Liberty Mutual Insurance Co.v.Progressive Casualty Insurance Co.

Patent Trial and Appeal Board

Feb 11, 2014

12132487 (P.T.A.B. Feb. 11, 2014)

Trials@uspto.gov Paper 78
571-272-7822 Entered: February 11, 2014

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 CBM2012-00003
Patent 8,140,358
____________

Before JAMESON LEE, JONI Y. CHANG, and MICHAEL R. ZECHER,
Administrative Patent Judges.

LEE, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

Case CBM2012-00003
Patent 8,140,358
2
I. INTRODUCTION
Liberty Mutual Insurance Company (“Liberty”) filed a petition on
September 16, 2012, requesting a covered business method patent review of
claims 1-20 of U.S. Patent No. 8,140,358 (“the ’358 patent”) pursuant to
section 18(a) of the Leahy-Smith America Invents Act (“AIA”).
1
Paper 1
(“Pet.”). Because the petition raised a total of 422 grounds of
unpatentability against 20 claims, the Board considered the petition as
containing redundant grounds, and required Liberty to select a subset of
those grounds to pursue in this proceeding. Paper 7. Also, prior to receiving
a preliminary response from the patent owner, Progressive Casualty
Insurance Company (“Progressive”), the Board issued a decision declining
to institute review on 196 of the 422 grounds of unpatentability. Paper 8.
On November 1, 2012, Liberty filed a paper indicating its selection of
a subset of grounds of unpatentability to pursue in this proceeding. Paper 9.
On November 26, 2012, the Board issued an order which (1) denied those
non-selected grounds which previously were not denied in Paper 8, (2)
summarized the alleged grounds of unpatentability remaining in this
proceeding, and (3) instructed Progressive to respond only to the remaining
alleged grounds of unpatentability. Paper 12.
Progressive filed a patent owner preliminary response. Paper 13
(“Prelim. Resp.”). Taking into account Progressive’s preliminary response,
the Board determined that the information presented in Liberty’s petition

1
Pub. L. No. 112-29, 125 Stat. 284, 329 (2011).
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demonstrates that it is more likely than not that each of claims 1-20 of the
’358 patent is unpatentable. Pursuant to 35 U.S.C. § 324, the Board
instituted this trial on February 12, 2013, as to claims 1-20 of the ’358
patent. Paper 15 (“Dec.”).
During the trial, Progressive filed a patent owner response (Paper 33,
“PO Resp.”), and Liberty filed a reply to the patent owner response
(Paper 39, “Reply”). Oral hearing was held on October 15, 2013.
2

The Board has jurisdiction under 35 U.S.C. § 6(c). This decision is
a final written decision under 35 U.S.C. § 328(a) as to the patentability of
claims 1-20 of the ’358 patent. For reasons discussed below, Liberty has
proved, by a preponderance of the evidence, that claims 2-18 of the ’358
patent are unpatentable, but not proved that claims 1, 19, and 20 are
unpatentable. Therefore, claims 2-18 are herein cancelled.
A final written decision in Case CBM2013-00009 is entered
concurrently with this decision.
A. The ’358 Patent
The ’358 patent relates to a vehicle monitoring system. Ex. 1001,
Title. A data logging device is disclosed, which tracks the operation of a
vehicle and/or operator behavior. Ex. 1001, 1:33-34. A processor reads data
from an automotive bus that transfers data from vehicle sensors to other

2
The oral arguments for the instant trial and for CBM2013-00009 were
merged and conducted at the same time. A transcript of the oral hearing is
included in the record as Paper 76.
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components. Id. at 1:40-42. The processor writes data that reflects a level
of safety to a storage device. Id. at 1:42-44. A communication device links
the data logging device to a network of computers. Id. at 1:44-45.
In the Background of the Invention portion of the disclosure of the
’358 patent, preexisting methods for determining cost of insurance are
acknowledged, and it is indicated that they gather data from “personal
interviews and legacy sources.” Ex. 1001, 1:20-21. It is further indicated
that such data may be used to classify applicants into actuarial classes that
may be associated with insurance rates. Id. at 1:21-23. According to the
’358 patent, some of such data used to classify risk “is not verified and has
little relevance to measuring risk.” Id. at 1:24-25. It is stated in the ’358
patent that the data may not be validated, may be outdated, and may not
support new or dynamic risk assessments. Id. at 1:27-29. “Systems may
accumulate and analyze significant amounts of data and yet discover that the
data does not accurately predict losses.” Id. at 1:25-27.
The claims of the ’358 patent are directed to a system that monitors
and facilitates a review of data collected from a vehicle that is used to
determine a level of safety or cost of insurance. E.g., Ex. 1001, Claim 1.
Claim 1 is the only independent claim. Claims 2-20 each depend,
directly or indirectly, from claim 1, which is reproduced below:
1. A system that monitors and facilitates a review of data
collected from a vehicle that is used to determine a level of
safety or cost of insurance comprising:
a processor that collects vehicle data from a vehicle bus
that represents aspects of operating the vehicle;
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a memory that stores selected vehicle data related to a
level of safety or an insurable risk in operating a vehicle;
a wireless transmitter configured to transfer the selected
vehicle data retained within the memory to a distributed
network and a server;
a database operatively linked to the server to store the
selected vehicle data transmitted by the wireless transmitter, the
database comprising a storage system remote from the wireless
transmitter and the memory comprising records with operations
for searching the records and other functions;
where the server is configured to process selected vehicle
data that represents one or more aspects of operating the vehicle
with data that reflects how the selected vehicle data affects a
premium of an insurance policy, safety or level of risk; and
where the server is further configured to generate a rating
factor based on the selected vehicle data stored in the database.
B. Related Proceedings
Liberty indicates that the ’358 patent was asserted against it in
Progressive Cas. Ins. Co. v. Safeco Ins. Co. of Ill., Case No. 1:10-cv-01370
(N.D. Ohio). Pet. 7. The ’358 patent also is subject to a covered business
method patent review in CBM2013-00009.
C. Covered Business Method Patent
Upon consideration of Liberty’s contentions in the petition and
Progressive’s arguments in the preliminary response, the Board, in the
Decision on Institution, determined that the ’358 patent is a covered business
method patent as defined in section 18(a)(1)(E) of the AIA and 37 C.F.R.
§ 42.301, because at least one claim of the ’358 patent is directed to a
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6
covered business method. Dec. 7-16. The Board concluded that the ’358
patent is eligible for a covered business method patent review. Id. at 16.
In its patent owner response, Progressive argues that the Board must
conduct a claim-by-claim analysis and determine that every challenged
claim is directed to a covered business method, before it is authorized, under
section 18(a)(1)(E) of the AIA, to review all of the challenged claims.
PO Resp. 3-4, n.1. Progressive asserts that the Board exceeded its statutory
authority by instituting review of patent claims which the Board has not
determined to be directed to a covered business method. Id.
Progressive’s argument is based on an erroneous statutory
construction that would interpret the word “patent” as “claim” in the
statutory provision on what is subject to review. We decline to adopt such
an interpretation.
As in any statutory construction analysis, we begin with the language
of the statute. Duncan v. Walker, 533 U.S. 167, 172 (2001); Crandon v.
United States, 494 U.S. 152, 158 (1990); In re Swanson, 540 F.3d 1368,
1374-75 (Fed. Cir. 2008). “In the absence of a clearly expressed legislative
intention to the contrary, the language of the statute itself must ordinarily be
regarded as conclusive.” United States v. James, 478 U.S. 597, 606 (1986)
(internal quotation marks and citations omitted). “It is well settled law that
the plain and unambiguous meaning of the words used by Congress prevails
in the absence of a clearly expressed legislative intent to the contrary.”
Hoechst AG v. Quigg, 917 F.2d 522, 526 (Fed. Cir. 1990).
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Section 18(d)(1) of the AIA defines the term “covered business
method patent” to mean (emphasis added):
[A] patent that claims a method or corresponding apparatus for
performing data processing or other operations used in the
practice, administration, or management of a financial product
or service, except that the term does not include patents for
technological inventions.
If Congress intended to limit the availability of the covered business
method patent review on a claim-by-claim basis, as urged by Progressive, it
could have used the term “claim” rather than “patent.” Notably, when
specifying the subject matter for review, Congress could have used the
language “a claim that is directed to a method or corresponding apparatus”
rather than “a patent that claims a method or corresponding apparatus.”
Section 18(d)(1) of the AIA sets forth a single threshold based on just one
claim—the satisfaction of which qualifies an entire patent as eligible for
review—rather than a test which must be applied on a claim-by-claim basis
to justify review of each claim.
3
Therefore, a patent is eligible for a covered
business method patent review if the subject matter of at least one claim is
directed to a covered business method. Nothing in the legislative history, or
other parts of the AIA, requires us to deviate from the plain meaning of the
definition set forth in section 18(d)(1) of the AIA, as proposed by
Progressive. Moreover, Progressive has not identified any statutory

