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 CBM2013-00009
`Patent 8,140,358
`
`—————————————
`
`PATENT OWNER’S RESPONSE
`PURSUANT TO 37 C.F.R. § 42.220
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`CLI-2114925v4
`
`

`

`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`V.
`
`PRELIMINARY STATEMENT .................................................................... 1
`I.
`THE ALLEGED GROUNDS FOR UNPATENTABILITY ......................... 4
`II.
`III. BACKGROUND REGARDING DETERMINATION OF AUTO
`INSURANCE PREMIUMS ........................................................................... 7
`A. General Considerations ........................................................................ 7
`B. Actuarial Classes, Risk Factors And Rate Factors ............................... 8
`IV. THE ’358 PATENT AND CLAIM CONSTRUCTION ISSUES ................ 10
`A.
`Background Of The Invention ............................................................ 10
`B.
`The Invention Of The ’358 Patent...................................................... 11
`C.
`Claim Terms ....................................................................................... 12
`1.
`Rating Factor ............................................................................ 12
`THE ’358 PATENT CLAIMS ARE PATENTABLE .................................. 13
`A.
`Background On The Principal References ......................................... 13
`1.
`RDSS ........................................................................................ 13
`2.
`The Geostar 10-K ..................................................................... 18
`3.
`Kosaka ...................................................................................... 21
`B. Applicable Law .................................................................................. 25
`1.
`Liberty Bears The Burden Of Proof ........................................ 25
`2.
`The Law Of Obviousness ......................................................... 25
`The ’358 Patent Is Patentable ............................................................. 27
`1.
`Liberty Has Misconstrued The Geostar 10-K .......................... 27
`2.
`The Geostar 10-K Is Not Prior Art .......................................... 30
`3.
`The Geostar 10-K Is Nonanalogous Art .................................. 32
`4.
`A POSITA Would Not Have Relocated The Analysis
`Components Of Kosaka ........................................................... 35
`
`C.
`
`
`CLI-2114925v4
`
`
`
`i
`
`
`
`

`

`
`
`5.
`
`(a) The Board’s Decisions In Other Proceedings ............... 36
`(b) Advantages In The GEOSTAR System Are Not
`Necessarily Advantageous In Other Systems ................ 38
`(c) Liberty’s Proposed Modification Of Kosaka
`Would Have Been Disadvantageous ............................. 39
`Even If Kosaka Were Modified As Liberty Proposes
`(Using Hindsight), The Modified System Would Not
`Meet The “Vehicle Bus” Or “Database” Limitations Of
`The ’385 Patent ........................................................................ 44
`Even If Kosaka Were Modified As Liberty Proposes
`(Using Hindsight), The Modification Would Not Meet
`The “Rating Factor” Limitation Of The ’358 Patent ............... 46
`VI. CONCLUSION ............................................................................................. 48
`
`
`
`6.
`
`CLI-2114925v4
`
`ii
`
`

`

`Case CBM2013-00009
`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
`
`
`Pursuant to the Board’s Decision – Institution of Covered Business Method
`
`Review (Paper 10) (“Institution Decision”), entered March 28, 2013, and 37 C.F.R.
`
`§ 42.220(c), Patent Owner Progressive Casualty Insurance Co. (“Progressive” or
`
`“Patent Owner”) submits this Response in opposition to the Petition for Covered
`
`Business Method Patent Review of United States Patent No. 8,140,358 (the “’358
`
`patent”) filed by Liberty Mutual Insurance Co. (“Liberty” or “Petitioner”).
`
`I.
`
`PRELIMINARY STATEMENT
`
`The instant Petition represents the FOURTH time in a span of two months
`
`that Liberty has filed a Petition seeking Covered Business Method review of a
`
`Progressive patent based on Kosaka.1 It is the second such Petition filed by
`
`Liberty against Progressive’s ’358 patent. In response to the first Petition
`
`(CBM2012-00003), the Board issued an Order sua sponte denying all of
`
`Petitioner’s grounds based on Kosaka in combination with other references
`
`disclosing wireless transmission of data from a vehicle. (See Ex. 2005.) And in
`
`CBM2013-00003, the Board denied Liberty’s Petition, which was based on the
`
`1 The other three Petitions are: (1) CBM2012-00002; (2) CBM2012-00003;
`and (3) CBM2013-00003.
`
`CLI-2114925v4
`
`1
`
`

