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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`—————————————
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`—————————————
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`LIBERTY MUTUAL INSURANCE CO.
`Petitioner
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`v.
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`PROGRESSIVE CASUALTY INSURANCE CO.
`Patent Owner
`
`
`—————————————
`
`Case CBM2013-00009
`Patent 8,140,358
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`—————————————
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`DECLARATION OF IVAN ZATKOVICH
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`CLI-2116196v4
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`DECLARATION OF IVAN ZATKOVICH
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`I, Ivan Zatkovich, hereby declare under penalty of perjury:
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`I.
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`Introduction
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`A.
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`1.
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`Scope of Assignment
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`I was retained by the law firm of Jones Day, on behalf of the
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`Progressive Casualty Insurance Company (“Progressive”), to render opinions
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`regarding technology described and claimed in U.S. Patent No. 8,140,358 (the
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`“’358 patent”) and certain references cited as prior art against the ’358 patent
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`claims.
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`B.
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`2.
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`Scope of Declaration
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`The following are materials discussed in this declaration:
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`a. The ’358 patent.
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`b. Petition for Review of U.S. Patent No. 8,140,358 in CBM2013-00009
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`(Paper 2) (“Petition”).
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`c. Decision Instituting Covered Business Method Patent Review in
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`CBM2013-00009 (Paper 10) (“Institution Decision”).
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`d. Geostar, Understanding Radio Determination Satellite Service (Jane
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`Pierce & Marilyn Finley eds.) (Ex. 1004) (“RDSS”).
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`e. Geostar Corp., Annual Report (Form 10-K) (April 16, 1990) (Ex.
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`1005) (“Geostar 10-K”).
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`f. Japan Patent Application H4-182868 (Ex. 1003) (“Kosaka”).
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`g. Declaration of Scott Andrews for CBM2013-00009 (Ex. 1014)
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`(“Andrews Declaration”).
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`h. Declaration of Mark Ehsani for CBM2013-00009 (Ex. 2016) (“Ehsani
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`Declaration”).
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`3.
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`I have been asked to render opinions regarding technology described
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`and claimed in the ’358 patent and the RDSS and Geostar 10-K references cited as
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`prior art against the ’358 patent claims.
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`C. Background and Experience
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`4.
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`The following is a summary of my professional experience and
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`qualifications. My complete curriculum vitae is provided as Exhibit 2021.
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`• I have more than 4 years experience designing and implementing vehicle
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`telematics systems and have designed and implemented ecommerce
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`computer systems for the insurance industry, such as for Geico and
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`Hartford.
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`• I have over thirty-one years experience in computer science, network
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`communications, and software development, which includes eight years
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`of experience in the design and development of financial and insurance
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`business applications including development of claims processing
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`systems, policyholder systems, financial network products, and electronic
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`transaction products.
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`• I received a Bachelor’s degree in Computer Science, with a minor in
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`Electrical Engineering Digital Circuit Design, from the University of
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`Pittsburgh in 1980. I completed a master’s thesis in Computer Networks.
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`• In addition to a master’s thesis, my other publications include articles on
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`network design in Byte Magazine and programming techniques and
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`tutorials in Sync Magazine. I also presented a paper concerning High
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`Volume Web Content at the Momentum conference in August 2003. I
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`have given presentations on ICGS Computer Graphic Standards at the
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`Institute of Electrical and Electronics Engineers (IEEE) SigGraph
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`Conference, as well as on Internet publishing standards at the Momentum
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`Conference.
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`• My professional memberships include IEEE, International Internet
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`Society, and Association for Computing Machinery.
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`• I have served as a committee member for ISO and ANSI standards
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`organizations where I had the responsibility of defining disk and network
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`communication standards.
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`• My certifications include IBM Websphere Certified Solutions Expert,
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`Capability Maturity Model (CMM), and Project Management
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`Professional (PMP).
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`5.
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`Specific systems that I have designed and developed include:
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`• Utility Partners – Customized Wireless Telematics Systems for Gas and
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`Electric Utility Companies. These systems contained:
`o Wireless communications between the field service trucks and the
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`remote central dispatch system.
`o Monitoring of the status of the field service representatives and
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`truck location.
`o Wireless transmission and receiving of work order information and
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`status to and from the field service truck.