3
See also Transitional Program for Covered Business Method Patents –
Definitions of Covered Business Method Patent and Technological
Invention; Final Rule, 77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012).
Case CBM2012-00003
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provision or legislative history that requires “each” claim for which trial is
instituted to meet the test for a covered business method patent.
With respect to Progressive’s argument concerning the Board’s
determination that at least one claim of the ’358 patent is directed to a
covered business method, Progressive provides no meaningful explanation
as to why the Board’s analysis with regard to claim 1 was incorrect. PO
Resp. 3-4, n.1.
For the foregoing reasons, we disagree with Progressive that the
Board exceeded its statutory authority by instituting a covered business
method patent review as to claims 2-20 of the ’358 patent. We find no error
in the covered business method patent determination set forth in the
Decision on Institution.
D. Prior Art Relied Upon
For the grounds of unpatentability over which the Board instituted
review of the ’358 patent, Liberty relies upon the following prior art:
Nakagawa U.S. Pub. App. 2002/0128882 Sept. 12, 2002 (Ex. 1005)
Stanifer U.S. Patent No. 5,243,530 Sept. 7, 1993 (Ex. 1007)
Chang U.S. Patent No. 5,446,757 Aug. 29, 1995 (Ex. 1008)
Beaverton U.S. Patent No. 5,210,854 May 11, 1993 (Ex. 1009)
Hunt U.S. Patent No. 6,957,133 Oct. 18, 2005 (Ex. 1010)
Lowrey U.S. Patent No. 7,228,211 B1 June 5, 2007 (Ex. 1011)
Bouchard U.S. Patent No. 5,465,079 Nov. 7, 1995 (Ex. 1014)
Kosaka Jap. Pub. App. H4-182868 June 30, 1992 (Ex. 1003)

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Patent 8,140,358
9
Dimitris A. Scapinakis and William L. Garrison, Communications
And Positioning Systems In The Motor Carrier Industry, California Partners
for Advanced Transit and Highways (PATH), Institute of Transportation
Studies, UC Berkeley (January 1, 1992).
(“Scapinakis”) (Ex. 1016)

QUALCOMM’s MSM6500 Multimedia Single-Chip Solution Enables
High-Performance Multimode Handsets Supporting CDMA2000 1X, 1xEV-
DO and GSM/GPRS, PR Newswire (November 12, 2002)
(“Qualcomm MSM6500”) (Ex. 1019)

Nakagawa has a filing date of February 27, 2002. Ex. 1005, Cover.
Progressive asserts that claims 1, 9, 19, and 20 of the ’358 patent are entitled
to the filing date of grandparent application 09/571,650, filed on May 15,
2000, and therefore, Nakagawa is not prior art as to claims 1, 9, 19, and 20.
In Section II.D. below, we determine that Progressive has shown that claims
1, 19, and 20 are entitled to the May 15, 2000, filing date of grandparent
application 09/571,650. Thus, Nakagawa is not prior art as to claims 1, 19,
and 20. But we determine that Nakagawa is prior art as to claims 2-18.
E. Grounds of Unpatentability
The Board instituted this covered business method patent review
based on the following grounds of unpatentability:

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Claims Basis References
1, 19, 20 § 102 Nakagawa
2 § 103 Nakagawa and Chang
3, 6, 7 § 103 Nakagawa and Stanifer
4 § 103 Nakagawa and Beaverton
5, 8 § 103 Nakagawa and Scapinakis
9 § 103 Nakagawa and Hunt
10, 11, 13-15 § 103 Nakagawa and Lowrey
12 § 103 Nakagawa, Lowrey, and Qualcomm MSM6500
16, 17, 18 § 103 Nakagawa and Bouchard
19, 20 § 103 Nakagawa and Kosaka

II. ANALYSIS
A. Claim Construction
In a covered business method patent review, claim terms are given
their broadest reasonable construction in light of the specification of the
patent in which they appear. 37 C.F.R. § 42.300(b). Under the broadest
reasonable construction standard, claims terms are given their ordinary and
customary meaning as would be understood by one of ordinary skill in the
art in the context of the entire disclosure. In re Translogic Tech. Inc.,
504 F.3d 1249, 1257 (Fed. Cir. 2007). A particular embodiment appearing
in the written description must not be read into a claim if the claim language
is broader than the embodiment. In re Van Geuns, 988 F.2d 1181, 1184
(Fed. Cir. 1993). If a feature is not necessary to give meaning to what the
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inventor means by a claim term, it would be “extraneous” and should not be
read into the claim. Renishaw PLC v. Marposs Societa’ per Azioni,
158 F.3d 1243, 1249 (Fed. Cir. 1998); E.I. du Pont de Nemours & Co. v.
Phillips Petroleum Co., 849 F.2d 1430, 1433 (Fed. Cir. 1988).
1. “rating factor”(independent claim 1)
In its petition, Liberty urged that “rating factor” should be construed
as meaning “a calculated insurance risk value such as a safety score or a
usage discount.” Pet. 15:11-14. In support of that assertion, Liberty cited to
portions of the specification of the ’358 patent. Pet. 15:14-20 (citing Ex.
1001, 22:23-24, 23:41-47, figs. 8 and 10). Progressive, in its patent owner
preliminary response, presented no opposition to that proposed
interpretation. In the Decision on Institution, the Board adopted Liberty’s
proposed interpretation, but added 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.” Dec. 6:21-23.
In its patent owner response, Progressive stated the following with
regard to the Board’s construction of “rating factor”:
A person of ordinary skill in the art would interpret the Board’s
reference to “insurance risk” to mean expected claims losses,
and an “associated level of insurance risk” to describe rating
factors associated with actuarial classes.

PO Resp. 9:15-18 (citing Ex. 2005 ¶ 39).
Progressive’s argument is misplaced. The Decision on Institution is
not a patent disclosure or a scientific research paper. It is not written from
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the perspective of one with ordinary skill in the art. Nor is it specifically
written for one with ordinary skill in the art. When responding to an inquiry
from the Board regarding the usefulness of such an argument and the cited
expert testimony from Michael J. Miller (Ex. 2005 ¶ 39), counsel for
Progressive attempted to recast the argument as Mr. Miller’s interpretation
of “rating factor.” The pertinent portion of the exchange between the Board
and counsel for Progressive is reproduced below:
JUDGE LEE: Well, our opinion isn’t a patent document, it
isn’t a patent specification, so I'm not sure what the value is for
your expert to be interpreting our decision instituting trial from
the perspective of one with ordinary skill in the art.

MR. GRIFFITH: I understand, and a completely fair point. So,
this is his interpretation of rating factor.

Paper 76, 77:6-11.
The cited testimony of Mr. Miller is reproduced below:
39. As mentioned above, an actuarial class inherently
has associated with it a rate factor and a risk factor. These are
calculated insurance risk values. Accordingly, use of an
actuarial class within an insurance context necessarily involves
generating and using a rating factor. Use of rate factors and
risk factors is necessarily part of any insurance charges or
premium determination algorithm for an auto insurance
program using actuarial classes.

