
`17
`
`all new as the result of an ex parte reexamination. In that
`
`18
`
`process, all of Progressive's original claims were rejected over
`
`19
`
`the prior art. Progressive added new language in each claim that
`
`20
`
`issued, either the amended original claims or new claims, that
`
`21
`
`required one of two things: The use of actuarial classes or the
`
`22
`
`use of initial profiles with policy limits and deductibles for
`
`23
`
`determining a base cost for insurance.
`
`24
`
`But Progressive didn't tell the examiner during
`
`25
`
`reexamination that these were know n, used, and required by law,
`
`
`
`
`
` 4
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`as the evidence before the Board today confirms. That's the '970
`
`patent, the prior art, and expert testimony.
`
`So, during initial prosecution, as Exhibit 1002 from the
`
`file history, Progressive tried to get very broad claims to
`
`monitoring and recording vehicle data to determine an insurance
`
`cost, but it ran into repeated prior art objections from the
`
`examiner. The specification of the patent itself concedes that the
`
`technology, the pieces of the system that were claimed, wer e
`
`known in the art, as was the use of actuarial classes to rate
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`insurance customers.
`
`11
`
`And the examiner rejected the claims as anticipated by
`
`12
`
`the Camhi and Osborne references; for example, Exhibit 1002 at
`
`13
`
`page 137 and 122. So, in order to obtain its origi nal claims,
`
`14
`
`Progressive distinguished that art as rating for a future period
`
`15
`
`based on past driving activity and made amendments and
`
`16
`
`arguments to confirm that retrospective nature of the claims that
`
`17
`
`were issuing in the original prosecution.
`
`18
`
`And for some citations, all from Exhibit 1002, at page
`
`19
`
`128, which is a July 19th amendment, 1999; page 110, a
`
`20
`
`November 12th interview summary; and page 112, a November
`
`21
`
`15th amendment.
`
`22
`
`So, the original claims with these retrospective
`
`23
`
`limitations issued in 2000, and the n Petitioner here filed an ex
`
`24
`
`parte reexam request, the file history of which is in Exhibit
`
`25
`
`1003, and the reexamination examiner found that every
`
`
`
`
`
` 5
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`limitation of those original claims was disclosed by prior art,
`
`including the Kosaka, Black Magic, and Bouchar d references that
`
`are in the trials at issue today.
`
`Progressive was able to obtain allowance only after
`
`multiple rejections, including a final rejection and five
`
`interviews, by amending all of its original claims and including
`
`one of those two added limi tations I mentioned before, either the
`
`use of actuarial classes or the use of an initial profile with policy
`
`limits and policy deductibles.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`Now, again, these were known, used, and required by
`
`11
`
`law. The '970 patent itself confirms in its background sectio n --
`
`12
`
`which the Board in its Institution Decision decided was
`
`13
`
`conventional prior art, and that's the decision at page 20 -- that
`
`14
`
`the use of actuarial classes to rate insurance customers was
`
`15
`
`known, and that's Exhibit 1001, column 1, line 16, through
`
`16
`
`column 2, line 37.
`
`17
`
`The background also confirms that conventional
`
`18
`
`methods for determining insurance costs included the use of
`
`19
`
`liability limits and deductibles that if changed would "result in a
`
`20
`
`different premium being charged." That's Exhibit 1001, column
`
`21
`
`2, lines 6 to 14. The prior art itself also confirms that these
`
`22
`
`aspects were known.
`
`23
`
`The Florida Guide that's in both of the trials, Exhibit
`
`24
`
`1005 in the CBM2012 -00002 matter, and Exhibit 1008 in the
`
`25
`
`00004 matter, as well as the New York Guide that is cited by
`
`
`
`
`
` 6
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`Ms. O'Neil, Liberty's expert in both matters, that's Exhibits 1019
`
`and 1011.
`
`JUDGE LEE: Can I ask what significance did the
`
`addition of the term "actuarial classes" into the claims have to
`
`the patentability issue before the examiner?
`
`MR. BAUGHMAN: Well, Your Honor, we would argue
`
`that the addition of actuarial classes or these limits, neither of
`
`these lends patentability to the claims, and that that was what the
`
`examiner was led to believe led to patentability, but, in fact, it
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`did not.
`
`11
`
`JUDGE LEE: I see. But from the examiner's
`
`12
`
`perspective, were the addition of those terms significant?