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`• GEICO – Designed and developed eCommerce website for GEICO
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`Policyholders to:
`o Allow policyholders to retrieve policy information, coverage and
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`premium information.
`o Recommend and change policy parameters and re-estimate
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`premiums.
`o Provide on-line policy quotes to new visitors.
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`• Hartford Insurance – Designed and developed eCommerce website for
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`Policyholders and Claims Adjusters for:
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`o Online submission of auto insurance claims.
`o Automation of claims processing.
`o Performing subrogation application to determine the share of
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`settlements for multiple policy coverage.
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`• Smith Barney – Developed remote access network infrastructure and
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`wireless PDA financial system.
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`6.
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`Examples of cases where I have previously testified are:
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`• Swapalease v. Sublease Exchange.com (Patent Litigation)
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`Opined on the infringement of eCommerce systems and online exchange
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`of auto lease contracts, and the provision or transfer of auto insurance for
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`auto lease requirements.
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`• ABC Inc. v. Cisco WebEx (Patent Litigation)
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`Opined on the use and transmission of data from a remote module to a
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`central location for the purposes of viewing information from that remote
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`module and sending back control commands.
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`• Ronald A. Katz v. Fifth Third Bank (Patent Litigation)
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`Opined on call center systems, automated processing of banking,
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`mortgage, and credit cards transactions.
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`7.
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`Exhibit 2021 details my experiences with these companies. Based on
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`my years of hands-on experience with wireless transmission of data, including
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`vehicle data, and the processing of calculations of insurance premiums, I am very
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`familiar with technology associated with the ’358 patent.
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`8.
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`Unless noted otherwise, my statements and opinions reflect the
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`understanding as of 1996 of a person of ordinary skill in the art, as defined by
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`Petitioner, as follows: The field of art relevant to the ’358 patent is insurance, and
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`more particularly insurance rating based on telematics data; a person of ordinary
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`skill in the art (a “POSITA”) concerning the vehicle telematics aspects pertinent to
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`the ’358 patent (apart from the insurance risk aspects), as of January 1996, would
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`have at least a B.S. degree in electrical engineering, computer engineering,
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`computer science or the equivalent thereof and at least one to two years of
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`experience with telematics systems for vehicles, particularly, telematics systems
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`including communications and locations technologies.
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`9.
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`eComp Consultants is being compensated at a rate of $350 per hour
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`for my services.
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`II. Opinions as to RDSS and Geostar 10-K
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`10. The ’358 patent is titled “Vehicle Monitoring System.” It relates to a
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`“system that acquires data related to evaluating risk.” (’358 patent at 1:18.) This
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`data “may be used to quantify risk, determine a level of risk or determine a rating
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`or a cost of insurance.” (Id. at 3:43-44.) Claim 1 is the only independent claim in
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`the ’358 patent. Claim 1 recites elements of a “system that monitors and facilitates
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`review of data collected from a vehicle that is used to determine a level of safety or
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`cost of insurance.” (Id. at 41:56-58.)
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`11. RDSS (Ex. 1004) is marketing material published by Geostar
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`Corporation, entitled “Understanding Radio Determination Satellite Service.” The
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`authenticating cover declaration of Mark Cheston refers to it as “a booklet
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`published by Geostar corporation and publicly and widely distributed to potential
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`Geostar system users . . . .” (Ex. 1004 at 000001.)
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`12. The RDSS reference describes a commercial satellite communication
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`service for communicating position and short (100-character) messages. (Ex. 1004
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`at 000006-07.) This system – referred to as the GEOSTAR system – is described
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`in RDSS as being in an “early operational stage” and “focused on the commercial
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`trucking industry.” (Id. at 9:1:10 and 9:2:6-7.) As described in RDSS, the
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`GEOSTAR system requires each vehicle to be equipped with a satellite terminal
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`capable of transmitting position data and short text messages. The satellite
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`terminal transmits to the GEOSTAR system Central Control Facility, which
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`processes the transmission and forwards it to the home office/headquarters. (Id. at
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`000009.)
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`13. The architecture of the GEOSTAR system makes the Central Control
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`Facility “the nucleus for all functions of the network.” (Id. at 45:1:1-2.) As
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`described in RDSS, the Central Control Facility is a “combination satellite earth
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`station, network master control, and message distribution facility,” and it serves as
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`“the conduit between all users and recipients” of the service. (Id. at 45:1:2-7.)