Ex. 2005 ¶ 39.
The above-quoted testimony does not reflect an opinion of Mr. Miller
on what the term “rating factor” means to one with ordinary skill in the art.
Mr. Miller is expressing an opinion that if “actuarial classes” are relied on
Case CBM2012-00003
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for calculating an insurance premium, it necessarily involves use of rate
factors and risk factors.
Thus, “rating factor” is construed to mean “a calculated insurance risk
value such as a safety score or a usage discount,” with 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.” The
construction is broad, and does not require the use or reliance on “actuarial
classes” to generate a rating factor. Nothing from the disclosure of the ’358
patent requires importing such an extraneous requirement into the claims.
Similarly, “a corresponding insurance premium” refers to a general level of
insurance premium, not necessarily any specific dollar amount of premium.
2. “selected vehicle data” (independent claim 1)
Claim 1 recites a processor that collects vehicle data from a vehicle
bus that represents aspects of operating the vehicle, and a memory that stores
“selected vehicle data” related to a level of safety or an insurable risk in
operating a vehicle. Claim 1 further recites a wireless transmitter configured
to transfer the “selected vehicle data” retained within the memory to a
distributed network and a server. Claim 1 additionally requires a database
operatively linked to the server to store the “selected vehicle data”
transmitted by the wireless transmitter, and recites that the server is
configured to process “selected vehicle data” that represents one or more
aspects of operating the vehicle with data that reflects how the “selected
vehicle data” affects a premium of an insurance policy, safety or level of
Case CBM2012-00003
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risk. Finally, claim 1 recites that the server is further configured to generate
a rating factor based on the “selected vehicle data” stored in the database.
Liberty, in its petition, did not propose an interpretation for “selected
vehicle data.” Progressive, in its patent owner response, urges that “selected
vehicle data” be interpreted as including “certain vehicle data that relates to
a level of safety or an insurable risk in operating a vehicle.” PO Resp. 10:6-
8. The interpretation proposed by Progressive is not meaningful, as claim 1
itself expressly introduces “selected vehicle data” by the phrase: “a memory
that stores selected vehicle data related to a level of safety or an insurable
risk in operating a vehicle.” Ex. 1001, (emphasis added). Progressive does
not explain any reasoning for according the term “selected vehicle data,”
itself, the meaning provided by the above-emphasized descriptive phrase
that immediately follows the term. We see no appropriate basis for doing so.
Claim terms are not construed properly in a vacuum. It is appropriate
to consider the surrounding context. Claim 1 begins by reciting: “a
processor that collects vehicle data from a vehicle bus that represents aspects
of operating the vehicle.” There is no mention in that introductory recitation
of the vehicle data being “selected.” That recitation is followed by: “a
memory that stores selected vehicle data related to a level of safety or an
insurable risk in operating a vehicle,” which limits the referenced vehicle
data to those that are related to a level of safety or an insurable risk in
operating a vehicle. From that perspective, the vehicle data has undergone a
selection. That could be the only reason why “vehicle data” is prefaced by
the word “selected” in the recitation of the memory element. Under the rule
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of broadest reasonable interpretation, “selected vehicle data” means nothing
substantively more than “certain vehicle data.” In that regard, note that the
interpretation urged by Progressive also starts with “certain vehicle data,”
prior to repeating what already is specified elsewhere in the claim.
Our interpretation is consistent with the disclosure of the ’358 patent.
For instance, the disclosure states that vehicle data elements monitored
and/or recorded include raw data elements, calculated data elements, and
derived data elements. Ex. 1001, 7:11-13. It is evident that the term is
meant to be inclusive, not restrictive. Thus, we do not limit “selected
vehicle data” to just raw data sensed by sensors. Instead, it covers processed
or calculated vehicle data. In summary, we reiterate that “selected vehicle
data” means “certain vehicle data,” and note that it covers vehicle data
transformed by processing or calculation. The particular forms of
processing and calculation referenced in the specification merely are
examples, and we do not consider them as limitations on the covered
transformation, under the rule of broadest reasonable interpretation.
3. “database” (independent claim 1)
Liberty, in its petition, does not offer an interpretation for “database.”
Progressive, in its patent owner response, states that the term “database” is
used in its ordinary sense in the disclosure of the ’358 patent. PO Resp.
10:10-11. Progressive asserts, citing Microsoft Press Computer Dictionary,
that “database” means “a file composed of records, each containing fields
together with a set of operations for searching, sorting, recombining, and
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other functions.” PO Resp. 10:15-19 (citing Microsoft Press Computer
Dictionary 129 (3d ed. 1997) (Ex. 2010) (internal quotation marks omitted)).
The assertion is supported by the declaration testimony of Ivan Zatkovich
(Ex. 2007 ¶ 21), and is not specifically disputed by Liberty in its reply.
We generally agree with Progressive’s proposed interpretation, except
that under the rule of broadest reasonable interpretation, we determine that a
basic database need not have all of the functions of searching, sorting,
recombining, and additional unspecified “other functions.” Progressive’s
expert witness, Mr. Zatkovich, does not explain where a line would be
drawn, that denotes the bare minimum for a memory to qualify as a
database. On the evidence before us, we construe a database as “a memory
in which the stored data are searchable by the content of a particular field in
the data entries stored therein.” Other more sophisticated functions, such as
sorting and recombining are not required.
4. “record” (independent claim 1)
Liberty, in its petition, does not offer an interpretation for “record.”
Progressive, in its patent owner response, states that the term “record”
should be accorded its ordinary meaning when used in the context of a
database record, as is the case in the disclosure of the ’358 patent. PO Resp.
11:3-4. Citing Microsoft Press Computer Dictionary, Progressive asserts
that “record” means “[a] data structure that is a collection of fields
(elements) each with its own name and type.” PO Resp. 11:4-7 (citing
Microsoft Press Computer Dictionary 399 (3d ed. 1997) (internal quotation
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marks omitted)). The assertion is supported, partially, by the declaration
testimony of Ivan Zatkovich, Ex. 2007 ¶ 23. We say partially supported
because Mr. Zatkovich refers to what was generally known, or the standard
format for a database record. Mr. Zatkovich does not explain the bare
minimum for qualifying a data entry as a database record. It is not clear
from Mr. Zatkovich’s testimony (1) how many separate fields must a record
include, and (2) whether each field must have both a “name” and “type”
attribute.
We agree with Progressive’s proposed interpretation, except that
under the rule of broadest reasonable interpretation, we determine that a
record need have only one searchable field, and that the searchable field
need have only one associated attribute, such as “name” or “type.” Thus, a
“record” in the context of the database recited in claim 1 is “a data entry
item, having a structure that includes at least one searchable field with an
associated attribute, such as name or type.”
B. Alleged Anticipation of Claims 1, 19, and 20
Liberty asserts that claims 1, 19, and 20 are unpatentable, under
35 U.S.C. § 102, as anticipated by Nakagawa. Pet. 22, 70, 76. In support of
that asserted ground of unpatentability, Liberty provides detailed
explanations as to how each claim element, arranged as is recited in these
claims, is disclosed by Nakagawa. Pet. 22-26, 70-71, 76. Liberty’s petition
also relies on the declaration testimony of Mr. Scott Andrews (Ex. 1025).

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Upon review of Liberty’s petition, Progressive’s response, and
Liberty’s reply, we determine that Liberty has demonstrated, by a
preponderance of the evidence, that each element of claims 1, 19, and 20,
arranged as it is recited in the claims, is disclosed by Nakagawa. However,
because claims 1, 19, and 20, are entitled to an effective filing date of May
15, 2000, as determined in Section II.D. below, Nakagawa is not prior art to
claims 1, 19, and 20. Therefore, we determine that claims 1, 19, and 20 are
not unpatentable, under 35 U.S.C. § 102, as anticipated by Nakagawa.
Nevertheless, we proceed to discuss how each element of independent
claim 1 is disclosed by Nakagawa, because those findings are the basis for
the conclusion of obviousness of dependent claims 2-18 over respective
prior art combinations, including Nakagawa as disclosing all of the elements
of independent claim 1.
1. Nakagawa
Nakagawa’s disclosed invention relates to a vehicle insurance
premium calculation system, onboard apparatus, and server apparatus.
Ex. 1005, Title. The system includes a usage status detection means for
detecting the usage status of a vehicle, a data input means for inputting data
relating to the maintenance or management of a vehicle, and an insurance
premium calculation means for calculating vehicle insurance premium based
on detection results and inputted data. Ex. 1005, Abst; ¶ 0006.
In its description of related art, Nakagawa refers to another insurance
premium calculation system, that is based on the monitoring, recording, and
communication of data showing the operating characteristics of the operator
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and vehicle, and that retroactively adjusts the insurance premium by linking
operating characteristics to prescribed safety standards, as well as sets the
future premium. Id. at ¶ 0004. That other system includes a process that
monitors a multiplicity of data elements showing the actions of operators or
how the car is being operated. Id. Selected data elements having a
prescribed relationship with a prescribed safety standard are recorded, for
determining any additional charge or discount that should be applied to the
basic premium, when the recorded data are processed in an insurance
company profile. Id.
With regard to the related art, Nakagawa states that it has been
difficult for insurance companies to prove that a vehicle has been maintained
and serviced properly because the premium is calculated based solely on
information relating to the vehicle’s operation and history of use of safety
equipment. Ex. 1005 ¶ 0005. In that regard, Nakagawa states:
That is, it was not possible to calculate car insurance premiums
that took into account whether or not components such as tires
and brake pads, used to run a vehicle safely, have been serviced
or maintained. This system aims to calculate appropriate
vehicle insurance premiums by taking into account the
maintenance and servicing history of the vehicle.

Id. Thus, Nakagawa discloses a system and method for calculating
insurance premium based on both (1) detected data indicating the usage
status of a vehicle as detected by a detecting means, and also (2) inputted
data relating to vehicle servicing or maintenance. Ex. 1005 ¶¶ 0006, 0007.
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In that regard, Nakagawa describes that the usage status of a vehicle refers to
the way in which a vehicle is operated by the driver or to the installation
status of equipment for protecting passengers. Ex. 1005 ¶ 0007.
Nakagawa’s Figure 1 is reproduced below:

Figure 1 illustrates a broad conceptual diagram of Nakagawa’s system
and method for calculating vehicle insurance premium. Ex. 1005 ¶¶ 0036,
0048. An onboard apparatus is installed on the vehicle, which collects, via
various sensors, information relating to the driver’s operation of the vehicle,
and information relating to the installation status of safety equipment. Ex.
1005 ¶ 0048. That collected information is transmitted from onboard the
vehicle to the insurance company via radio communication. Id. Contract
repair factory 3 is aware of whether or not the user of the vehicle has
serviced the vehicle regularly at the facility. Ex. 1005 ¶ 0049. When
vehicle inspection and service is carried out at contract repair factory 3, that
information is sent from contract repair factory 3 to the insurance company,
via either radio or wired communication. Id. The insurance company
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calculates the insurance premium, based on the information transmitted from
the vehicle and the information transmitted from the contract repair factory,
in the form of an increase or decrease of a base premium. Ex. 1005 ¶ 0050.
Information relating to any adjustment in premium is transmitted via radio
communication from the insurance company to the vehicle, and then
displayed for viewing by the user of the vehicle. Id.
Figure 2 of Nakagawa is reproduced below:

The technical components of one embodiment of Nakagawa’s system
for calculating vehicle insurance premiums are illustrated in Figure 2.
Ex. 1005 ¶¶ 0037, 0052. They include onboard apparatus 4 in the vehicle,
maintenance data management means 5 in contract repair factory 3, and
server apparatus 6 at the car insurance company. Ex. 1005 ¶ 0052. Onboard
apparatus 4 includes operation status detection means or detector 7 that
detects how a car is being operated by a user, installation status detection
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means or detector 8 that detects whether or not equipment for protecting
passengers has been installed, onboard radio part 9 that sends and receives
data by radio, and display means 10 that displays data. Ex. 1005 ¶ 0053.
Those components are all connected via control bus 11 to onboard control
part 12, which is a processor. Id. The disclosure of Nakagawa describes the
operating status of a vehicle by a user, as well as the installation status of
equipment for protecting passengers, as “vehicle usage status.” Id.
The following description conveys the nature of the vehicle usage
status information collected by operation status detection means 7:
The operating status detection means 7 consists of
various sensors. It detects how the accelerator is used by the
user of car 1, the speed at which the car is driven, how the anti-
lock braking (or brake) system (ABS) is working, the time,
changes in engine revolutions, transmission settings (parking,
reverse, drive, neutral), and use of left and right indicators and
of headlamps. It then outputs this information as data. It can
detect the current location of a car using a global positioning
satellite (or system) (GPS) and uses a G sensor to detect
deceleration and acceleration and braking.

