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
`______________
`
`Before the Honorable JAMESON LEE, JONI Y. CHANG, and MICHAEL R.
`ZECHER, Administrative Patent Judges.
`
`PETITIONER LIBERTY MUTUAL INSURANCE CO.’S
`MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND 42.64
`
`
`______________
`
`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
`______________
`
`Before the Honorable JAMESON LEE, JONI Y. CHANG, and MICHAEL R.
`ZECHER, Administrative Patent Judges.
`
`PETITIONER LIBERTY MUTUAL INSURANCE CO.’S
`MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND 42.64
`
`
`
`Case CBM2013-00009
`Patent 8,140,358
`Petitioner, Liberty Mutual Insurance Company (“Petitioner”), respectfully
`
`submits this Motion to Exclude pursuant to 37 C.F.R. §§ 42.62 and 42.64, and Sched-
`
`uling Order §4(b) (Dkt. 11; 30; 31).
`
`As an initial matter, and as Petitioner has indicated in parallel proceedings in-
`
`volving these same parties (CBM2012-00010, Paper 46, and CBM2013-00002, Paper
`
`48), Petitioner respectfully submits that the Board, sitting as a non-jury tribunal with
`
`administrative expertise, is well-positioned to determine and assign the appropriate
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`weight to be accorded to the evidence presented by both Petitioner and Patent Owner
`
`Progressive Casualty Insurance Co. (“Patent Owner”) in this patent invalidity trial
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`without the need for formal exclusion. See, e.g., S.E.C. v. Guenthner, 395 F. Supp. 2d
`
`835, 842 n.3 (D. Neb. 2005) (admitting expert testimony over objections; “Trial courts
`
`should be more reluctant to exclude evidence in a bench trial than a jury trial. . . .
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`Thus, in bench trials evidence should be admitted and then sifted when the district
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`court makes its findings of fact and conclusions of law. In a nonjury case, the trial
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`court is presumed to consider only the competent evidence and to disregard all evi-
`
`dence that is incompetent. Where the court has assumed the role of fact-finder in a
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`bench trial, ‘the better course’ is to ‘hear the testimony, and continue to sustain objec-
`
`tions when appropriate.’ . . . [T]he court has admitted the testimony of [plaintiff’s ex-
`
`pert] and has accorded it appropriate weight.” (citations omitted)); Builders Steel Co. v.
`
`Comm’r of Internal Revenue, 179 F.2d 377, 379 (8th Cir. 1950) (vacating Tax Court deci-
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`sion for exclusion of competent and material evidence; “In the trial of a nonjury case,
`
`
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`1
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`Case CBM2013-00009
`Patent 8,140,358
`it is virtually impossible for a trial judge to commit reversible error by receiving in-
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`competent evidence, whether objected to or not. An appellate court will not reverse a
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`judgment in a nonjury case because of the admission of incompetent evidence, unless
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`all of the competent evidence is sufficient to support the judgment or unless if affirm-
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`atively appears that the incompetent evidence induced the court to make an essential
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`finding which would not otherwise have been made. . . . On the other hand, a trial
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`judge who, in the trial of a nonjury case, attempts to make strict rulings on the admis-
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`sibility of evidence, can easily get his decision reversed by excluding evidence which is
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`objected to, but which, on review, the appellate court believes should have been ad-
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`mitted.”). Petitioner accordingly submits that it is, as a general matter, better for the
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`Board to have before it a complete record of the evidence submitted by the parties
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`than to exclude particular pieces of it and thereby risk improper exclusion that could
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`later be assigned as error. See, e.g., Builders Steel, 379; Donnelly Garment Co. v. NLRB,
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`123 F.2d 215, 224 (8th Cir. 1942) (finding NLRB’s refusal to receive testimonial evi-
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`dence amounted to a denial of due process; “One who is capable of ruling accurately
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`upon the admissibility of evidence is equally capable of sifting it accurately after it has
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`been received, and, since he will base his findings upon the evidence which he regards
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`as competent, material and convincing, he cannot be injured by the presence in the
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`record of testimony which he does not consider competent or material. Lawyers and
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`judges frequently differ as to the admissibility of evidence, and it occasionally happens
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`that a reviewing court regards as admissible evidence which was rejected by the judge,
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`2
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`Case CBM2013-00009
`Patent 8,140,358
`special master, or trial examiner. If the record on review contains not only all evidence