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`Because of this, the Central Facility includes a substantial amount of hardware and
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`software required to determine the position of the terminals in the vehicles and
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`process short (100-character) messages. RDSS indicates (id. at 46:1:1 to 46:2:2):
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`Geostar’s control segment consists of Communications
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`Satellite Corporation (COMSAT) spread spectrum
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`modulation and demodulation equipment and network
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`operations software under the control of a Hewlett-
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`Packard computer system using a UNIX-based operating
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`system. The control hub at the Central encodes and
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`decodes spread spectrum signals, calculates position fixes,
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`and routes traffic externally to the network as well as
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`internally for electronic sorting and distribution. . . .
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`The Central’s message distribution function sends and
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`stores messages, and maintains user identification data
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`bases and traffic routing instructions.
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`14. RDSS discloses that the user terminals can send “position data, status
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`or alarms, and messages” to the GEOSTAR Central Facility. (Id. at 22:2:10.) A
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`POSITA would recognize that GEOSTAR’s capability of the user terminals to
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`transmit status data is limited. The user terminals disclosed in RDSS can sense and
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`transmit only an on/off status at their inputs. (Id. at 000052-53 and 000056.) The
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`Sony-manufactured terminal, for example, can “transmit such on/off data as:
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`engine overheat, oil low, door open, refrigeration temperature too high and burglar
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`alarms.” (Id. at 56:2:17-20.) This limited capability of the user terminals to
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`transmit a status/alarm is dictated by the way in which the GEOSTAR system
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`communicates. RDSS discloses that the GEOSTAR system does not transmit
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`information continuously but rather in short bursts. (Id. at 8:1:43-46.) The user
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`terminal responds to a general interrogation signal from the Central Facility, then is
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`automatically turned off. (Id. at 18:1:19 to 18:2:3.) The message “is formatted
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`digitally into message packets, which contain a total of 1,024 bits each.” (Id. at
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`26:1:10-13.) The figure in RDSS which depicts the format for a message packet
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`inbound from a user to the Central Facility in RDSS (id. at 000027) shows that a
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`small data block in the packet is reserved for “status,” identified in the
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`accompanying text as “hardware and port status” (id. at 26:2:30.)
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`15.
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`In describing the features and operations of the GEOSTAR user
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`terminals, RDSS states that “[o]perations requiring extensive processing are
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`performed at GEOSTAR Central, reducing the sophistication and cost of the
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`terminal.” (Id. at 52:1:6-9.) A POSITA would understand that the principal
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`“operations” referred to in that sentence are the calculation of position fixes and
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`reformatting and routing of message packets, both externally to and internally
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`within the network.
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`16. The RDSS reference does not disclose that the Central Facility
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`performs any analysis or processing of the limited “status” data transmitted from
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`the user terminals. A POSITA would understand that such data would not be
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`analyzed but would rather simply be routed to the user’s home office since – like
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`the inbound text messages from the user – this status information has no relevance
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`to GEOSTAR Central operations. And unlike the position data, no specialized
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`calculations or processing is needed to decipher this data. RDSS discloses that it
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`would typically take from three seconds to three minutes for the message to
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`complete transit from a vehicle to the home office. (Id. at 25:1:20-21.)
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`17.
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`I disagree with certain opinions about RDSS expressed in ¶ 27 of the
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`Declaration of Scott Andrews. (Ex. 1014.) In particular, RDSS does not disclose a
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`system in which vehicle data transmitted to the Control Facility is analyzed and
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`used in determining insurance premiums, and a POSITA would not have
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`understood GEOSTAR to have any application in that respect. I also disagree with
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`Mr. Andrews that RDSS discloses that the “status” data which may be transmitted
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`by users would be processed at the Central Facility. A POSITA would understand
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`that this on/off status data would simply be routed to the user’s home office. There
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`is no disclosure in RDSS regarding any use to which this data is put.