Ex. 1005 ¶ 0054.
The following description conveys the nature of the vehicle usage
status information collected by installation status detection means 8:
The installation status detection means 8 consists of
various sensors that detect the installation status of safety
equipment. It detects seatbelts installation status, child seat
installation status, and the position in which head rests are used
and outputs information as data.

Ex. 1005 ¶ 0055.
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Nakagawa states that onboard control part 12 contains a memory,
which is not shown in the drawings. Ex. 1005 ¶ 0058. Nakagawa further
states: “[t]his memory stores data collected by operating status detection
means 7 and installation status detection means 8 and data received via radio
by on-board radio part 9.” Id. Also, according to the Nakagawa, data
collected by operating status detection means 7 and installation status
detection means 8 are sent to radio part 9, via control bus 11 under the
control of onboard control part 12, and radio part 9 sends such data to server
apparatus 6 at insurance company 2. Ex. 1005 ¶ 0056. Server apparatus 6
calculates an insurance premium based on data received from onboard
apparatus 4 and maintenance data management means 5. Ex. 1005 ¶ 0061.
Nakagawa’s Figure 5 is reproduced below:

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Figure 5 is a flowchart illustrating the operation in which vehicle
insurance premium calculation means 20 in server apparatus 6 calculates
vehicle insurance premiums. Ex. 1005 ¶ 0069. Specifically, in onboard
apparatus 4, “usage data” is read from the memory in onboard control part
12, and onboard radio part 9 sends the data—read from memory—together
with an associated User ID, to server apparatus 6 located at the insurance
company. Ex. 1005 ¶ 0069. Thereafter, control part 22 at the insurance
company updates the user data stored in memory, at the insurance company,
that correspond to the received User ID, with the data received from onboard
apparatus 4. Id. In that regard, Nakagawa describes that the latest data
collected by onboard apparatus 4 and the latest data collected at contract
repair factory 3 are stored within control part 22 at the insurance company as
user data. Id. Next, insurance premium calculation part 20 reads the “user
data,” corresponding to a User ID, in the memory of control part 22, and
calculates the insurance premium applicable to the associated user for the
next insurance term. Ex. 1005 ¶ 0070.
Nakagawa describes that the insurance premium is calculated by
determining a discount or a surcharge based on a prescribed standard value.
Ex. 1005 ¶ 0072. For instance, when user data indicate speeding, non-use or
misuse of seatbelts, or worn brake pads, the calculation will result in an
increased premium. Id. When user data indicate appropriate driving,
appropriate use of seatbelts, and timely replacement of brake pads and hoses,
the calculation will result in a discount from the standard premium. Id. The
results of insurance premium calculation are sent, by radio, to onboard
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apparatus 4, and display means 10 displays the calculated insurance
premium. Ex. 1005 ¶ 0073.
2. Discussion
To establish anticipation, each and every element in a claim, arranged
as is recited in the claim, must be found in a single prior art reference. Net
MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1369 (Fed. Cir. 2008);
Karsten Mfg. Corp. v. Cleveland Golf Co., 242 F.3d 1376, 1383 (Fed. Cir.
2001). Our analysis will focus on each of the three deficiencies alleged by
Progressive in its patent owner response with regard to claim 1.
Progressive identifies three elements of claim 1, as not disclosed by
Nakagawa. Progressive asserts that Nakagawa does not disclose that
(a) “selected vehicle data,” retained within memory, is transferred to a
distributed network and a server; (b) a database operatively linked to the
server; and (c) the server being configured to generate a rating factor.
a. Selected Vehicle Data, Retained within Memory, is Transferred
As correctly noted by Progressive (PO Resp. 20-21), claim 1 recites
(1) a processor that collects vehicle data from a vehicle bus that represents
aspects of operating the vehicle; (2) a memory that stores selected vehicle
data related to a level of safety or an insurable risk of operating the vehicle;
and (3) a wireless transmitter configured to transfer the selected vehicle data
retained within the memory to a distributed network and a server.
Progressive asserts, however, that there is no disclosure in Nakagawa
that “selected vehicle data” is stored within memory and transferred by the
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wireless transmitter to a network and server. PO Resp. 21:8-10. Citing to
the declaration testimony of Ivan Zatkovich (Ex. 2007 ¶¶ 39-43) for support,
Progressive states that although Nakagawa does collect vehicle data from a
control bus, using various sensors to detect how a user is operating the car,
Nakagawa does not disclose storing “selected vehicle data” in memory and
transferring that “selected vehicle data” by wireless transmitter. PO Resp.
21:11-15. For reasons discussed below, the argument is unpersuasive.
It is true that, according to claim 1, the selected vehicle data that is
stored in memory has to be related to a level of safety or an insurable risk of
operating the vehicle. It does not matter whether that characteristic of the
stored data is derived from the meaning of “selected vehicle data,” as argued
by Progressive, or from a separate limitation recited in the claim, as we have
determined above in the section of the decision on claim interpretation.
What Progressive argues is that Nakagawa does not disclose storing in
memory, or transferring to a distributed network and a server, certain vehicle
data which are related to a level of safety or an insurable risk of operating
the vehicle. The argument is unpersuasive. It is contradicted by our
findings on Nakagawa’s disclosure, as discussed below.
Nakagawa describes the operating status of a vehicle by a user, as
well as the installation status of equipment for protecting passengers, as
“vehicle usage status.” Ex. 1005 ¶ 0053. Nakagawa describes that the usage
status of a vehicle refers to the way in which a vehicle is operated by the
driver or the installation status of equipment for protecting passengers.
Ex. 1005 ¶ 0007. Nakagawa describes that its vehicle insurance premium
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calculation system comprises a usage status detection means that detects the
usage status of a vehicle, a data input means through which data relating to
vehicle servicing or maintenance is input, and an insurance premium
calculation means that calculates vehicle insurance premiums based on the
detection results and input data. Ex. 1005, Abst.; ¶ 0006.
Thus, whether or not expressly referred to as vehicle “usage data,” the
information detected by the usage status detection means, which reflects the
“usage status” of the vehicle, is vehicle “usage data.” This usage status
detection means, described in the Summary of the Invention portion of
Nakagawa, is broken down into two parts in the Description of Preferred
Embodiments portion of Nakagawa, i.e., operating status detection means
and installation status detection means. Ex. 1005 ¶¶ 0053-55.
Nakagawa’s operating status detection means detects how a car is
operated by a user, such as how the accelerator is used, how fast is the
vehicle being driven, and how the anti-lock braking system or braking
system is working, whereas Nakagawa’s installation status detection means
detects the installation status of safety equipment such as seatbelts, child
seats, and head rests. Id. Thus, the data collected by Nakagawa’s operating
status means and Nakagawa’s installation status detection means are related
to a level of safety or an insurable risk of operating the vehicle, and thus,
constitute “selected vehicle data” related to a level of safety or an insurable
risk of operating the vehicle.
Nakagawa describes that onboard control part 12 includes a memory,
which stores the data collected by the operating status detection means and
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the installation status detection means. Ex. 1005 ¶ 0058. Nakagawa also
describes that data collected by the operating status detecting means and
installation status detection means are sent to onboard radio part 9, which
sends the information to an insurance company. Ex. 1005 ¶ 0056.
In another part of its disclosure, Nakagawa describes, in connection
with the overall operational flowchart illustrated in Figure 5, that vehicle
“usage data” is read from the memory within onboard control part 12, and
radio part 9 sends the usage data, thus read, together with an associated User
ID, to server apparatus 6 at the insurance company. Ex. 1005 ¶ 0069. The
operational flowchart of Figure 5 illustrates no other transmission from the
vehicle.
Progressive’s argument (PO Resp. 21:18 to 22:6), and the supporting
testimony of its expert witness Mr. Zatkovich (Ex. 2007 ¶¶ 40, 41), both
narrowly focus on only one paragraph of Nakagawa’s disclosure, i.e.,
¶ 0065, which is reproduced below:
In step S2, the on-board control part 12 determines
whether the operation and installation statuses of a vehicle are
safe or dangerous based on data collected from operating status
detection means 7 and installation status detection means 8.
When it determines that both the operating and installation
statuses are safe, the degree of safe operation is recorded in
point form (step S3). When it determines that the statuses are
dangerous, the danger status is recorded in point form (step S4).
The data stored in steps S3 and S4 are stored in the memory
provided in the on-board control part 12 as “usage data” (step
S5).