`

`
`same combination of Kosaka and the GEOSTAR system disclosed in the RDSS
`
`Case CBM2013-00009
`Patent 8,140,358
`
`references on which Liberty relies here.2 (Ex. 2022.)
`
`The Institution Decision in this proceeding is inconsistent with the Board’s
`
`prior rulings rejecting Liberty’s repeated contention that it would have been
`
`obvious to relocate components of Kosaka to a remote location and wirelessly
`
`transmit Kosaka’s data to it. Even though the record here is slightly different, the
`
`difference is immaterial. The record here – as in the prior proceedings – does not
`
`disclose that any advantage would have been gained by “modify[ing] Kosaka’s in-
`
`vehicle integrated system (which has the risk evaluation device onboard to provide
`
`real-time risk evaluation) to transmit the monitored vehicle data wirelessly to a . . .
`
`server . . . .” (Ex. 2022 at 21.) Quite the contrary, a person of ordinary skill in the
`
`art (“POSITA”) would have had no reason or motivation to do so because the
`
`modification provided no advantage, was unnecessary, would have resulted in
`
`
`2 The RDSS reference was not asserted in the CBM2012-00003 Petition, but
`that was evidently a strategic choice, because it was known and available to
`Liberty at the time that Petition was filed. (See Cheston Declaration, Ex. 1004 at
`000001, executed on September 14, 2012, two days before Liberty filed its Petition
`in CBM2012-00003.) In addition, the same GEOSTAR system described in RDSS
`was disclosed in the Scapinakis reference that Liberty submitted in CBM2012-
`00003. (Ex. 1016 in CBM2012-00003.)
`
`CLI-2114925v4
`
`2
`
`

`

`
`higher cost and greater technical complexity, and would have rendered key aspects
`
`Case CBM2013-00009
`Patent 8,140,358
`
`of Kosaka’s system nonfunctional.
`
`There particularly would have been no motivation for a POSITA to modify
`
`the insurance premium determination device disclosed in the Kosaka reference,
`
`using the satellite communication GEOSTAR system disclosed in the RDSS
`
`brochure. RDSS contains no disclosure relating to insurance or determining an
`
`insurance rating. Petitioner’s argument to the contrary is based on a misleading
`
`cropped quote from the 1989 Geostar Corporation 10-K report. The Geostar 10-K
`
`is not prior art, is nonanalogous, and the complete passage makes it clear that the
`
`RDSS has no relevance to the ’358 patent. And while Liberty argues that RDSS
`
`discloses that it would have been useful for operations “requiring extensive
`
`processing” to be performed at a central location, there are no such operations in
`
`Kosaka, and Petitioner has offered no proof to the contrary. Even assuming that
`
`centralizing certain processing activities was advantageous in the GEOSTAR
`
`system, that does not mean that it would be advantageous to do so in Kosaka’s
`
`system. There would have been no reason to “relocate” Kosaka’s risk evaluation
`
`components. In fact, “relocating” Kosaka’s risk evaluation and insurance premium
`
`components in the manner suggested by Liberty would be disadvantageous
`
`(including more costly) and would deprive Kosaka of key functionality.
`
`CLI-2114925v4
`
`3
`
`