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`18. Although RDSS does state that “[o]perations requiring extensive
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`processing are performed at GEOSTAR Central” (Ex. 1004 at 52:1:6-9), I
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`disagree with the opinion of Mr. Andrews in ¶ 28 of his declaration to the extent he
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`is stating that a POSITA would necessarily consider it advantageous to transmit
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`monitored vehicle data to a central computer system for analysis. RDSS is
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`describing the GEOSTAR system, which is designed to permit mobile users to
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`communicate and transmit their positions by satellite communications. A POSITA
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`would realize, for example, that because of the way in which position fixes were
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`calculated in several of the GEOSTAR systems, it would be advantageous to
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`perform those calculations at the Central Facility rather than to incorporate the
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`capability in each user terminal. Since GEOSTAR user terminals already include a
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`satellite transmitter, a POSITA could design the system to take advantage of the
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`superior computing power available at the Central Facility. The mere fact that this
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`approach would be advantageous in the GEOSTAR system does not make it
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`advantageous in others, however. For example, the GEOSTAR design approach
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`would not motivate a POSITA to implement it in a system that would work well
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`without wireless transmission of the data. A POSITA would approach each system
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`design separately and would not be inclined to transmit data elsewhere for
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`processing when the additional expense and sophistication of a wireless transmitter
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`and central facility would add cost, was unnecessary, and provided neither
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`technical or operational advantages.
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`19.
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`I disagree further with Mr. Andrews’ opinion in ¶ 29 of his
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`declaration that a POSITA “would have recognized that the Geostar system was
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`useful for insurance purposes.” Mr. Andrews bases this opinion on his quotes from
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`the 1989 10-K report of Geostar Corporation. (Ex. 1005.) A POSITA would not
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`have been aware of these statements. For Liberty to contend otherwise is pure
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`hindsight. During my career of more than thirty years, I have never consulted a
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`10-K report or any other kind of SEC filing when working to design, develop or
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`modify a system. No one working with me has ever told me that he consulted such
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`an SEC filing, and I have never heard of it being done in system design or
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`development. There is no reason to believe that the POSITA as defined by
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`Mr. Andrews would have seen these statements and none is offered by
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`Mr. Andrews or Liberty.
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`III. Opinions as to Kosaka
`20.
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`I have reviewed the Kosaka reference, and also the declaration of
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`Dr. Mark Ehsani. My opinions on Kosaka in this paragraph are based in part on
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`the opinion of Dr. Ehsani as expressed in his declaration. In my opinion, to the
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`extent that the Kosaka reference would have been understandable, a person of
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`ordinary skill in the art would not have been motivated to modify Kosaka so as to
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`relocate its risk evaluation and insurance premium determination components to a
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`remote location and wirelessly transmit Kosaka’s data to that location for analysis.
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`I have identified below several reasons why this is so:
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`A.
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`The proposed modification would provide no advantage. Liberty
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`relies on the statement in RDSS that “operations requiring extensive
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`processing” can be carried out at the Central Facility of the
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`GEOSTAR system. But as explained by Dr. Ehsani at paragraphs 31-
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`38 of his declaration, the operations of Kosaka do not require
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`extensive processing, but rather can readily be carried out in Kosaka’s
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`onboard integrated device using inexpensive processors that were
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`available in 1996.
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`B.
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`The proposed modification would have increased the cost and
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`complexity of the Kosaka system. Liberty argues that by relocating
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`the analysis components of Kosaka to a Central Facility, the cost and
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`sophistication of the Kosaka system would be reduced. As Dr. Ehsani
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`has testified at paragraphs 39 and 41-43 of his declaration, the
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`proposed modification would in fact result in increased costs and
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`technical complexity, due to the need to add a wireless transmitter to
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`each onboard device and install a Central Facility and network
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`capability.
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`C.
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`The proposed modification would have rendered aspects of Kosaka’s
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`system nonfunctional. The Board observed in its Institution Decision
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`(at page 6) that an objective of Kosaka’s invention was to “continually”
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`determine insurance premium changes “through the detection of states
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`that lead to risk.” However, the proposed modification would
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`foreclose Kosaka’s system from realizing the continuous, real-time
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`operation contemplated by the inventor, because the GEOSTAR
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`system does not provide continuous communications. As I explained
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`in ¶ 14 above, communication in the GEOSTAR system occurs in
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`short bursts and in response to an interrogation signal from the Central
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`Facility. Network access by automobile users is typically several
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`hours apart. (Ex. 1004 at 18:2:8-9.) The proposed modification
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`would therefore prevent Kosaka from realizing one of its principal
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`objectives. Moreover, based on Dr. Ehsani’s declaration, it is my
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`opinion that the modification proposed by Liberty would also destroy
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`another aspect of Kosaka’s functionality – providing a warning to the
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`driver. As Dr. Ehsani has testified at ¶¶ 45-47 of his declaration, the
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`warning needs to be provided in real-time if it is to be effective.