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We agree with Liberty (Reply 4:4 to 5:9) that the above-quoted
paragraph is disclosure additional to all the description in Nakagawa of
collecting information on vehicle usage status, storing them, and transferring
them. Note, in particular, the description in ¶ 0056 of Nakagawa that data
collected by the operating status detection means and the installation status
detection means are sent to the onboard radio for transfer to the insurance
company, and the description in ¶ 0058 that a memory in onboard control
part 12 stores the data collected by the operating status detection means and
the installation status detection means.
Progressive does not explain adequately why information about the
usage status of the vehicle, as collected by what Nakagawa refers to in its
Summary of the Invention as usage status detection means, implemented in
Nakagawa’s preferred embodiments as operating status detection means and
installation status detection means, are not vehicle “usage data.”
Progressive also does not explain adequately why the description in
¶ 0068 of Nakagawa that vehicle “usage data” is read from memory and
sent, when “thus read,” by radio part 9 to the insurance company, refers only
to the point scores described in ¶ 0065 of Nakagawa. Progressive does not
explain adequately why vehicle “usage data” does not cover data collected
by the operating status detection means and the installation status detection
means, which are stored in memory as described in ¶ 0058 of Nakagawa.
Nakagawa’s ¶ 0065 expressly labels the point scores as “usage data.”
That, however, does not change the fact that information collected by a
“usage status detection means,” implemented in Nakagawa as operating
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status detection means and installation status detection means, about the
“usage status” of the vehicle, is vehicle “usage data.” The point scores, by
their nature, are even one step more removed from being usage data, than the
collected data themselves, because of the application of additional
processing to produce the point scores. The collected data does not require
express labeling to constitute “usage data.”
Furthermore, Nakagawa’s ¶ 0069 does not follow immediately from
¶ 0065, and does not expressly refer to the point scores noted in ¶ 0065.
Nakagawa’s ¶ 0069 discusses an overview of the entire system for
calculating insurance premium by beginning with the language: “Next, the
operation in which the server apparatus 6 calculates the car insurance
premiums will be explained. FIG. 5 is a flowchart that shows the operation
in which the car insurance premium calculation means 20 in server apparatus
6 calculates car insurance premiums.” The only transmission of data from
the vehicle to the insurance company, as illustrated in Figure 5, is vehicle
usage data and an associated User ID. That fact logically reflects that the
reference in Nakagawa’s ¶ 0069 to reading usage data from memory and
sending data, thus read, to the insurance company, is directed not only to the
point scores discussed in ¶ 0065, but also to the usage status information
collected by the operating status detection means and the installation status
detection means. In that connection, Progressive has not offered a reasoned
explanation as to why that is not the case.
In any event, on the basis of our construction of the claim phrase
“selected vehicle data” as sufficiently broad to cover vehicle data
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transformed by processing or calculation, we agree with Liberty’s contention
that the point scores described in ¶ 0065 of Nakagawa themselves constitute
“selected vehicle data.” Therefore, for that reason as well, Progressive’s
argument that the “usage data” referred to in Nakagawa’s ¶ 0068 are merely
the point scores described in Nakagawa’s ¶ 0065, are unavailing. The point
scores are stored in memory, read from memory, and sent, thus read, to
server apparatus 6 at the insurance company through radio part 9.
Ex. 1005 ¶ 0068.
b. A Database Operatively Linked to the Server
Claim 1 requires that there be a database operatively linked to the
server to store the selected vehicle data transmitted by the wireless
transmitter, and specifies that the database comprises records with
operations for searching the records and other functions. The language is
broad, particularly with respect to “and other functions,” which is met
simply with storage and retrieval functionality, apart from searching.
With regard to the term “database,” we have construed it as “a
memory in which the stored data are searchable by the content of a particular
field in the data entries stored therein.” We have construed the term
“record,” in the context of the database, as “a data entry item, having a
structure that includes at least one searchable field with an associated
attribute, such as name or type.” Therefore, a memory in Nakagawa’s
disclosed server would be a “database,” if its data entries have a structure
that includes at least one searchable field, and if the memory is searchable
by the content within that field.
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Citing the testimony of its expert witness Scott Andrews (Ex. 1025
¶¶ 22, 25, 35, 36), Liberty, in its petition, asserts that a person of ordinary
skill in the art would have recognized that Nakagawa’s disclosure of storing
selected vehicle data in a memory on the server, and updating that stored
data corresponding to an ID, explicitly teaches, or inherently discloses, use
of a database. Pet. 25:2:18-24. Progressive, on the other hand, cites the
testimony of its expert witness Mr. Ivan Zatkovich (Ex. 2007 ¶¶ 35, 36, 49,
55), and asserts that the Nakagawa disclosure, relied on by Liberty, merely
discloses a generic memory, which may or may not be a database, and only
describes the general updating of stored data within the memory that have
corresponding User IDs also transferred from the vehicle. PO Resp. 24:15-
18, 25:1-3.
Progressive asserts that general disclosure of “updating” stored data,
which corresponds to a received User ID, does not teach storage of records
in a database or operations for searching the records. PO Resp. 25:1-6.
According to Progressive, Nakagawa does not describe the format, if any, in
which any data is stored in the memory within the server. PO Resp. 24:18-
20. In that connection, Mr. Zatkovich testifies that the step of adding a
corresponding User ID to the data being transferred from the vehicle to the
remote server “does not introduce any database requirements for that data.”
Ex. 2007 ¶ 49.
For reasons discussed below, Liberty has established that the memory
in Nakagawa’s server apparatus 6 is a database. We credit the testimony of
Mr. Andrews over that of Mr. Zatkovich. According to Mr. Andrews,
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Nakagawa discloses storing, in the server, the corresponding User ID
together with the vehicle data. Ex. 1025 ¶ 36. We do not take
Mr. Andrews’s testimony as meaning that the User ID must be stored at a
location contiguous to the location storing the corresponding vehicle data.
That is not Mr. Andrews’s testimony. Rather, Mr. Andrews testifies that, in
Nakagawa, the User ID also is stored and that a link is maintained between
the stored vehicle usage data and the corresponding user ID. Id. That
testimony supports Liberty’s contention that Nakagawa’s server memory is
searchable by User ID.
Paragraph 36 of the declaration of Mr. Andrews is reproduced below:
Nakagawa discloses storing a driver’s vehicle data
(“usage data”) in a memory on a server along with an ID for
that driver. Id. at ¶ [0069]. Nakagawa also describes updating
the driver’s usage data stored in the server’s memory that
corresponds to the ID. Id. These data are thus stored so as to
create a correspondence between a driver’s stored “usage data”
and an ID. Such a correspondence would be understood by one
skilled in the art as indicating a database.

