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`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________
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`LIBERTY MUTUAL INSURANCE CO.
`Petitioner
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`v.
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`PROGRESSIVE CASUALTY INSURANCE CO.
`Patent Owner
`______________
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`Case CBM2013-00009
`Patent 8,140,358
`______________
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`Before the Honorable JAMESON LEE, JONI Y. CHANG, and MICHAEL R.
`ZECHER, Administrative Patent Judges.
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`PETITIONER’S RESPONSE TO PATENT OWNER’S OBSERVATIONS
`ON TESTIMONY OF MARY L. O’NEIL
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`Case CBM2013-00009
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`Patent 8,140,358
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`Petitioner, Liberty Mutual Insurance Co., has the following responses to each
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`of Patent Owner’s observations on the September 13, 2013 cross-examination
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`testimony of Mary L. O’Neil:
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`In its observations 1-3, Progressive quotes three portions of the Mary L.
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`O’Neil’s testimony and states that they all refute the same sections of Liberty Mutual’s
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`Reply brief and Ms. O’Neil’s Rebuttal Declaration dealing with the Risk Classification
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`Statement of Principles, which was introduced by Mr. Miller in his declaration, but
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`never attached by Progressive as an exhibit in this proceeding. See Petitioner’s
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`Motion to Exclude, Paper 40, p. 10. However, as pointed out by Ms. O’Neil in her
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`testimony, “these statements of principles and the standards of practice are guidelines
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`for actuaries in their professional practice,” from which actuaries may “deviate,” as
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`long as such deviations are “documented.” Ex. 1047, p. 9, line 22 to p. 10, line 5.
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`Further, Ms. O’Neil clarifies that the Statement of Principles notes that “the three
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`statistical considerations, homogeneity, credibility and predictive stability” are
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`“conflicting” and “decision[s] as to the relative weights of these three considerations
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`are left to the professional judgment” of the actuary. Ex. 1047, p. 185, line 24 to p.
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`186, line 16.
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`As Ms. O’Neil explains in great detail in both her Rebuttal Declaration and her
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`cross-examination testimony, she disagrees with Mr. Miller’s testimony that a
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`POSITA would “adhere” to this Statement of Principles, and instead asserts that they
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`would be “treated as considerations and guidelines, not rules that must be strictly
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`Patent 8,140,358
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`followed,” and used “along with the rest of the body of actuarial literature.” Ex.
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`1047, p. 10, lines 6-12; p. 21, lines 9-13. See Ex. 1031 ¶ 17-19. This is not merely a
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`“semantic” difference as Progressive asserts, because it is a substantive difference as
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`to how a POSITA would use the Statement of Principles.
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`In observation 3, Progressive asserts that Ms. O’Neil admitted that Mr. Miller
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`took into consideration information other than actual claims data in generating
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`actuarial classes. However, as Ms. O’Neil explained, the section of Mr. Miller’s
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`declaration referenced by Progressive that mentions factors other than actual claims
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`data, actually “refers to overall rate level” for providing that “an insurer's rates comply
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`with the statutory rate standards” and not the creation of actuarial “classifications.”
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`Ex. 1047, p. 33, line 24 to p. 34, line 19. Thus, contrary to Progressive’s statements,
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`this testimony is consistent with Ms. O’Neil’s previous testimony regarding Mr.
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`Miller’s insistence on the use of actual claims data to generate actuarial classes. See
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`Ex. 1031 ¶ 19 (citing Ex. 2013 ¶¶ 17-19, 40-41, 43).
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`In its observations 4-6, Progressive cites three portions of Ms. O’Neil’s
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`testimony that it asserts refute Ms. O’Neil’s statements and bolster Progressive’s
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`arguments relating to fuzzy logic. However, Progressive is once again
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`misunderstanding the concept behind a POSITA. In patent law, a POSITA is a
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`hypothetical person that is tasked with having knowledge of all relevant pieces of
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`prior art. Obviously no real person can meet every aspect of that standard. Ms.
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`O’Neil never claimed to be an expert in fuzzy logic or even the telematics aspects of
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`Case CBM2013-00009
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`the ‘358 patent. Instead, she is a POSITA in the insurance aspects of the ‘358
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`patent. A telematics expert, on the other hand, would have had more experience
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`studying and using fuzzy logic systems in the relevant time period. See Ex. 1048, p.
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`196, lines 11-16; p. 198, lines 20-25.
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`As Ms. O’Neil explained in both her Rebuttal Declaration and her cross-
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`examination testimony, “one would not even have to know anything about fuzzy
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`logic” in order to use the teachings in Kosaka to supplement RDSS because it is “not
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`necessary” to use fuzzy logic and one “could utilize a lookup table” instead. Ex.
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`1047, p. 66, line 23 to p. 67, line 7. See also Ex. 1031 ¶ 40.
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`Additionally, Ms. O’Neil makes it clear in her testimony that “[n]ot every
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`actuary has experience in every aspect and every possible application.” Ex. 1047, p.