`

`For these and other reasons spelled out in detail below, the Board should
`
`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`issue judgment that all claims of the ’358 patent are patentable over the grounds
`
`specified by the Board in the Institution Decision.
`
`II. THE ALLEGED GROUNDS FOR UNPATENTABILITY
`The Institution Decision sets forth the following alleged grounds for
`
`unpatentability in this trial:
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`F.
`
`G.
`
`Claims 1, 3, 5, 8, 9, 19 and 20 as unpatentable under 35 U.S.C.
`§ 103 over RDSS, Geostar 10-K and Kosaka;
`
`Claim 2 as unpatentable under 35 U.S.C. § 103 over RDSS,
`Geostar 10-K, Kosaka and Chang;
`
`Claim 4 as unpatentable under 35 U.S.C. § 103 over RDSS,
`Geostar 10-K, Kosaka and Beaverton;
`
`Claims 6 and 7 as unpatentable under 35 U.S.C. § 103 over
`RDSS, Geostar 10-K, Kosaka and Stanifer;
`
`Claims 10, 11 and 13-15 as unpatentable under 35 U.S.C. § 103
`over RDSS, Geostar 10-K, Kosaka and Lowrey;
`
`Claim 12 as unpatentable under 35 U.S.C. § 103 over RDSS,
`Geostar 10-K, Kosaka and Lowrey;
`
`Claims 16, 17 and 18 as unpatentable under 35 U.S.C. § 103
`over RDSS, Geostar 10-K, Kosaka and Bouchard;
`
`CLI-2114925v4
`
`4
`
`

`

`
`
`H.
`
`I.
`
`Case CBM2013-00009
`Patent 8,140,358
`
`Claims 17 and 18 as unpatentable under 35 U.S.C. § 103 over
`RDSS, Geostar 10-K, Kosaka, Bouchard and Gray; and
`
`Claims 17 and 18 as unpatentable under 35 U.S.C. § 103 over
`RDSS, Geostar 10-K, Kosaka, Bouchard and Lewis.
`
`(Institution Decision at 29-30.)
`
`In the Institution Decision, the Board first analyzed claim 1 of the ’358
`
`patent and held that it was eligible for covered business method review, rejecting
`
`Progressive’s arguments that the ’358 patent is instead directed to a “technological
`
`invention.” 3 Second, the Board declined to deny Liberty’s Petition
`
`
`3 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 10-17.) The
`Patent Owner objects to the Board’s conclusion not only as to claim 1 but also to
`the determination that the Board may review all the other ’358 claims without first
`analyzing each of them to determine whether the claim is drawn to 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.” The statute and legislative history are clear that not all business
`method patents are subject to review under the procedure of Section 18. These
`provisions restrict the PTO’s authority and limit review under Section 18 to only
`those patented inventions which have been found to meet the statutory criteria of
`covered business method patents. An analysis of one claim in a patent sheds no
`
`CLI-2114925v4
`
`5
`
`

`

`
`notwithstanding Progressive’s arguments that no review should be instituted under
`
`Case CBM2013-00009
`Patent 8,140,358
`
`35 U.S.C. § 325(d) because “the same or substantially the same prior art or
`
`arguments previously were presented to the Office,” both during prosecution and
`
`by Liberty’s Petition in CBM2012-00003.
`
`Turning to the grounds for unpatentability raised in Liberty’s Petition
`
`pertaining to claim 1, the Board held (at p. 21) that “[on] this record, Liberty’s
`
`arguments have merit . . . .” Based on Liberty’s Petition, the Board concluded (at
`
`pp. 21-24) that: (1) a POSITA would have had knowledge of statements about
`
`potential markets for the GEOSTAR system disclosed in a 10-K Annual Report
`
`filed by Geostar Corporation in April, 1990; (2) a POSITA “would have known to
`
`use the GEOSTAR system disclosed in RDSS for insurance purposes, specifically
`
`
`(continued…)
`
`
`light on whether any other claim in the same patent is directed to a covered
`business method. Indeed, at page 17 of its Institution Decision, the Board held that
`a “determination of what constitutes a technological invention under the statute is
`made on a case-by-case and claim-by-claim basis.” (Emphasis added.) Yet the
`Board did not conduct a “claim-by-claim” analysis in instituting CBM review of
`’358 claims 2-20 in this case. The Patent Owner requests dismissal of the
`proceedings as to all ’358 claims in dispute other than claim 1, since the Board’s
`statutory authority is limited to conducting CBM post-grant review of just those
`patent claims which the Board first determines to be directed to a covered business
`method.
`
`CLI-2114925v4
`
`6
`
`