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`which was clearly admissible, but also all evidence of doubtful admissibility, the court
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`which is called upon to review the case can usually make an end of it, whereas if evi-
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`dence was excluded which that court regards as having been admissible, a new trial or
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`rehearing cannot be avoided.”). See also, e.g., Samuel H. Moss, Inc. v. FTC, 148 F.2d 378,
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`380 (2d Cir.), cert. denied, 326 U.S. 734 (1945) (observing that, “if the case was to be
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`tried with strictness, the examiner was right [but w]hy [the examiner] or the Commis-
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`sion’s attorney should have thought it desirable to be so formal about the admission
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`of evidence, we cannot understand. Even in criminal trials to a jury it is better, nine
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`times out of ten, to admit, than exclude evidence and in such proceedings as these the
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`only conceivable interest that can suffer by admitting any evidence is the time lost,
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`which is seldom as much as that inevitably lost by idle bickering about irrelevancy or
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`incompetence. In the case at bar it chances that no injustice was done, but we take
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`this occasion to point out the danger always involved in conducting such a proceeding
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`in such a spirit, and the absence of any advantage in depriving either the Commission
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`or ourselves of all evidence which can conceivably throw any light upon the contro-
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`versy.”).
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`At the same time, however, Petitioner recognizes that this trial is an early ex-
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`ample of a new set of proceedings. Thus, to the extent that the Board intends to ap-
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`ply the Federal Rules of Evidence strictly in these proceedings, cf. 77 Fed. Reg. 48612,
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`48616 (Aug. 14, 2012) (“42.5(a) and (b) permit administrative patent judges wide lati-
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`
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`3
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`Case CBM2013-00009
`Patent 8,140,358
`tude in administering the proceedings to balance the ideal of precise rules against the
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`need for flexibility to achieve reasonably fast, inexpensive and fair proceedings”), Peti-
`
`tioner respectfully submits that Patent Owner’s testimonial submissions from its pur-
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`ported expert witnesses, do not meet these standards and should be excluded—in par-
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`ticular, at least ¶¶ 10-23 of EX2020,1 the Declaration of Ivan Zatkovich, ¶¶ 20-47 of
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`EX2015, the Declaration of Dr. Mark Ehsani, ¶ 17 of EX2013, the Declaration of
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`Michael J. Miller, and ¶¶ 2-5 of EX2026, the Supplemental Declaration of Michael J.
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`Miller—together with any reference to or reliance on the foregoing in Patent Owner’s
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`Response (Dkt. 21). Petitioner’s objections to these Exhibits were previously set
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`forth in Petitioner’s First Set of Objections to Patent Owner Progressive Casualty In-
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`surance Co.’s Exhibits, served June 20, 2013 and Petitioner’s Second Set of Objec-
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`tions to Patent Owner Progressive Casualty Insurance Co.’s Exhibits, served July 3,
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`2013 (“Objections”) pursuant to 37 C.F.R. § 42.64(b)(1), see MX1045 §§ I, II, & III
`
`and MX1046 §§ I & II, and are further explained below pursuant to 37 C.F.R. §
`
`42.64(c).
`
`I. Legal Standard
`
`Rule 702 of the Federal Rules of Evidence, which applies to this proceeding (37
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`C.F.R. § 42.62), governs the admissibility of expert testimony and states: “A witness
`
`
`1 Exhibits are referenced “EX” or, for rebuttal or motion exhibits, “RX” or “MX”;
`
`abbreviations are defined in the Petition (“Pet.,” Dkt. 1), and emphases are added.
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`
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`4
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`Case CBM2013-00009
`Patent 8,140,358
`who is qualified as an expert by knowledge, skill, experience, training, or education
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`may testify in the form of an opinion or otherwise if: (a) the expert’s scientific, tech-
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`nical, or other specialized knowledge will help the trier of fact to understand the evi-
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`dence or to determine a fact in issue; (b) the testimony is based on sufficient facts or
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`data; (c) the testimony is the product of reliable principles and methods; and (d) the
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`expert has reliably applied the principles and methods to the facts of the case.” F.R.E.