`
`13
`
`THE WITNESS: Yes, Your Honor. If you look at the
`
`14
`
`notice of intent to issue reexam certificate, the examiner
`
`15
`
`discusses those as the bases -- and we outlined this in our
`
`16
`
`petition -- that those two reasons were the distinctions that she
`
`17
`
`found over the prior art in confirming the reexamined claims.
`
`18
`
`JUDGE LEE: In arguing the patentable significance of
`
`19
`
`actuarial classes, to what level of detail did the Patent Owner
`
`20
`
`engage in in telling the examiner about actuarial classes?
`
`21
`
`MR. BAUGHMAN: Well, from what we can tell from
`
`22
`
`the record, because there were a number of interviews, but the
`
`23
`
`summaries we see, it appears that Progressive was telling the
`
`24
`
`examiner that the use of actuarial classes was different here
`
`25
`
`because the data being used to assign operators and vehicles to
`
`
`
`
`
` 7
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`classes included monitored data. So, it was the underlying data
`
`being used to do the conventional assignment of actuarial
`
`classes.
`
`But as I've stated, Your Honor, because that was known,
`
`used, and required by law, the other systems that were using
`
`monitored data for insurance purposes that were of record were
`
`also necessarily using actuarial classes, so it was not new.
`
`JUDGE LEE: Did they argue some thing to the effect of,
`
`in order to have actuarial classes, you actually have to compute a
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`numerical value that equals the expected loss?
`
`11
`
`MR. BAUGHMAN: Your Honor, turning to that claim
`
`12
`
`construction question, they appeared to have been asserting a
`
`13
`
`different definition in reexamination than they're asserting here.
`
`14
`
`The one I have a note about is on page 111 of Exhibit 1003, and
`
`15
`
`there, they were using a different expert and argument to suggest
`
`16
`
`that it would -- actuarial classes, group operators are vehicle s
`
`17
`
`having a similar risk characteristic. And as I understand the new
`
`18
`
`definition that Progressive is urging in the trials here today, they
`
`19
`
`are adding a couple of aspects to that.
`
`20
`
`First, they are arguing that it also needs to relate to
`
`21
`
`expected insurance claims loss or insurance costs, and they've
`
`22
`
`added sort of a parenthetical about equating risks and insurance.
`
`23
`
`It's my understanding from reading the declaration of Mr. Miller
`
`24
`
`that there's a little bit of additional definitions packed into both
`
`
`
`
`
` 8
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`of those terms, which I'm happy to address now if that would be
`
`helpful.
`
`JUDGE LEE: No, I'm only concerned about what they
`
`said before the examiner. I gather, from what you just said, that
`
`they did not, before the examiner, say actuarial classes means
`
`you actually have to compute some numerical value that equals
`
`the expected loss.
`
`MR. BAUGHMAN: It's not my understanding that they
`
`phrased it in that way before the examiner, Your Honor. There
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`was -- I will say there was a lot of back and forth about this,
`
`11
`
`declarations, definitions from extrinsic evidence, with the
`
`12
`
`examiner, on this term and others, indicating a tension that she
`
`13
`
`perceived between the intrinsic record and the definitions that
`
`14
`
`were being advanced during reexamination.
`
`15
`
`What Progressive is telling th e Board today is that
`
`16
`
`references like the Florida guide -- this is the paper at 27, in the
`
`17
`
`opposition, at page 20 -- and other references should be
`
`18
`
`discounted because they were before the PTO during the
`
`19
`
`examination, but they were cited well after the exami ner's final
`
`20
`
`rejection, only after Progressive had conducted its fifth and final
`
`21
`
`interview, and Progressive didn't provide the examiner the letter
`
`22
`
`we sent attaching these or any other explanation of relevance.
`
`23
`
`And if you look at Exhibit 1003, and which is the
`
`24
`
`reexamination file history, pages 37 and 38, the examiner made
`
`25
`
`clear that any consideration she gave was limited because there
`
`
`
`
`
` 9
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`was no explanation of relevance; they were considered only
`
`within the scope required, without any indication of why they
`
`were placed in the record, along with a set of other references.
`
`The same is true of the New York Guide.