`

`
`to lower insurance premiums”; and (3) it would have been obvious based on RDSS
`
`Case CBM2013-00009
`Patent 8,140,358
`
`to relocate certain components of Kosaka’s system to a remote central location and
`
`wirelessly transmit the vehicle data from each vehicle to the central location for
`
`analysis. In instituting review, the Board also modified the grounds asserted in
`
`Liberty’s Petition by adding the Geostar 10-K report as a reference in each of the
`
`grounds.4 (Institution Decision at 23.)
`
`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 that
`
`potentially has multiple operators. (Ex. 2013, Miller Decl. at ¶ 24.)
`
`4 Progressive objects to this action of the Board. In its October 25, 2012
`Order in CBM2012-00003 denying numerous grounds raised by Liberty in that
`Petition – including all grounds based on Kosaka – the Board ruled that “we will
`address only the basis, rationale, and reasoning put forth by the Petitioner in the
`Petition, and resolve all vagueness and ambiguity in Petitioner’s arguments against
`the Petitioner.” (Ex. 2005 at 10.) The Board’s action in modifying the grounds
`identified by the Petitioner in its Petition is inconsistent with that ruling.
`
`CLI-2114925v4
`
`7
`
`

`

`The insurance premium is determined so as to reasonably reflect both the
`
`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`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. An insurance premium, however, reflects more than the degree of risk
`
`(or expected losses) being transferred. In addition to provisions for expected future
`
`claim costs and claim settlement expenses, an insurance premium also includes
`
`provisions for expected operational and administrative expenses, and the insurer’s
`
`cost of capital. (Id. at ¶¶ 26-27.)
`
`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, not the likelihood of accident occurrence. (Ex. 2013, Miller
`
`Decl. at ¶¶ 17-19.)
`
`CLI-2114925v4
`
`8
`
`

`

`An actuarial class for a particular risk characteristic inherently has a risk
`
`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`factor associated with the risk characteristic. (Id. at ¶ 20.) A risk factor is a
`
`calculated numerical value for that actuarial class and is used to calculate the
`
`expected loss for an insured. (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
`
`¶ 21.) A rate factor is a calculated numerical value for the actuarial class that is
`
`used to calculate the premiums for an insured. (Id.) It relates to the difference in
`
`premiums charged to insureds. (Id.) The rate factor reflects not only the
`
`differences in the expected losses (i.e., the risk factor), 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. (Ex. 2013 at ¶ 33.)
`
`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
`
`CLI-2114925v4
`
`9
`
`

`

`
`premium for an insured car is determined based on three risk characteristics: the
`
`Case CBM2013-00009
`Patent 8,140,358
`
`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 hypothetical 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 credit. If the rate factor is .85 for a $500 deductible coverage, and a rate
`
`factor of .90 is applied if the insured qualifies for a claim-free credit, then, under
`
`this 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 ¶¶ 32, 34.) This is the
`
`way actuarial classes are used in the determination of insurance premiums. (Id. at
`
`¶¶ 32-34.)
`
`IV. THE ’358 PATENT AND CLAIM CONSTRUCTION ISSUES
`A. Background Of The Invention
`The ’358 patent pertains to a vehicle monitoring system. It describes the
`
`relevant field as relating to “a system that acquires data related to evaluating risk.”
`
`(’358 patent at 1:18.) Data and systems used previously “to classify applicants into
`
`actuarial classes” did not accurately predict insurance losses. Such “data may not
`
`CLI-2114925v4
`
`10
`
`