`
`702. The proponent of expert testimony must demonstrate admissibility by a pre-
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`ponderance of the evidence, see Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579,
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`592 n.10 (1993), and Patent Owner has failed to meet this burden. Furthermore, all
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`evidence must be filed in the form of an exhibit. 37 C.F.R. § 42.63(a). However, Pa-
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`tent Owner’s expert, Mr. Miller, has relied on evidence that has not been provided in
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`the form of an exhibit. See EX2013 ¶ 17.
`
`II. Mr. Zatkovich is Not Qualified to Opine on a POSITA’s Understanding
`of Insurance Matters or Telematics Matters in 1996
`
`Mr. Zatkovich lacks the necessary “scientific, technical, or other specialized
`
`knowledge” on insurance and telematics issues pertinent to the ‘358 patent to provide
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`testimony on those subjects, but he nonetheless proceeds to do so in his June 11,
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`2013 declaration. See e.g., EX2020 ¶¶ 8, 17, 19, 20. Mr. Zatkovich does not even pur-
`
`port to be a POSITA regarding insurance, and thus has no basis to render the various
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`opinions he provides regarding a POSITA’s understandings of insurance matters. E.g.,
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`EX2020 ¶¶ 8, 17, 19. While Mr. Zatkovich purports to opine about a POSITA’s un-
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`
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`5
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`Case CBM2013-00009
`Patent 8,140,358
`derstanding as of 1996 and concedes such a person must have “as of January 1996 …at
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`least one to two years of experience with telematics systems for vehicles…including
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`communications and locations technologies” (EX2020 ¶ 8), he had no such experi-
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`ence in 1996. Id. ¶¶ 4, 5 (asserting telematics experience only with Utility Partners);
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`EX2021 (CV) at 4 (this work began in 1996).
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`As set forth in Petitioner’s Objections and further explained above, Mr. Zatko-
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`vich is not an expert in the pertinent subject matter qualified to provide the opinions
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`contained in at least ¶¶ 10-23 of Exhibit 2020 and lacks the necessary “scientific,
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`technical, or other specialized knowledge [to] help the trier of fact to understand the
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`evidence or to determine a fact in issue” because he is not sufficiently knowledgeable
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`about insurance matters or telematics matters as of 1996, in violation of F.R.E. 702.
`
`Accordingly, to the extent that the Board determines to apply the Federal Rules of
`
`Evidence strictly in this proceeding, these identified portions of Exhibit 2020, and any
`
`reference to or reliance on this testimony in Patent Owner’s Response, should be ex-
`
`cluded.
`
`III.
`Dr. Ehsani is Not Qualified to Opine on a POSITA’s Understand-
`ing of Insurance Matters or Telematics Matters
`
`Dr. Ehsani lacks the necessary “scientific, technical, or other specialized
`
`knowledge” on insurance and telematics issues pertinent to the ‘358 patent to provide
`
`testimony on those subjects, but he nonetheless proceeds to do so in his June 11,
`
`2013 declaration. See e.g., EX2015 ¶¶ 20-47. Dr. Ehsani does not even purport to be
`
`
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`6
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`Case CBM2013-00009
`Patent 8,140,358
`a POSITA regarding insurance, and thus has no basis to render the various opinions
`
`he provides regarding a POSITA’s understandings of insurance matters. E.g., EX2015
`
`¶¶ 27; RX1027 (Andrews Rebuttal Declaration) ¶ 7. Dr. Ehsani also concedes a
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`POSITA must have “at least one to two years of experience with telematics systems for
`
`vehicles, particularly, telematics systems including communications and locations tech-
`
`nologies” (EX2015, ¶ 19), but he does not. See id. ¶ 11 (reflecting no experience with
`
`wireless transmission of vehicle data, but instead asserting experience only with data
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`“acquisition” and “processing”); EX2016 (CV); RX1027 ¶ 14.