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`Relocating the risk evaluation unit to a remote location and wirelessly
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`transmitting the data to that location would destroy Kosaka’s warning
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`functionality.
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`D.
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`The proposed modification would introduce unneeded technical
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`problems to the Kosaka device. Dr. Ehsani has identified (at ¶¶ 40-44)
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`numerous technical difficulties associated with relocating the risk
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`evaluation and insurance premium determination components. Based
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`on Dr. Ehsani’s opinions in this regard, a POSITA would not have
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`been motivated to relocate the components.
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`E.
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`A POSITA would realize that the proposed modification to include
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`wireless transmission of data was unnecessary. I disagree with Scott
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`Andrews’ opinion in ¶ 38 of his declaration that relocating the
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`analysis components of Kosaka to a central computer would allow the
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`vehicle data and the results of the insurance premium calculations to
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`be made available more rapidly and efficiently to the insurer. Since
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`Kosaka does not disclose how his device conveys information to the
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`insurer, it is speculation for Mr. Andrews to claim that the information
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`would be made available any more rapidly and efficiently in the
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`modified configuration.
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`F.
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`A POSITA would not have been motivated to modify Kosaka’s
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`insurance premium determination device based on the disclosure of
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`RDSS for the reasons identified in ¶¶ 10-19 of my declaration.
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`21. Kosaka does not disclose that vehicle data sensed in his system is
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`collected from a vehicle bus as recited in claim 1 of the ’358 patent, and Liberty
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`does not claim otherwise. I disagree with the opinion expressed by Scott Andrews
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`in ¶ 34 of his declaration that the vehicle data Kosaka describes, i.e., the data from
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`the Doppler radar unit indicating the speed relative to the preceding vehicle, would
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`have been available for collection from the OBD-II vehicle bus port. The
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`protocols for the vehicle bus in 1996 were not fast enough for the radar to resolve
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`and deliver the velocity information from the radar unit. Therefore, contrary to
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`Mr. Andrews’ opinion, a POSITA would not have found it obvious to use the
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`vehicle bus or this OBD-II port vehicle bus connection to monitor and collect the
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`data. Because of this, the proposed combination of Kosaka with RDSS would not
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`meet the vehicle bus limitation of claim 1 and all the dependent claims.
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`22.
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`I disagree with Mr. Andrews’ opinion that a POSITA would be
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`motivated to relocate Kosaka’s analysis components to a central location and
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`wirelessly communicate Kosaka’s sensor data to the central location. (Andrews
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`Decl. at ¶¶ 37-38.) In fact, a POSITA would have rejected that modification
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`because the quantity of data and the data rates from Kosaka’s Doppler radar unit
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`would have exceeded the capacity of a wireless communication channel. A
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`POSITA would have recognized that communication of other data to or from the
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`central location (including warnings) would be so severely restricted as to render
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`Kosaka’s system non-functional. Since the proposed modification of the Kosaka
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`device would render it non-functional, a POSITA would not implement it.
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`23.
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`I also disagree with Mr. Andrews’ opinion, at ¶ 36 of his declaration,
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`that “the in-vehicle device containing the fuzzy memory would have been
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`understood by a person of ordinary skill in the art to comprise a database.” The
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`Board has stated that “[i]t is a stated objective of Kosaka that insurance premiums
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`can be increased or decreased by ‘continually’ determining insurance premium
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`changes through the detection of states that lead to risk.” (Institution Decision at
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`6.) The real time, continuous processing of Kosaka would be severely adversely
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`affected by using a database to store and retrieve vehicle data rather than a simple
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`memory. Especially given that the claimed database element requires database
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`records searching and other functions, a POSITA would understand that such
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`database operations (e.g., insert, update, delete, and query/search operations)
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`usually involve significant overhead. This performance overhead would tend to
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`degrade Kosaka’s real time risk evaluation performance. In view of the foregoing,
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`a POSITA would understand fuzzy memory 4 as disclosed in Kosaka not to
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`comprise the database required by the claims of the ’358 patent. Moreover, it
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`would not have been obvious to a POSITA to use a database in view of the
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`resulting adverse effects on the performance of Kosaka’s system.
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`Date:
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`Signature:
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`June 13, 2013
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