`

`
`be validated, may be outdated, and may not support new or dynamic risk
`
`Case CBM2013-00009
`Patent 8,140,358
`
`assessment.” (Id. at 1:20-29.)
`
`The Invention Of The ’358 Patent
`
`B.
`The ’358 patent generally discloses a system for collecting various types of
`
`risk-based or insurance-related vehicle data, wirelessly transmitting the data to a
`
`network and server, where it is stored in a database and processed with other data
`
`to generate a rating factor based on the vehicle data. This data “may be used to
`
`quantify risk, determine a level of risk or determine a rating or a cost of insurance.”
`
`(’358 patent at 3:43-44.) The “monitoring may generate insurance scores, safety
`
`scores, rating factors, and/or affect current, retrospective or prospective costs of
`
`insurance.” (Id. at 3:63-65.) Examples of data representative of operating
`
`characteristics to be monitored, recorded and/or communicated include actual
`
`miles driven, types of roads driven on, speeding, safety equipment used, time of
`
`day driven, and others. (See, e.g., id. at 3:65–4:20; see also id. at 7:11–8:32.) Data
`
`regarding such operating characteristics can be used to generate a rating factor
`
`and/or to calculate an insurance premium based on the rating factor. (Id. at 3:63-
`
`65.)
`
`The ’358 patent claims priority to earlier applications. Since the principal
`
`references at issue in this proceeding (i.e., RDSS and Kosaka references) are dated
`
`more than one year before the earliest possible priority date for the ’358 patent, the
`
`CLI-2114925v4
`
`11
`
`

`

`
`priority date issue is moot and Progressive does not address it in this Response.
`
`Case CBM2013-00009
`Patent 8,140,358
`
`Progressive has argued the ’358 patent priority issue in its Response in CBM2012-
`
`00003 and understands that the Board will take the issue up in that proceeding.
`
`C. Claim Terms
`1.
`Rating Factor
`The Board adopted Liberty’s proposed construction of the claim term “rating
`
`factor” as “a calculated insurance risk value such as a safety score or usage
`
`discount.” (Institution Decision at 8.) 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. at 9.)
`
`The Board stated that “[b]y the clarification, we do not mean that an insurance risk
`
`value must be associated with a specifically corresponding insurance premium
`
`amount, but only that it has a role or significance in the calculation of an insurance
`
`premium.” (Id. at 9-10.) A POSITA would understand that the Board’s “insurance
`
`risk” refers to expected claims losses, and “an associated level of insurance risk”
`
`describes rating factors associated with actuarial classes. (Ex. 2013, Miller Decl.
`
`at ¶ 16.) Progressive will therefore apply this construction of “rating factor” for
`
`purposes of this proceeding.
`
`CLI-2114925v4
`
`12
`
`

`

`Case CBM2013-00009
`Patent 8,140,358
`
`
`V. THE ’358 PATENT CLAIMS ARE PATENTABLE
`A. Background On The Principal References
`1.
`RDSS
`The RDSS reference (Ex. 1004) is marketing material relating to the
`
`GEOSTAR system published by Geostar Corporation, entitled “Understanding
`
`Radio Determination Satellite Service.” The cover declaration of Mark Cheston
`
`refers to it as “a booklet published by Geostar Corporation and publicly and widely
`
`distributed to potential Geostar system users . . . .” (Ex. 1004 at 000001.)5
`
`The GEOSTAR Radio Determination Satellite Service is described variously
`
`as a “new commercial communications technology” and “new commercial
`
`technology offering messaging and accurate positioning” (Id. at 000006-07), as
`
`depicted in the following illustration titled “What RDSS Is All About.” (Id. at
`
`000009.)
`
`
`5 Citations to page numbers of Liberty’s exhibits are to the exhibit page
`numbers applied by Liberty in the lower right-hand corner of each exhibit page.
`
`CLI-2114925v4
`
`13
`
`

`

`
`
`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`“Using RDSS technology, a dispatcher can immediately locate and communicate
`
`with one or all of the fleet . . . .” (Id. at 7:2:21 to 8:1:3.)
`
`Geostar Corporation claimed that it was “the originator and current leader in
`
`developing an RDSS system.” (Id. at 8:2:44 to 9:1:1.) As explained in the
`
`document (id. at 9:1:9 to 9:2:7):
`
`The GEOSTAR System is presently in an early
`
`operational stage, with major capability enhancements
`still ahead. Initial GEOSTAR service (Systems 1 and 2)
`provides a one-way flow of data, with external
`positioning information provided by LORAN or other
`navigational system. In its simplest form a user terminal
`broadcasts to its intended address, normally via satellite
`to the GEOSTAR (RDSS) Central Control Facility where
`
`CLI-2114925v4
`
`14
`
`