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`51, lines 2-6. “A person of ordinary skill in the art would have been aware of many
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`techniques” and just because they did not have personal experience using every single
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`one of them does not mean they are not a POSITA, and does not mean that a
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`POSITA would not have been able to use that technique. Ex. 1047, p. 53, lines 3-
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`12. As stated above, actuaries can still qualify as POSITAs because they can consult
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`prior art that a POSITA is deemed to know. As Ms. O’Neil pointed out, a POSITA
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`would have been aware of the use of fuzzy logic in classification rating and
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`underwriting based on the plethora of articles written on the subject. See Ex. 1031 ¶
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`35. Certainly, just because some actuaries who were “not totally familiar with fuzzy
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`logic” would thus “do their own research and education on that” does not mean that
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`such a POSITA would need to combine Kosaka with other references in a new
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`alleged ground for patentability, as proposed by Progressive. Ex. 1047, p. 67, line 23
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`to p. 68, line 7. Instead, that simply means that an individual actuary may need to
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`become educated in order to obtain the level of the hypothetical POSITA, who is
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`presumed to know all relevant prior art.
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`Ms. O’Neil’s testimony makes clear that although she is not “an expert in fuzzy
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`logic,” she understands that the “final risk evaluation value” outputted from the fuzzy
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`logic system of Kosaka is “a crisp answer.” Ex. 1047, p. 76, lines 20-21; p. 70, lines
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`10-11; p. 82, lines 19-20. Ms. O’Neil, as an insurance expert, understands this
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`because that crisp value is multiplied by the base premium in order to obtain an
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`insurance premium, a mathematical calculation that requires a single crisp value, not a
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`fuzzy value. See Ex. 1048, p. 222, line 23 to p. 225, line 1.
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`Thus, Ms. O’Neil’s testimony is consistent with her statements that a POSITA
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`with respect to all aspects of the ‘358 patent would be knowledgeable about fuzzy
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`logic, even if an individual actuarial expert might not have personal experience
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`implementing such a system.
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`In its observation 7, Progressive quotes a portion of Mary L. O’Neil’s
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`testimony and states that it authenticates Ex. 1014, which Progressive argues refutes
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`sections of Liberty Mutual’s Reply brief and Mary L. O’Neil’s Rebuttal Declaration
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`dealing with rating factors. However, as pointed out repeatedly by Ms. O’Neil, the
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`book chapter related to classification “relativities,” which are sometimes referred to as
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`5
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`rating factors, but are “not the same as the rating factors in the '358.” Ex. 1047, p.
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`121, lines 15-17; p. 98, lines 7-10. Cf. Institution Decision, Paper 15, p. 8 (“a ‘rating
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`factor’ is a calculated insurance risk value such as a safety score or a usage discount,
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`which reflects a level of insurance risk and a corresponding insurance premium”) and
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`Ex. 1001 at 44:10-11 (“calculate an insured’s premium . . . based on the rating
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`factor”).
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`A rating factor, as claimed in the ‘358 patent, is from the “perspective of the
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`actuary” in “setting price[s]” and must be a calculated insurance risk value that is used
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`to calculate an individual insured’s risk level or premium. Ex. 1047, p. 131, lines 14-
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`17. On the other hand, the term rating factor, as used in Exhibit 2014 is different
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`and irrelevant to the ‘358 patent and this proceeding, as it occurs “after the actuary
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`already” set the premiums for each actuarial class. Ex. 1047, p. 131, lines 18-24.
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`As Ms. O’Neil explained in her testimony, those “classification relativities” are just
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`ratios relating different premiums for “convenience sake” between actuarial classes
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`and for “agent’s use” in updating multiple class determinations, so they “don’t have to
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`publish a price for each class every time they issue the rate manual to the agent.”
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`Ex. 1047, p. 99, lines 2-22. These classification relativities between actuarial classes
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`“are not calculated directly” and are “just a ratio of two prices” produced after “the
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`prices for the two classes” have already been determined. Ex. 1047, p. 100, lines 7-
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`22.
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`Case CBM2013-00009
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`Patent 8,140,358
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`It is clear from reading Ms. O’Neil’s entire testimony that the challenged
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`statements regarding rating factors related to historical rate manuals used by agents to
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`update the prices of existing actuarial classes based on price ratios between actuarial
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`classes. Ex. 1014 and her cross-examination testimony concerned completely
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`different concepts than claimed in the ‘358 patent.
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`Respectfully submitted,
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`ROPES & GRAY LLP
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`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
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`Attorneys for Petitioner Liberty Mutual Insurance Co.
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`Mailing address for all PTAB correspondence:
`ROPES & GRAY LLP
`IPRM – Floor 43
`Prudential Tower
`800 Boylston Street
`Boston, Massachusetts 02199-3600
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`7
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`October 4, 2013
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`CERTIFICATE OF SERVICE
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`It is certified that a copy of Petitioner’s Response to Patent Owner’s
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`Observations on Testimony of Mary L. O’Neil has been served in its entirety on
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`the Patent Owner as provided in 37 CFR § 42.6.
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`The copy has been served on October 4, 2013 by causing the aforementioned
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`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
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`ROPES & GRAY LLP
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`8
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