`
`Now, in fact, those two references that I just mentioned,
`
`the Florida and New York Guides, both show the use of actuarial
`
`classes, the establishment of an initial profile with limits and
`
`deductibles to calculate a base cost of insurance, and they show
`
`they were required parts of any policy in those states.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`So, taking a look at Exhibit 1005, the Florida Guide,
`
`11
`
`Florida described the cost for auto insuran ce depending on
`
`12
`
`selected coverage limits and deductibles, together with other
`
`13
`
`profile information. So, on page 11 -- this is the internal
`
`14
`
`numbers of the document, it's Bates number 12 -- the Florida
`
`15
`
`Guide talks about the premium a company quoted varying
`
`16
`
`depending on what type of coverage you select, including
`
`17
`
`liability limits and deductibles. Generally, if you pay -- you'll
`
`18
`
`pay more for auto insurance if you have had accidents or
`
`19
`
`violations, if you have high liability limits and low deductibles
`
`20
`
`and so forth.
`
`21
`
`Turning to page 13 of the internal numbering, the
`
`22
`
`Florida Guide also states that premiums vary widely and that
`
`23
`
`there is a set of key factors that are used to determine them,
`
`24
`
`including age, sex, marital status, driving record, use of the car,
`
`25
`
`and so forth, make and model, and where you live. And the
`
`
`
`
`
` 10
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`guide also talks about using these categories to avoid
`
`discrimination. It says, "Auto insurers may not engage in unfair
`
`discrimination, but they do charge different premiums in
`
`different areas, based on s uch factors as frequency of accidents,
`
`medical expenses, and repair costs."
`
`Similarly, the New York Guide -- and that's Exhibit
`
`1006 -- talks about factors that affect your auto insurance
`
`premium, and it says that premiums vary widely because they
`
`depend, in part, on the characteristics of the person insured
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`shown by statistical analysis and experience to be reliable
`
`11
`
`predictors of future accidents. It says that in New York, risks
`
`12
`
`are grouped by age, sex, marital status, and other -- other
`
`13
`
`classifications to assure that these characteristics are not used in
`
`14
`
`an unfairly discriminatory way. Otherwise, there would be
`
`15
`
`widespread, unfair discrimination, which New York prohibits, in
`
`16
`
`the absence of such a sound classification system, actuarial
`
`17
`
`classification.
`
`18
`
`JUDGE LEE: Do those definitions fit the
`
`19
`
`interpretations you propose?
`
`20
`
`MR. BAUGHMAN: I believe they do, Your Honor, that
`
`21
`
`these characteristics are used to group the kinds of risks that are
`
`22
`
`useful for insurance purposes, and the actual definition that the
`
`23
`
`Board has used and we have proposed in our Petition is a
`
`24
`
`combination of groupings -- so we have that here -- related to
`
`25
`
`loss risk safety, so things like accident predictability, and
`
`
`
`
`
` 11
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`other characteristics that are determined from classifications,
`
`characteristics representative of motor vehicle operational
`
`characteristics and driver behavior for which data is gathered.
`
`JUDGE LEE: In that definition, do you see the term
`
`"motor vehicle operational characteristics"?
`
`MR. BAUGHMAN: Yes, Your Honor.
`
`JUDGE LEE: Do you mean by that the operational
`
`characteristics as -- or resulting from the driver's manipulation
`
`of the vehicle?
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`MR. BAUGHMAN: So, one of the keys here, Your
`
`11
`
`Honor, is driving experience. So, these factors are linked
`
`12
`
`together in predicting motor vehicle operation and assessing risk
`
`13
`
`in actuarial classes.
`
`14
`
`JUDGE LEE: Yeah. My question is, does the term in
`
`15
`
`the proposed definition include items that are not related to
`
`16
`
`driver operation? In other words, if you go buy a car, it will
`
`17
`
`give you operational characteristics of the car that are totally
`
`18
`
`unrelated to driver maneuvering. It will say the suspension is
`
`19
`
`this or the braking distance is this. Those are a kind of
`
`20
`
`operational characteristics as well, but they are not related to the
`
`21
`
`driver.
`
`22
`
`So, I'm just asking, in the definition you propose, there's
`
`23
`
`a term "motor vehicle operational characteristics." Do you mean
`
`24
`
`that as being connected to driver manipulation of the car or is it
`
`
`
`
`
` 12
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`even broader than that, to cover items that have no relation to
`
`driver operation of the car?
`
`MR. BAUGHMAN: Well, I guess I agree that it would
`
`include operation of the car. I would differ on the sort of
`
`characterization of the second part. I think it's broader than a
`
`direct measurement, because the definition says "representative
`
`of." So, there could be other characteristics, like the car's
`
`braking capabilities and so forth, that are representative of
`
`characteristics -- operational characteristics or driver behavior,
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`that are not as directly related. So, they need to have that -- they
`
`11
`
`need to have a connection to motor vehicle operational
`
`12
`
`characteristics or driver behavior.