`

`
`
`Case CBM2013-00009
`Patent 8,140,358
`
`the transmission is processed and forwarded to the user’s
`organizational headquarters site or home office. This
`introductory capability is the initial service focused on
`the commercial trucking industry.
`
`The reference goes on to describe the principal components of the system (id. at
`
`10:1:8-23):
`
`The GEOSTAR system has three components: a
`
`control segment, a family of relay satellites comprising
`the space segment, and user terminals. The GEOSTAR
`control segment, or Central, contains redundant earth
`stations and a set of computers for network control. The
`space segment consists of several satellite relays, one of
`which must have a transmit as well as a receive
`capability in order to provide two-way service. The user
`segment consists of compact, inexpensive radio
`terminals, each with a distinctive identification code. In
`general the user will be able to compose, store, edit,
`display, transmit, and receive digital messages.
`
`The Federal Communications Commission and International
`
`Telecommunications Union set standards for RDSS, defining radio determination
`
`as “the determination of position, or obtaining information relating to position, by
`
`means of propagation of radio waves.” (Id. at 8:1:27-29.) The RDSS system
`
`“does not compete with conventional voice or data systems that transmit
`
`CLI-2114925v4
`
`15
`
`

`

`
`information continuously. Instead, RDSS sends short bursts of information with
`
`Case CBM2013-00009
`Patent 8,140,358
`
`accurate positioning and other services added by a central network control
`
`facility.” (Id. at 8:1:41-46.)
`
`RDSS does not contain any mention of insurance companies using the
`
`GEOSTAR system for any purpose, let alone for assessing levels of risk,
`
`determining insurance rating factors, insurance premiums, or the like. The “vast
`
`potential” of the system described in the RDSS reference does not refer to anything
`
`remotely approaching those applications. (Id. at 10:1:29.) RDSS instead states that
`
`the GEOSTAR system is “in an early operational stage,” with its capability
`
`“focused on the commercial trucking industry.” (Id. at 9:2:6-7.)
`
`The GEOSTAR Central Control Facility is required to perform a myriad
`
`number of operations for the System.
`
`RDSS Central is the nucleus for all functions of
`
`the network. A combination satellite earth station,
`network master control, and message distribution facility,
`the Central Control Facility is the conduit between all
`users and recipients of RDSS services.
`
`(Id. at 45:1:3-9.) The Central facility includes a substantial amount of computer
`
`hardware and software as required to determine the position of the remote
`
`terminals and to process and route short (100-character) messages.
`
`CLI-2114925v4
`
`16
`
`

`

`
`
`Case CBM2013-00009
`Patent 8,140,358
`
`Geostar’s control segment consists of
`
`Communications Satellite Corporation (COMSAT)
`spread spectrum modulation and demodulation
`equipment and network operations software under the
`control of a Hewlett-Packard computer system using a
`UNIX-based operating system. The control hub at the
`Central encodes and decodes spread spectrum signals,
`calculates position fixes, and routes traffic externally to
`the network as well as internally for electronic sorting
`and distribution. . . .
`
`The Central’s message distribution function sends
`
`and stores messages, and maintains user identification
`data bases and traffic routing instructions.
`
`(Id. at 46:1:1 to 46:2:2.) There is no disclosure that the GEOSTAR Central facility
`
`analyzes or processes any monitored “vehicle data related to a level of safety or an
`
`insurable risk in operating a vehicle.”
`
`The user terminals disclosed in RDSS incorporate sophisticated satellite
`
`radio transmitters. The reference states that “operations requiring extensive
`
`processing” – e.g., the satellite-based position determination, routing of traffic, and
`
`message distribution – are performed by the Central facility, “reducing the
`
`sophistication and cost of the terminal.” (Id. at 52:1:8-9.) The GEOSTAR user
`
`terminal nonetheless is still costly. The same paragraph states that the “design goal
`
`CLI-2114925v4
`
`17
`
`