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`As set forth in Petitioner’s Objections and further explained above, Dr. Ehsani
`
`is not an expert in the pertinent subject matter qualified to provide the opinions con-
`
`tained in at least ¶¶ 20-47 of Exhibit 2015 and lacks the necessary “scientific, tech-
`
`nical, or other specialized knowledge [to] help the trier of fact to understand the evi-
`
`dence or to determine a fact in issue” because he is not sufficiently knowledgeable
`
`about insurance matters or telematics matters, in violation of F.R.E. 702. According-
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`ly, to the extent that the Board determines to apply the Federal Rules of Evidence
`
`strictly in this proceeding, these identified portions of Exhibit 2015, and any reference
`
`to or reliance on this testimony in Patent Owner’s Response, should be excluded.
`
`IV.
`Mr. Zatkovich and Dr. Ehsani Fail to Provide Sufficient Underly-
`ing Facts or Data Upon Which Thier Opinions Could Legitimately be
`Based, and, To the Contrary, Ignore Prior Art Known to a POSITA
`
`Mr. Zatkovich and Dr. Ehsani also failed to provide sufficient underlying facts
`
`or data upon which their opinions regarding insurance matters and telematics matters
`
`
`
`7
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`Case CBM2013-00009
`Patent 8,140,358
`could legitimately be based, in violation of Rule 702(b) of the Federal Rules of Evi-
`
`dence. “While an expert need not consider every possible factor to render a reliable
`
`opinion, the expert still must consider enough factors to make his or her opinion suffi-
`
`ciently reliable in the eyes of the court.” Microstrategy Inc. v. Business Objects, S.A., 429
`
`F.3d 1344, 1355 (Fed. Cir. 2005). In violation of this requirement, Progressive’s “ex-
`
`perts”—while purporting to describe the knowledge of a POSITA—ignore art that a
`
`POSITA would clearly have known. E.g., Standard Oil Co. v. Am. Cyanamid Co., 774
`
`F.2d 448, 454 (Fed. Cir. 1985) (POSITA presumed to know of all relevant prior art).
`
`For example, Mr. Zatkovich argues a POSITA would not necessarily design a
`
`“system to take advantage of the superior computing power available at the Central
`
`Facility” of the Geostar system. EX2020 ¶ 18; Opp. 38. In effect, Mr. Zatkovich ar-
`
`gues a designer of an insurance premium determination system using monitored vehi-
`
`cle data, starting with a blank piece of paper, would not design the Geostar system.
`
`But in doing so Mr. Zatkovich—who claims to be a POSITA and thus is presumed to
`
`know of all relevant prior art, Standard Oil, 774 F.2d at 454—ignores that the Geostar
`
`telematics system with wireless transmission of monitored vehicle data was in existence,
`
`and was designed to serve multiple markets (including insurance) and multiple busi-
`
`ness objectives. EX1005, 9-11. Given this existing prior art Geostar design with
`
`networked communication to a central processing facility, it would have been obvious
`
`for a POSITA to employ Kosaka’s insurance premium adjustment teachings in the pre-
`
`existing Geostar system and, in doing so, to locate Kosaka’s analysis functions at Geo-
`
`
`
`8
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`Case CBM2013-00009
`Patent 8,140,358
`star’s existing centrally-located computers. EX1014 ¶ 28. Indeed, merely that certain
`
`processing could be performed on-board does not mean a POSITA would ignore the
`
`possibility of “tak[ing] advantage of the superior computing power available at the Central
`
`Facility” since it—and the wireless transmission capability to send data there from the vehicles—
`
`already existed: additional cost and complexity would not “be added for the GEOSTAR
`
`system because it was [already] a communication system that required a wireless
`
`transmitter in order to function as intended.” Opp. 40-41.