`
`13
`
`JUDGE LEE: So, does it include items that have no
`
`14
`
`relation to the driver, I mean, that's simply a characteristic of the
`
`15
`
`car itself?
`
`16
`
`MR. BAUGHMAN: Well, they -- yes, they could be
`
`17
`
`characteristics of the car itself. That could be representative of
`
`18
`
`operational characteristics on the vehicle.
`
`19
`
`20
`
`21
`
`22
`
`JUDGE LEE: Like if you have power steering or not.
`
`MR. BAUGHMAN: Yes, Your Honor.
`
`JUDGE LEE: That's not driver-related, but --
`
`MR. BAUGHMAN: Right. So, in the definition we've
`
`23
`
`proposed -- and this is the definition, by the way, from the
`
`24
`
`reexamination examiner, who found it to be the broadest
`
`25
`
`reasonable interpretation -- it's characteristics rep resentative of
`
`
`
`
`
` 13
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`motor vehicle operational and driver behavior. So, those
`
`categories are both there.
`
`JUDGE LEE: Oh, I see. So, in the first term you're
`
`only talking about things related to the vehicle, and then in the --
`
`and then through the end, you br ing in the driver behavior. So,
`
`both has to be present? It can't just be one?
`
`MR. BAUGHMAN: No, I don't think both have to be
`
`present, Your Honor, because if you look at the claims
`
`themselves and the use of actuarial class, it talks about assigning
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`vehicles or operators to actuarial classes.
`
`11
`
`JUDGE LEE: But you have the word "and" there in the
`
`12
`
`proposed definition.
`
`13
`
`MR. BAUGHMAN: It's a combination of different
`
`14
`
`aspects. So, it --
`
`15
`
`16
`
`JUDGE LEE: Do you really mean "and/or"?
`
`MR. BAUGHMAN: I think pe rhaps we really mean
`
`17
`
`and/or, Your Honor. I apologize if I didn't perceive
`
`18
`
`the difference there, but, yes, I think the characteristics of a
`
`19
`
`particular group can be one or the other, as the claims make
`
`20
`
`clear.
`
`21
`
`JUDGE LEE: One or the other, and you meant th e first
`
`22
`
`one as being vehicle-related and the second one as being
`
`23
`
`driver-related.
`
`
`
`
`
` 14
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`MR. BAUGHMAN: There can be characteristics that
`
`are vehicle-related and characteristics that are driver -related,
`
`Your Honor. Yes.
`
`JUDGE LEE: All right. Thank you.
`
`MR. BAUGHMAN: In the New York Guide, as we were
`
`discussing, so they do talk about these actuarial classes. They
`
`also talk about limits and deductibles on page -- I'm sorry, that
`
`first page was internal page 14. The second page is page 6 of the
`
`New York Guide. It talks at the bottom about different liability
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`limits and how they would increase your premium if you raise --
`
`11
`
`I'm sorry, if you lower the liability limits -- I'm sorry, if you
`
`12
`
`lower the deductible limits, increase premiums.
`
`13
`
`And on page 18 intern ally of the document, it talks
`
`14
`
`about reducing your insurance costs by raising the deductibles or
`
`15
`
`on physical damage coverage. So, again, limits and deductibles,
`
`16
`
`the use of actuarial classes were well known, and they were
`
`17
`
`required -- requiring the use of actuarial classes to avoid
`
`18
`
`discrimination.
`
`19
`
`And finally, we have the testimony of expert Ms. O'Neil
`
`20
`
`saying the same thing, that these things are well known, they are
`
`21
`
`used, and they are required. Exhibit 1011 in the 2012 -00004
`
`22
`
`matter, paragraph 24, she opi ned that "calculating an insurance
`
`23
`
`policy premium necessarily involves determining limits and
`
`24
`
`deductibles for the policy, as well as applying actuarial classes
`
`25
`
`due to, for example, state regulations."
`
`
`
`
`
` 15
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`She says similar things in the 2012 -00002 matter,
`
`Exhibit 1009, at paragraphs 22 and 26. And Progressive
`
`conceded in its preliminary response that the broad concept of
`
`actuarial classes was known, and the Board acknowledged this in
`
`its Institution Decision, page 20, and concluded that the
`
`background section of the '970 patent -- that's column 1, line 17,
`
`to 2, line 37 -- is "admitted conventional prior art and thus the
`
`knowledge of one with ordinary skill in the art would include a
`
`thorough understanding of using actuarial classes to determine
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`vehicle insurance costs."