`

`
`is to manufacture a production model user terminal for under $3,000.” (Id. at
`
`Case CBM2013-00009
`Patent 8,140,358
`
`52:1:1-3.) And while RDSS discloses user terminals that included inputs for
`
`sensors, their capability was limited. The user terminals only had the ability to
`
`sense on or off status at their input ports, due to the way in which GEOSTAR
`
`communicates in short bursts rather than continuously. (Ex. 2020, Zatkovich Decl.
`
`at ¶ 14.) A POSITA would understand that such status data would be routed to the
`
`user’s home office. The Central facility has no interest in the status data, and there
`
`is no disclosure that any such on/off status data is analyzed or processed in any
`
`way in the GEOSTAR system. (Id. at ¶ 16.)
`
`The Geostar 10-K
`
`2.
`Ex. 1005 is the Form 10-K filed with the SEC on April 16, 1990 by Geostar
`
`Corporation (the “Company”) for the fiscal year ended December 31, 1989.
`
`Liberty quotes from and relies on it to argue that the GEOSTAR system was
`
`generally “useful for insurance purposes.” (Petition at 20.) This argument is
`
`based on a cropped quote taken out of context from the section of the report in
`
`which the Company identified a large number of industries that it “believed” might
`
`be interested in the GEOSTAR system.
`
`The Geostar 10-K discloses that the operations of Geostar Corporation “are
`
`currently in one industry: position determination and mobile satellite
`
`communications.” (Ex. 1005 at 000004.)
`
`CLI-2114925v4
`
`18
`
`

`

`The passage from the Geostar 10-K report relied upon by Liberty appears in
`
`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`a section under the heading “Markets.” Immediately before the passage relied
`
`upon by Liberty, the report states (id. at 000010, emphasis added):
`
`The primary market for GEOSTAR System 2C
`
`service is in the management of mobile assets. System
`2C (Phase 1) service is targeted for the “heavy”
`commercial transportation markets, such as the trucking,
`aviation, rail and maritime markets. The Company
`believes that GEOSTAR RDSS (Phase 2) will be useful
`in additional transportation markets, such as private
`fleets, rental and “light” trucking, specialized and
`conventional trailers, and specialized railcars. In
`addition, the Company believes that additional markets
`for GEOSTAR RDSS include: control of field
`operations; transaction services; fixed site and mobile
`remote monitoring and control of equipment; business
`communications; and government communications,
`command and control services.
`
`This provides context for the next paragraph of the Report, which reads in its
`
`entirety as set forth below. Only the emphasized words were quoted by Liberty:
`
`The Company believes that the GEOSTAR System
`
`enables commercial fleet owners to increase asset
`utilization, reduce deadhead miles, shorten billing cycles,
`improve just-in-time deliveries, enhance security, lower
`
`CLI-2114925v4
`
`19
`
`

`

`
`
`Case CBM2013-00009
`Patent 8,140,358
`
`insurance premiums, reduce communications costs,
`perform real-time operations and maintenance
`monitoring, scheduling, and controlling to achieve more
`efficient operations and reduce operating costs. Most of
`the Company’s current customers are long distance
`trucking companies.
`
`The Geostar 10-K does not explain the basis for the Company’s “belief” that “the
`
`GEOSTAR system enables commercial fleet owners” to, inter alia, “lower
`
`insurance premiums,” or how these lowered premiums would come about.
`
`(Ex. 2013, Miller Decl. at ¶ 46.) In any event, this passage explicitly relates to
`
`commercial fleet owners, and does not disclose or suggest to a POSITA that an
`
`insurance company could set up a usage-based insurance program that would
`
`determine insurance premiums, generate rating factors or rate insurance based
`
`upon any data about a vehicle acquired or processed in the GEOSTAR system.
`
`(Id.)
`
`The next part of the Geostar 10-K