`
`Similarly, although a POSITA is presumed to know of all relevant prior art,
`
`Standard Oil, 774 F.2d at 454, Dr. Ehsani ignores that insurers were using fuzzy logic
`
`in premium determination years before the ‘358’s alleged priority date. See RX1031
`
`(O’Neil Rebuttal Declaration) ¶¶ 34-49 (discussing, e.g., five fuzzy logic insurance arti-
`
`cles—RX1034 through RX1038). And while a POSITA only in insurance aspects of the
`
`field might not have been expert in some technical data processing aspects within Ko-
`
`saka’s Risk Evaluation Unit (EX2013 ¶ 37), this would certainly have been within the
`
`understanding of a POSITA having the appropriate technical expertise. E.g., RX1027
`
`¶¶ 5-9. Finally, Dr. Ehsani’s assertions that understanding Kosaka is “beyond” a tech-
`
`nical POSITA (e.g., EX2015 ¶¶ 26-30) ignores the understanding of a POSITA as re-
`
`flected in other portions of his own testimony, which confirm Kosaka employs very
`
`basic fuzzy logic and omits only insurance details Dr. Ehsani is in no position to under-
`
`stand or opine about. Again, this testimony fails the minimum standards of Fed. R.
`
`Evid. 702, and, to the extent that the Board determines to apply the Federal Rules of
`
`
`
`9
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`
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`Case CBM2013-00009
`Patent 8,140,358
`
`Evidence strictly in this proceeding, should be rejected.
`
`V. Mr. Miller Has Relied on Improper Evidence in Forming His Opinions
`
`In paragraph 17 of Exhibit 2013, Mr. Miller purports to define “actuarial class,”
`
`and alleges that his “definition is consistent with the definition in the Risk Classifica-
`
`tion Statement of Principles of the American Academy of Actuaries.” Patent Owner,
`
`however, did not provide this document as an Exhibit, as required by 37 C.F.R. §§
`
`42.63(a). Petitioner objects to Patent Owner’s purported reference to (in Exhibits
`
`2013 and 2026) and any reliance on Exhibit 2012 from another trial involving a differ-
`
`ent patent (CBM2012-00002) as an exhibit not of record in this CBM2013-00009 pro-
`
`ceeding and not properly numbered or submitted in this CBM proceeding, pursuant
`
`to 37 C.F.R. §§ 42.6(c), 42.51(b)(1), 42.63, and 42.64(b)(2). See also 37 C.F.R. § 42.223.
`
`Because the document referred to in paragraph 17 of Exhibit 2013 and para-
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`graphs 2-5 of Exhibit 2026 has not been included as an exhibit, to the extent that the
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`Board determines to apply the Federal Rules of Evidence strictly in this proceeding,
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`any reference to the document or reliance thereon by Mr. Miller or Patent Owner
`
`should be excluded.
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`10
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`
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`Respectfully submitted,
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`Case CBM2013-00009
`Patent 8,140,358
`
`
`
`
`ROPES & GRAY LLP
`
`
`
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
`James R. Myers (pro hac vice)
`Nicole M. Jantzi
`ROPES & GRAY LLP
`700 12th St. NW, Suite 900
`Washington, DC 20005
`Steven.baughman@ropesgray.com
`James.myers@ropesgray.com
`Nicole.jantzi@ropesgray.com
`
`Attorneys for Petitioner Liberty Mutual Insurance Co.
`
`Mailing address for all PTAB correspondence:
`ROPES & GRAY LLP
`IPRM – Floor 43
`Prudential Tower
`800 Boylston Street
`Boston, Massachusetts 02199-3600
`
`11
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`September 30, 2013
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`CERTIFICATE OF SERVICE
`
`It is certified that a copy of PETITIONER LIBERTY MUTUAL INSUR-
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`ANCE CO.’S MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND
`
`42.64 has been served in its entirety on the Patent Owner as provided in 37 CFR §
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`42.6.
`
`The copy has been served on September 30, 2013 by causing the aforemen-
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`tioned document to be electronically mailed to:
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`Calvin P. Griffith, at: cpgriffith@jonesday.com
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`James L. Wamsley, III at: jlwamsleyiii@jonesday.com
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`John V. Biernacki at: jvbiernacki@jonesday.com
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`pursuant to the Petitioner and Patent Owner’s agreement.
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`
`
`
`
` /s/ Jordan M. Rossen
`Jordan M. Rossen
`
`
`ROPES & GRAY LLP
`
`
`
`
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`
`
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