`
`11
`
`The Board found the same was true of insured profiles
`
`12
`
`with deductibles and limits to determine a base cost of insurance.
`
`13
`
`This is also page 20 of the Institution Decision. "A person of
`
`14
`
`ordinary skill in the art would have appreciated that wh en a
`
`15
`
`vehicle operator is applying for an insurance policy from an
`
`16
`
`insurance company, an insured profile for the vehicle operator
`
`17
`
`would be generated to determine a base cost (unique vehicle
`
`18
`
`insurance cost) and such an insured profile includes coverage
`
`19
`
`information, such as limits and deductibles, may also observe
`
`20
`
`that a person of ordinary skill in the art would recognize the base
`
`21
`
`cost as the amount that the insurance company charges prior to
`
`22
`
`applying any discounts or surcharges, and the total cost is
`
`23
`
`calculated based on the base cost and any applicable discounts or
`
`24
`
`surcharges."
`
`
`
`
`
` 16
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`And finally, just to have it on the table for our
`
`discussion today, the Board found a high level of skill in this art.
`
`That's page 19 of the Institution Decision, that the ordinary l evel
`
`of skill in this art is "quite advanced." So, against this
`
`background of a high level of skill, Progressive added to the '970
`
`patent claims two limitations, these actuarial classes and profiles
`
`of these limits and deductibles, that actually added we would say
`
`nothing to what a person of skill would already know. They
`
`were known, used, and required by law, as the patent, the prior
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`art, and the expert testimony before Your Honors confirms.
`
`11
`
`JUDGE LEE: Counsel, would age itself constitute an
`
`12
`
`actuarial class?
`
`13
`
`MR. BAUGHMAN: It can be a -- it's a driver
`
`14
`
`characteristic that can be representative of driver behavior, Your
`
`15
`
`Honor.
`
`16
`
`JUDGE LEE: Well, that's the question. So, the answer
`
`17
`
`is yes, because a junior driver is more -- more of a risk, so from
`
`18
`
`that perspective, age alone could be an actuarial class?
`
`19
`
`MR. BAUGHMAN: It is an actuarial class, and I guess
`
`20
`
`one of the -- one of the tensions maybe that we're coming up
`
`21
`
`against is there are additional limitations in the claims that talk
`
`22
`
`about what kind of data is in the actuarial classes, and sometimes
`
`23
`
`there are references to monitored data, but the guides -- the New
`
`24
`
`York and Florida Guides, for example, indicate that age and so
`
`
`
`
`
` 17
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`forth are indicative of accident risk; and so, therefore, they are
`
`representative of operational characteristics or driver behavior.
`
`JUDGE LEE: Which one?
`
`MR. BAUGHMAN: I'm sorry. In that case, Your
`
`Honor, clearly driver behavior, not operational characteristics of
`
`the vehicle itself.
`
`JUDGE LEE: As long as there is some dat a to show that
`
`it is linked to some driver behavior, you would say that it is an
`
`actuarial class?
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`MR. BAUGHMAN: As long as there is an appropriate
`
`11
`
`actuarial calculation. As we may talk about later today, it
`
`12
`
`doesn't have to be claims data, but as long a s there is a
`
`13
`
`reasonable actuarial basis for determining that something is an
`
`14
`
`appropriate predictor, then, yes, that would be appropriate.
`
`15
`
`16
`
`JUDGE LEE: Thank you.
`
`MR. BAUGHMAN: So, with the knowledge of a person
`
`17
`
`of skill that the Board has confirmed tha t the references show,
`
`18
`
`the art before the Board and the history of the two distinctions
`
`19
`
`that were really not distinctions at all over the prior art, the
`
`20
`
`Board was correct to confirm the prima facie case of invalidity
`
`21
`
`of all these reexamined claims. And Pr ogressive, in its
`
`22
`
`responses, offers really only quibbles and reargument of the
`
`23
`
`same positions taken in the reexamination in its preliminary
`
`24
`
`response.
`
`
`
`
`
` 18
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`Kosaka, for example, does render these claims obvious
`
`in the combinations we've presented. It teaches, among other
`
`things, determining an initial insured profile for determining a
`
`base cost of insurance, a prepayment amount; correlating group
`
`data values, such as the vehicle speed, to preset values and
`
`generating an output based on that correlation; and its risk
`
`evaluation system produces crisp, numerical risk evaluation
`
`values that are used to generate premiums.
