Liberty Mutual Insurance Co v. Progressive Casualty Insurance Co

1. Case Identification

• Case #: CBM2012-00002
• Patent #: 6,064,970
• Filed: September 16, 2012
• Petitioner(s): Liberty Mutual Insurance Company
• Patent Owner(s): Progressive Casualty Insurance Company
• Challenged Claims: 1, 3-18

2. Patent Overview

• Title: Motor Vehicle Monitoring System for Determining a Cost of Insurance
• Brief Description: The ’970 patent relates to methods and systems for determining a cost for automobile insurance. The invention involves monitoring and recording data representative of operator and vehicle driving characteristics for a selected time period to retrospectively determine an insurance cost.

3. Grounds for Unpatentability

Ground 1: Obviousness of Claims 1, 3, 6-15, and 18 - Claims are obvious over Kosaka in view of Herrod and Black Magic

• Prior Art Relied Upon: Kosaka (Japanese Patent Pub. No. JP-A-4/182868), Herrod (U.K. Patent Application Pub. No. GB 2286471 A), and Black Magic (an article in Insurance Age magazine, Jan. 1994).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that the primary reference, Kosaka, teaches a system for evaluating vehicle risk and determining insurance premiums in real-time based on monitored data like speed and driver operations. Herrod was introduced to teach the limitation of generating "actuarial classes," as Herrod explicitly discloses a computer-based device that monitors acceleration data to classify a driver into one of several groups associated with a different level of accident risk. Black Magic was cited for its disclosure of using "black box recorders" with GPS technology to record time, location, and speed, which can be used to "accurately rate premiums according to the styles of driving and locality of use." Petitioner contended that the combination of these references teaches all elements of the independent claims, including monitoring driver behavior, grouping drivers into risk-based classes, and using the collected data to determine an insurance cost.
  • Motivation to Combine: A Person of Ordinary Skill in the Art (POSITA) would combine these references as they all address the same field of vehicle telematics for insurance rating. A POSITA would have been motivated to enhance Kosaka’s real-time risk evaluation system by incorporating Herrod’s more detailed method for creating actuarial classes from long-term driver data and by adding Black Magic’s GPS technology to incorporate location data, thereby creating a more robust and accurate insurance rating system.
  • Expectation of Success: The combination involved applying known technologies and methods for their intended purposes, leading to the predictable result of a more comprehensive insurance rating system.

Ground 2: Obviousness of Claims 1, 3, 6-15, and 18 - Claims are obvious over Kosaka in view of Black Magic and New York Guide

• Prior Art Relied Upon: Kosaka, Black Magic, and New York Guide (1995 Consumers Guide on Automobile Insurance).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground uses Kosaka and Black Magic for the same core technical teachings as Ground 1. The New York Guide, a consumer-facing insurance guide, was introduced to address the "actuarial class" and "insured profile" limitations, which Patent Owner added during reexamination to secure allowance. Petitioner argued the New York Guide demonstrates that generating actuarial classes was a standard, required practice in the insurance industry, not a patentable invention. The Guide explicitly states that "risks are grouped for rating purposes by classifications to assure that risks with similar characteristics (such as age, sex, marital status) and driving experience receive comparable pricing treatment." It also describes how an operator's profile, including chosen coverage limits and deductibles, is used to determine a base insurance cost.
  • Motivation to Combine: A POSITA developing the technical system of Kosaka and Black Magic would be compelled to incorporate the standard business practices detailed in the New York Guide. Compliance with state regulations and the need to create a commercially viable product would have provided a strong motivation to use established concepts like actuarial classes and insured profiles for setting insurance rates.
  • Key Aspects: This ground’s strategy was to show that the very features the Patent Owner relied upon for patentability were, in fact, unpatentable, commonplace elements of the insurance business method itself.

Ground 3: Anticipation of Claims 4 and 5 - Claims are anticipated under 35 U.S.C. §102 by Kosaka

• Prior Art Relied Upon: Kosaka.

• Core Argument for this Ground:

  • Prior Art Mapping: Petitioner asserted that Kosaka, by itself, teaches every limitation of independent claims 4 and 5. For claim 4, Kosaka discloses insuring a vehicle for a selected period based on driving characteristics. It teaches generating an "initial operator profile" through its disclosure of a "prepayment amount" and pre-stored risk evaluation values determined offline. Petitioner argued that generating an "insured profile" with coverage information (limits and deductibles) is inherently disclosed, as such information would be necessary to calculate the initial prepayment amount. Kosaka then explicitly teaches monitoring the operator’s driving characteristics and adjusting the insurance premium based on that monitoring, thereby deciding a total cost of insurance. Similar arguments were made for claim 5.

• Additional Grounds: Petitioner asserted additional obviousness challenges based on combinations including the Florida Guide, which, like the New York Guide, was used to show that creating an insured profile with limits and deductibles to determine a base cost of insurance was a standard industry practice.

4. Key Claim Construction Positions

• Petitioner argued for adopting the claim constructions used by the USPTO Examiner during the patent's reexamination, asserting they represent the broadest reasonable interpretation. Two constructions were central to Petitioner's arguments:
• "actuarial class": Construed as "a combination/group/groupings related to loss/risk/safety which are determined from classifications/characteristics representative of motor vehicle operational characteristics and driver behavior for which data is gathered." This construction was key to Petitioner's argument that references like the New York Guide and Herrod teach this limitation.
• "initial insured profile": Construed as "initial files or information with respect to the operator or the insuring thereof." Petitioner used this broad construction to argue that Kosaka’s disclosure of a "prepayment amount" and pre-stored risk data met this limitation.

5. Relief Requested

• Petitioner requests institution of a covered business method patent review and cancellation of claims 1 and 3-18 of Patent 6,064,970 as unpatentable under 35 U.S.C. §§ 102 and 103.