`
`Kosaka's system, as the Board correctly found, can
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`easily be implemented, as far as teaching, using monitored
`
`11
`
`vehicle data to separate drivers in to actuarial classes, inherited
`
`12
`
`behavioral groups may be used; and it can also easily be
`
`13
`
`combined with the Black Magic reference, which teaches the use
`
`14
`
`of black box monitoring in vehicles for insurance purposes with
`
`15
`
`the use of GPS for position information. Black Magic clearly
`
`16
`
`shows the determination of attributes, like decelerations, that
`
`17
`
`require simultaneously storing both speed and time along with
`
`18
`
`GPS determination.
`
`19
`
`20
`
`Yes, Judge Chang?
`
`JUDGE CHANG: Counsel, I think the Patent Owner
`
`21
`
`questioned whether th e reference, Kosaka, which teaches fuzzy
`
`22
`
`logic, can that be combined with a regular type of evaluation tool
`
`23
`
`like the other reference had? Can you address to that?
`
`24
`
`MR. BAUGHMAN: Yes, Your Honor.
`
`
`
`
`
` 19
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`So, first of all, one of the suggestions that Progressiv e
`
`makes is that there is some fundamental change in operation that
`
`makes Kosaka different and uncombinable, really, with anything
`
`else. First, the Board has already rejected the argument in the
`
`Institution Decision because it's not the argument we're maki ng.
`
`We're not arguing necessarily physical substitution.
`
`Herrod, as the Board found, was being used to show the
`
`use of actual monitored data in well -known actuarial classes, and
`
`there's still no evidence to suggest that this mere substitution of
`
`10
`
`actual data for the traditional reported characteristics would have
`
`11
`
`been beyond a person of skill.
`
`12
`
`And, in fact, the '970 patent, to the extent it has support
`
`13
`
`for this at all, basically says, well, go do this; it says use this
`
`14
`
`data, but it doesn't say anything in particular about how to do it
`
`15
`
`as an actuarial matter. So, there is no showing that that's beyond
`
`16
`
`a person of skill.
`
`17
`
`It also -- this position about sort of a fundamental
`
`18
`
`change, a totally different philosophical approach, this all comes
`
`19
`
`from Dr. Ehsani, who is not an insurance expert. He is a person
`
`20
`
`who talks about fuzzy logic, and this is addressed in our motion
`
`21
`
`to exclude. Dr. Ehsani's testimony in paragraphs 28 to 34 and, in
`
`22
`
`particular, paragraphs 33 and 34 of his declaration talk about
`
`23
`
`insurance opinions, insurance issues, something he's completely
`
`24
`
`unqualified to do.
`
`
`
`
`
` 20
`
`
`
`Case Nos. CBM2012-00002 and CBM2012-00004
`Patent 6,064,970
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`So, if you take a look at our reply supporting our motion
`
`to exclude, it really crystallizes these issues, and if you look at
`
`Progressive's opposition and listen today, you are goin g to hear a
`
`lot about these paragraphs, I think, of Dr. Ehsani's testimony.
`
`So, for example, Progressive tries to argue that these
`
`pronouncements about a fundamental change in operation for an
`
`actuarial approach, that he talks about, and a totally differ ent
`
`philosophical approach from an actuarial approach are based
`
`simply on, one -- this is a quote -- his "own expertise," and
`
`10
`
`Dr. Ehsani doesn't purport to have insurance expertise. I don't
`
`11
`
`think Progressive is arguing that. And two, "the assumption that
`
`12
`
`an actuarial approach involves assignment to only one actuarial
`
`13
`
`class for a particular risk category." That's in their opposition to
`
`14
`
`our motion to exclude, paper 56 at 4.
`
`15
`
`But there is no such assumptions stated by Dr. Ehsani.
`
`16
`
`This is his own testimony . He doesn't say he ever talked to
`
`17
`
`Mr. Miller. He doesn't say he ever read Mr. Miller's testimony.
`
`18
`
`If you look at paragraph 34 that says this, there's no mention of
`
`19
`
`that assumption. There's only one very narrow assumption that's
`
`20
`
`made in this paper at a ll, and it's right here, paragraph 33. "I've
`
`21
`
`been asked to assume an actuarial class or a risk class is a
`
`22
`
`groupi
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