Ex. 1025 ¶ 36. Mr. Andrews also testifies that for the stored user data to be
recorded in memory in a way that can be located and retrieved later based on
a corresponding User ID, a person of ordinary skill in the art would
understand that such data are stored in a form that maintains a link between
the user data and the corresponding User ID. Ex. 1034 ¶ 22.
Mr. Andrews further testifies that Nakagawa discloses the
functionality of searching the user data within the server memory. Ex. 1034
¶¶ 28, 31. Mr. Andrews refers to Nakagawa’s disclosure that control part 22
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“updates” the user data recorded in the server memory that corresponds to
the received ID, and then explains that, to update such stored data keyed to a
particular user, the server necessarily must locate and retrieve, i.e., search,
one or more specific records from among the many records so that changes
can be made to a particular driver’s data. Ex. 1034 ¶ 28.
The above-noted testimony of Mr. Andrews is persuasive. Because
the data entries corresponding to particular User IDs have to be updated
later, it is logical that the User IDs have to be stored, that a link has to be
maintained between each data entry and its corresponding User ID, and that
the entries are searchable by User ID. Because of the presence of a link
between each User ID and the data corresponding to that User ID, each data
entry item has a field, the content of which is the User ID, which represents
a name for the corresponding data entry.
Mr. Zatkovich does not explain sufficiently his testimony (Ex. 2007
¶ 49) that adding a corresponding User ID to the vehicle data sent by
onboard radio part 9 to server apparatus 6 does not introduce any disclosure
about a database in server apparatus 6. For instance, he does not explain
why a link need not be maintained between each User ID and the
corresponding user data, such that each data entry item includes a field
containing the corresponding User ID, by which the data entry is searchable.
Mr. Zatkovich states that data need not be stored as records to be stored in
memory. Ex. 2007 ¶ 49. However, Mr. Zatkovich’s reference to a “record”
is based on Progressive’s proposed construction of a “record,” and not on the
Board’s construction of “record.” Mr. Zatkovich does not refute adequately
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all the evidence discussed above supporting a finding that Nakagawa
discloses storing both vehicle data, as well as the User ID to which the
vehicle data corresponds, and maintaining a link between each vehicle data
item and its corresponding User ID. That disclosure sufficiently accounts
for the requirements of a database “record.” There is no requirement that the
actual data and its corresponding User ID be stored in contiguous physical
locations.
Mr. Zatkovich testifies that Nakagawa’s server functionality can be
achieved with simple arrays, which use indexes to reference a value stored in
an array, because what are stored in Nakagawa’s server are merely point
values rather than different types of data. Ex. 2007 ¶ 55. For several
reasons, that testimony is not helpful for Progressive’s contention that
Liberty has not shown that Nakagawa’s server memory is a database.
First, we have determined above that Nakagawa’s onboard device
does not merely send certain point values, converted from vehicle data, but
also sends different types of vehicle data to the server apparatus. Second,
Progressive has not shown why the combination of an array and its index
does not constitute a “database” under the Board’s construction of the term.
In that regard, Progressive does not explain why it is not the case that the use
of an index to reference the array contents indicates that the User IDs are
stored in the index, that the index holds the name field linked to each of the
data entries in the array, and that the array is searchable by the field in the
index. Third, the ’358 patent itself regards arrays as a database. Ex. 1001,
31:36-41.
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For all of the foregoing reasons, Liberty has shown, not by principles
of inherent disclosure, but direct disclosure, that Nakagawa’s server
apparatus 6 is operatively linked to a database, as is required by claim 1 of
the ’358 patent.
c. Server Configured to Generate a Rating Factor
Claim 1 recites that “the server is further configured to generate a
rating factor based on the selected vehicle data stored in the database.”
Progressive’s argument that Nakagawa’s server does not generate any rating
factor is unpersuasive.
Progressive contends that a “rating factor” must be tied, somehow, to
expected claim losses or actuarial classes. PO Resp. 29. That argument is
unpersuasive, because it presents an issue of claim interpretation, and we
have rejected Progressive’s position on the meaning of “rating factor.” We
have construed “rating factor” to mean “a calculated insurance risk value
such as a safety score or a usage discount,” where “an insurance risk value
would be a value that reflects an associated level of insurance risk and,
therefore, also a corresponding insurance premium.” In that context, “a
corresponding insurance premium” refers to a general level of insurance
premium, not necessarily any specific dollar amount of premium.
Liberty, in its petition (Pet. 26:2:12-37), correctly regards the
aggregate “operating levels” described in Nakagawa’s ¶ 0076 as constituting
a “rating factor.” Nakagawa’s ¶ 0076 is reproduced below:

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FIG.7 shows an example of a screen display in step
ST10 in FIG. 5. Here, user operating levels and discount rates
for insurance premiums up until the previous month are shown
in graph form based on data relating to the driving operation of
the car from the start of the month to the present. That is, at the
end of each month, the evaluation of operating levels for one
month is calculated in numeric form and displayed to reflect the
amount by which the insurance premium will be multiplied.
The operating levels show driving techniques and the level of
safe driving as points which are then evaluated as numbers. For
example, in the evaluation of driving techniques, G sensors
installed in a car are used to detect whether or not deceleration
occurs smoothly without any locking of tires and whether or not
curves in the road are handled without unreasonable steering.
The findings are then converted into points. In the evaluation
of safe driving, inter-car distance sensors are used to detect
whether or not a safe distance is being maintained between
vehicles to suit the running speed. The finding is then
converted into points. The operation level, as shown in points,
is displayed as a bar graph as shown in FIG. 7. It can be seen
that operating levels improved in September when compared to
May. The discount rates applied to the insurance are displayed
in a broken line graph. Thus it can be seen that as operating
levels improve, the discount applied to the insurance increases
and the car insurance premium payable by the user decreases.
Ex. 1005 ¶ 0076.
The above-quoted text refers to a sample screen display according to
step ST10 in Nakagawa’s Figure 5, which states: “DISPLAY RESULTS.”
Step ST7 states: “CALCULATE INSURANCE PREMIUM FOR NEXT
TERM.” Ex. 1005, Fig. 5. Step ST8 states: “SEND RESULTS
INFORMATION.” Id. Step ST9 states: “RECEIVE RESULTS
INFORMATION.” Id. Nakagawa describes that in step ST7, it is insurance
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premium calculation part 20 on the server side, which calculates the
insurance premium. Ex. 1005 ¶ 0070. Nakagawa describes that when
insurance premium calculation part 20 on the server side has calculated the
car insurance premium, it sends the results, in step ST8, to onboard
apparatus 4. Ex. 1005 ¶ 0073. Nakagawa further describes that display
means 10 on the vehicle then displays the received information. Id. Another
portion of Nakagawa also describes that insurance premium is calculated on
the server side, sent back to the vehicle, and then displayed onboard.
Ex. 1005 ¶ 0062.
Based on the foregoing, it is the server apparatus which generates the
operating levels and calculates an appropriate insurance premium on the
basis of that operating level. Progressive, however, argues that it is the
onboard apparatus which determines the operating levels referred to in
Nakagawa’s ¶ 0076. The argument is unpersuasive.
Progressive relies on the testimony of Mr. Zatkovich (Ex. 2007 ¶¶ 39,
40), which narrowly focuses on ¶ 0065 of Nakagawa’s disclosure, as it has
with regard to its earlier argument that Nakagawa does not send selected
vehicle data to a remote server. PO Resp. 28. As we have discussed above,
Nakagawa’s ¶ 0065 does describe the generation, onboard the vehicle, of
certain point scores reflecting the safety or danger status of the vehicle. But
Progressive has not shown that negates or replaces the processing described
in Nakagawa’s ¶ 0076 in connection with the calculation of an insurance
premium, which occurs within server apparatus 6. Indeed, ¶ 0076 of
Nakagawa refers to the actual evaluation of data and subsequent conversion
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of the findings of the evaluation into point scores, and not simply reading
certain point values already generated by the onboard apparatus and
transmitted to the server.
Furthermore, Liberty correctly notes that the point scores referred to
in Nakagawa’s ¶ 0076 are aggregate values over an extended time period,
e.g., one month, which can affect or influence the level of insurance
premium, whereas that is not the case for the individual point scores referred
to in Nakagawa’s ¶ 0065. In any event, Progressive has not shown that the
point scores described in Nakagawa’s ¶ 0065 are the same point scores
described in Nakagawa’s ¶ 0076, or that the process described in
Nakagawa’s ¶ 0076 refers to the onboard procedure described in
Nakagawa’s ¶ 0065.
3. Conclusion
For reasons discussed above, Liberty has shown, by a preponderance
of the evidence, that each element of independent claim 1, arranged as is
recited in the claim, is disclosed by Nakagawa.
C. Alleged Obviousness of Claims 2-20
Each of claims 2-20 depend, directly or indirectly, from claim 1.
Each of claims 2-20 is subject to an alleged ground of unpatentability based
on Nakagawa and one or more additional prior art references. However,
because claims 19 and 20 are entitled to an effective filing date of May 15,
2000, as determined in Section II.D. below, Nakagawa is not prior art to
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claims 19 and 20. Therefore, we determine that claims 19 and 20 are not
unpatentable, under 35 U.S.C. § 103, over Nakagawa and Kosaka.
With regard to dependent claims 2-18, Liberty’s petition contains
arguments and evidence supporting each assertion of obviousness.
Progressive has not presented rebuttal arguments directed to the alleged
unpatentability of claims 2-18, on the various obviousness grounds over
which we instituted review of claims 2-18, except to argue that Nakagawa
does not disclose all the elements of independent claim 1. That argument
already has been considered and rejected above in the discussion concerning
the alleged anticipation of claim 1 by Nakagawa.
The level of ordinary skill is reflected by the prior art of record. See,
e.g., In re GPAC Inc., 57 F.3d 1573, 1579 (Fed. Cir. 1995). We have
considered the arguments and evidence before us, and conclude that Liberty
has demonstrated, by a preponderance of the evidence, that claims 2-18 are
unpatentable for obviousness, under 35 U.S.C. § 103, on the various
claim/ground combinations listed below:

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Claims Basis References
2 § 103 Nakagawa and Chang
3, 6, 7 § 103 Nakagawa and Stanifer
4 § 103 Nakagawa and Beaverton
5, 8 § 103 Nakagawa and Scapinakis
9 § 103 Nakagawa and Hunt
10, 11, 13-15 § 103 Nakagawa and Lowrey
12 § 103 Nakagawa, Lowrey, and Qualcomm MSM6500
16-18 § 103 Nakagawa and Bouchard
D. Priority Date of the ’358 Patent
Progressive asserts that claims 1, 9, 19, and 20 of the ’358 patent are
entitled to an effective filing date of May 15, 2000. For reasons discussed
below, we determine that Progressive has shown that claims 1, 19, and 20
are entitled to an effective filing date of May 15, 2000, but has not shown
that claim 9 is entitled an effective filing date of May 15, 2000.
For an application to be entitled to the earlier filing date of an
ancestral application, under 35 U.S.C. § 120, one of the requirements is that
the earlier-filed application contain a disclosure that complies with
35 U.S.C. § 112, first paragraph, for the claims in the later-filed application.
Studiengesellschaft Kohle, m.b.H. v. Shell Oil Co., 112 F.3d 1561, 1564
(Fed. Cir. 1997); Transco Prod. Inc. v. Performance Contracting Inc.,
38 F.3d 551, 556 (Fed. Cir. 1994). For instance, if a continuation-in-part
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application has a claim reciting a feature not described in the earlier-filed
application, then that claim is entitled only to the later filing date of the
continuation-in-part application. In re Van Lagenhoven, 458 F.2d 132, 136
(CCPA 1972).
Also, where there is a chain of continuing applications, if any
application in the chain fails to make the requisite disclosure of the claimed
subject matter under 35 U.S.C. § 112, first paragraph, then the claim is not
entitled to the benefit of the filing date of the applications preceding the
break in disclosure. Hollmer v. Harari, 681 F.3d 1351, 1355 (Fed. Cir.
2012). For a claim to gain the benefit of the filing date of an earlier filed
application under 35 U.S.C. § 120, each application in the chain leading
back to that earlier application must comply with the written description
requirement of 35 U.S.C. § 112, first paragraph. Zenon Envtl., Inc. v. U.S.
Filter Corp., 506 F.3d 1370, 1378 (Fed. Cir. 2007); Lockwood v. Am.
Airlines, Inc., 107 F.3d 1565, 1571 (Fed. Cir. 1997); In re Hogan, 559 F.2d
595, 609 (CCPA 1977); In re Schneider, 481 F.2d 1350, 1356 (CCPA 1973).
The ’358 patent issued from an application which is a continuation-in-
part of Application 10/764,076 (“the ’076 application”), filed January 23,
2004, which is a continuation-in-part of application 09/571,650 (“the ’650
application”), filed May 15, 2000. In its Preliminary Response, Progressive
asserted that its claims 1, 9, 19, and 20 are entitled to the earlier filing date
of the ’650 application, and attempted to make an adequate showing in that
regard. Prelim. Resp. 23-31, 34-38. The Board evaluated the showings in
Progressive’s Preliminary Response and, in the Decision on Institution,
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identified five features the description of which was not accounted
sufficiently by Progressive in the ancestral applications. Dec. 19-21. Two
features are from claim 1, and the remaining three are from claims 9, 19, and
20, respectively.
The test for determining satisfaction of the written description
requirement of 35 U.S.C. § 112, first paragraph, is whether the application
reasonably would have conveyed to one with ordinary skill in the art that the
inventor possessed the claimed invention at the time of the original
disclosure of the application. Pandrol USA, LP v. Airboss Ry. Products,
Inc., 424 F.3d 1161, 1165 (Fed. Cir. 2005). The specification must convey
with reasonable clarity to those skilled in the art that as of the filing date of
the application the inventor was in possession of the claimed invention.
Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563-64 (Fed. Cir. 1991).
The following discussion is based on the arguments and showings
presented in Progressive’s patent owner response and Liberty’s reply. We
discuss the five above-noted features, with regard to the disclosure of both
the ’650 application and the ’076 application.
1.
Claim 1 recites a wireless transmitter configured “to transfer the
selected vehicle data retained within the memory to a distributed network
and a server.” The recited functionality of the configured transmitter is
specific. According to the claim, it must be that data retained within the
memory which is transferred, not data which will be retained in memory,
and not data which is being written into memory. Essentially, the
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functionality required is that selected vehicle data is read from memory, and
then the data, thus read, is transferred by the wireless transmitter. That also
is the interpretation of the claim feature as it was read onto the disclosure of
Nakagawa.
Progressive refers to Figure 4 of the ’650 application, which is
reproduced below:

Figure 4 is a block diagram of a vehicle onboard computer and
recording system which communicates with a remote operations control
center. Ex. 2004, 9:13-15. As explained by Progressive (PO Resp. 35:1-2),
device 300 in Figure 4 interfaces with vehicle data bus and/or sensors 412.
That is true, as depicted. Progressive asserts, however, that Figure 4
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“depicts device 300 receiving data from vehicle database and/or sensors 412
in order to provide the sensor data information to the operations control
center 416 through communication link 418.” PO Resp. 35:2-4. That
assertion, in light of other disclosures cited by Progressive, is persuasive that
stored vehicle data from a memory is read to provide selected vehicle data to
the transmitter, which according to Figure 4 of the ’650 application can be a
wireless transmitter, for sending to remote operations control center 416.
While box 412 in Figure 4 is labeled “Vehicle databus and/or
Sensors,” that disclosure by itself is general and means no more than that a
communication path exists to both the vehicle databus and sensors. It does
not mean, necessarily, that when box 412 provides information to device 300
for sending to remote operations control center 416, the information is read
from a memory that is connected to the vehicle databus.
However, Progressive cites to other disclosure in the ’650 application,
which must be read in conjunction with the illustration in Figure 4.
Progressive cites (PO Resp. 35:5-7) to this descriptive text in the ’650
application: “An on-board computer 300 monitors and records various
sensors and operator actions to acquire the desired data for determining a
fair cost of insurance.” Ex. 2004, 11:9-11. That description indicates that
sensed vehicle data is stored in an onboard memory, as a part of the
operations for determining a fair cost of insurance. In that regard, the ’650
application describes the insurer, remote from the vehicle, as the entity
generating, on the basis of all the acquired data, a cost of insurance.
Ex. 2004, 19:20-20:6. Progressive also cites (PO Resp. 38:2-4) to this
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descriptive text in the ’650 application: “The unit of risk 200 is primarily
concerned with transferring three classes of data between it and the insurer.
The event data 500 and stored sensor data 502 have been discussed with
reference to FIG. 1.” Ex. 2004, 19:8-10. That description of data
transferred between the vehicle and the insurer as “stored sensor data”
indicates that the data sent to the insurer from the vehicle is, indeed, read
from a memory.
We have considered ¶¶ 75-82 of the declaration testimony of
Mr. Zatkovich (Ex. 2007), which cites to the same portions of the ’650
application discussed above, as well as Figure 5 of the ’650 application. The
testimony supports the position taken by Progressive, as discussed above.
We also have considered the declaration testimony of Mr. Andrews, in his
rebuttal declaration, which accompanied Liberty’s reply, specifically ¶¶ 49-
50 of that declaration. Ex. 1034. We are not persuaded by the testimony of
Mr. Andrews, because it does not address sufficiently the various portions of
the disclosure of the ’650 application relied on by Progressive, as we have
discussed above.
For example, Mr. Andrews states that Mr. Zatkovich provides no
support to show that the referenced “stored sensor data” in the ’650
application is the “selected vehicle data” required by claim 1. Ex. 1034
¶ 50. But Mr. Zatkovich does cite (Ex. 2007 ¶ 75) to this significant
disclosure of the ’650 application: “An on-board computer 300 monitors
and records various sensors and operator actions to acquire the desired data
for determining a fair cost of insurance.” Ex. 2004, 11:9-11.
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Mr. Andrews refers to Figure 1 of the ’650 application as not
disclosing the sending of recorded vehicle data to a distributed network and
a server. Ex. 1034 ¶ 50. But Figure 1 is a general flowchart only of the
“data capture process” performed “within the vehicle.” Ex. 2004, 14:27-29.
It does not purport to describe what happens after action performed by the
last action box in Figure 1, box 110, labeled as “Record Data.” What
Figure 1 discloses about trigger event processing that occurs prior to box
110, as explained by Mr. Andrews, is consistent with the testimony of
Mr. Zatkovich.
We also credit Mr. Zatkovich’s testimony over that of Mr. Andrews,
on whether the wireless transmission in the disclosure of the ’650
application is to a “distributed network and a server.” Mr. Zatkovich
identifies (Ex. 2007 ¶ 77) wireless communications link 418, disclosed in
the ’650 application as a cellular telephone, radio, or satellite system, as the
wireless transmitter, and explains (Ex. 2007 ¶ 81) that a cellular telephone
system is an example of a distributed network.
For the foregoing reasons, we determine that Progressive has shown
that there is written description in the ’650 application to support the
recitation in claim 1 of “a wireless transmitter configured to transfer the
selected vehicle data retained within the memory to a distributed network
and a server.”
With regard to the disclosure of the ’076 application, Progressive
explains, persuasively, that concerning the feature of “a wireless transmitter
configured to transfer the selected vehicle data retained within the memory
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to a distributed network and a server,” the disclosure of the ’076 application
“is nearly identical” to the relevant portions of the disclosure of the ’650
application. PO Resp. 57-58. With regard to this feature, Liberty does not
identify any pertinent, substantive difference between the two disclosures,
and does not make arguments apart from those discussed and rejected above
in the context of the ’650 application. Accordingly, we determine that
Progressive has shown that there is written description in the ’076
application to support the recitation in claim 1 of “a wireless transmitter
configured to transfer the selected vehicle data retained within the memory
to a distributed network and a server.”
2.
Claim 1 recites a server as the recipient of the wireless transmission of
selected vehicle data, and further requires (a) a database operatively linked
to the server to store the selected vehicle data transmitted by the wireless
transmitter, (b) where the server is configured to process selected vehicle
data that represents one or more aspects of operating the vehicle with data
that reflects how the selected vehicle data affects a premium of an insurance
policy, safety or level of risk, and (c) where the server is further configured
to generate a rating factor based on the selected vehicle data stored in the
database.
In pages 38-49 of its patent owner response, Progressive provides
detailed explanations, with citations to the record and to the supporting
testimony of Mr. Zatkovich and Mr. Miller, of why there is written
description in the disclosure of the ’650 application for each of the above-
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noted features concerning a server. With the exception of Progressive’s
contention on page 49 of the patent owner response that an actual calculated
amount of premium surcharge or discount constitutes a rating factor,
Progressive’s arguments are persuasive. An actual premium or surcharge is
not a “rating factor” as we have construed the term. A “rating factor”
reflects an associated level of risk and, therefore, a general level of premium,
but is not itself an amount of insurance premium, surcharge, or discount. It
is at least one step removed from an actual amount of insurance premium,
surcharge, or discount. Herein below, we focus on the arguments of Liberty
as presented in its reply, which are unpersuasive.
Fewer Figures and Columns
Liberty notes that the ’358 patent disclosure, as compared to the
disclosure of the ’650 application, contains nineteen more figures and
twenty-six more columns of text. Reply 14. However, that, in itself, does
not establish the specific material that was added. The additional material
may be drawn to the subject matter of claims 2-8 and 10-18, with respect to
which Progressive does not contend that it is entitled to the earlier filing date
of the ’650 application.
Generating a Rating Factor
Liberty correctly notes that claim 1 requires the generation by the
server of a “rating factor,” which is not yet the insurance premium. Reply
10. As explained above, however, the Board’s construction of “rating
factor” is the broadest reasonable construction. It is “a calculated insurance
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risk value such as a safety score or a usage discount,” with 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.”
Liberty argues that the disclosure of the ’650 application only refers to
insurance premium determination generally, and nowhere refers to the
calculation of a “rating factor.” Reply 10. That argument is unpersuasive.
Satisfaction of the written description requirement under 35 U.S.C. § 112,
first paragraph, does not require the description to be literally the same as
the claim language at issue. In re Wertheim, 541 F.2d 257, 265 (CCPA
1976); In re Lukach, 442 F.2d 967, 969 (CCPA 1971). Rather, by whatever
language, the specification only must convey with reasonable clarity to those
skilled in the art that, as of the filing date of the application, the inventor was
in possession of the claimed invention. Vas-Cath Inc., 935 F.2d at 1563-64.
Progressive identifies (PO Resp. 48) the following disclosure in the
’650 application: “The subject invention will base insurance charges with
regard to current material data representative of actual operating
characteristics to provide a classification rating of an operator or the unit in
an actuarial class which has vastly reduced rating error over conventional
insurance cost systems.” Ex. 2004, 6:15-18. That cited disclosure is
significant, as it reasonably conveys that the inventors were in possession of
basing the calculation of insurance charges on the rating of an operator in an
actuarial class. The general disclosure of calculating an insurance premium
is augmented by this disclosure that the calculation of insurance charges will
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be based on the placement of an operator into an actuarial class with a
corresponding rating.
Progressive further identifies (PO Resp. 48, n.3) the following
disclosure in the ’650 application: “It is another object of the present
invention to generate actuarial classes and operator profiles relative thereto
based upon actual driving characteristics of the vehicle and driver, as
represented by the monitored and recorded data elements for providing a
more knowledgeable, enhanced insurance rating precision.” Ex. 2004, 8:12-
15. That cited disclosure also is significant, because it also reasonably
conveys that the inventors were in possession of basing the calculation of
insurance charges on the rating of an operator in an actuarial class.
Citing the declaration testimony of Mr. Michael J. Miller (Ex. 2005
¶ 39), Progressive explains that an actuarial class inherently has associated
with it a rate factor and a risk factor. PO Resp. 48. Also citing the
declaration testimony of Mr. Miller (Ex. 2005 ¶ 39), Progressive explains
that use of an actuarial class within the context of insurance necessarily
involves generating and using a rating factor. PO Resp. 48. These
contentions are supported by the cited testimony of Mr. Miller.
Additionally, Mr. Miller refers to the above-noted portions of the disclosure
of the ’650 application, and concludes that the ’650 application inherently
discloses the generation of rating factors. Ex. 2005 ¶ 42. The testimony is
persuasive, because the cited portions of the disclosure of the ’650
application reasonably convey that insurance cost would be determined by
placing an insured in a corresponding actuarial class.
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Liberty argues that the disclosure of the ’650 application nowhere
explains how to calculate actuarial classes. Reply 11. However, it is well
established that a specification need not disclose what is well known in the
art. Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1385
(Fed. Cir. 1986); Lindemann Maschinenfabrik GMBH v. American Hoist &
Derrick Co., 730 F.2d 1452, 1463 (Fed. Cir. 1984).
Liberty contends that insurance costs may be determined based on
detected driving characteristics without necessarily generating a rating factor
prior to such determination. Reply 11. That contention is supported by the
declaration testimony of Ms. Mary L. O’Neil. Ex. 1032 ¶¶ 22, 24.
However, both Liberty’s contention and the cited testimony of Ms. O’Neil
are not on point. The pertinent issue that should be addressed by Liberty is
not the general one—whether insurance costs may be determined based on
detected driving characteristics without necessarily generating a rating factor
prior to such determination. Instead, it is the more specific one—whether
insurance costs determined by placing operators into actuarial classes
necessarily involve the generation of a rating factor. Accordingly, the
testimony in ¶¶ 22 and 24 of Ms. O’Neil’s declaration is inapposite, and
Liberty’s assertion is not persuasive.
Paragraph 23 of the declaration of Ms. O’Neil (Ex. 1032) is more
apposite but still unpersuasive. It is reproduced below:
23. In the absence of specific mention of the
calculation of rating factors, a POSITA could conclude that
direct calculation of insurance costs was intended by the ’650
patent application. For example, the ’650 application discloses
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types of roads driven as an example of monitored vehicle data.
If type of roads driven was utilized to identify two appropriate
actuarial classes, high risk and low risk, it would not be
necessary to generate rating factors in order to determine the
cost of insurance for each group. Instead each group could be
analyzed separately and an appropriate insurance cost could be
derived directly using standard actuarial ratemaking procedures,
e.g., using each group’s premium experience, claim loss
experience, and expense experience. The same concept would
apply to each of the examples of monitored data provided.
Hence, there would be no requirement to generate a rating
factor.

At the outset, it is noted that the portion of Liberty’s reply (Reply 11)
citing to ¶¶ 20-25 of the declaration of Ms. O’Neil does not make the
argument that determining insurance costs based on actuarial class does not
require the generation of rating factors. Rather, it simply states that
insurance costs may be determined based on detected driving characteristics
without necessarily generating a rating factor prior to the determination.
Thus, the specific contention in the above-quoted testimony regarding
determining insurance cost based on actuarial classes was not made by
Liberty and need not be addressed. Even considering the argument,
however, for reasons discussed below, we find the above-quoted testimony
unpersuasive.
The argument essentially is that one could determine a representative
claim loss experience for the group in an actuarial class, or a representative
expense experience for the group in an actuarial class, and then use those
values to determine the insurance cost for the operator, as though the values
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are the operator’s own values. However, we have construed “rating factor”
as a “calculated insurance risk value such as a safety score or a usage
discount,” and further clarified that “an insurance risk value would be a
value that reflects an associated level of insurance risk and, therefore, also a
corresponding insurance premium.” Given that meaning of “rating factor,”
which essentially is what Liberty proposed in its petition, the representative
and determined group experience in each actuarial class is itself a “rating
factor.” Therefore, even in the scenario described in ¶ 23 of the declaration
of Ms. O’Neil, rating factors still are generated for calculating the insurance
premium for an operator.
Remote Server Generating a Rating Factor
Liberty argues that, even assuming that a rating factor is generated,
the ’650 application does not necessarily disclose that it is generated at a
remote server, as is required by claim 1. Reply 11. The argument and the
supporting testimony of Mr. Andrews (Ex. 1034, ¶¶ 40-43, 45-48) are
unpersuasive, for reasons discussed below.
According to Liberty, the ’650 application discloses that
“charges/billing” algorithm “530,” “rating algorithms 522,” and “processing
logic” are developed by the insurer, but actually communicated to, and
located on, the on-board computer of each vehicle. Reply 11. In support of
that contention, Mr. Andrews cites (Ex. 1034 ¶ 47) to the following
statement in the ’650 application:

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An insurer can over time use the accumulated underwriting and
rating information from individual customers 520 to develop
improved rating algorithms 522. Such improved algorithms can
be regularly communicated to the units of risk 200 for
improved insurance cost computation accuracies. The
improved rating algorithms can be communicated 524 to the
units of risk on-board device 300 (FIG. 4).

Ex. 2004, 20:30-21:3. Mr. Andrews also cites (Ex. 1034 ¶ 47) to the part of
the disclosure of the ’650 application which indicates that certain specialized
data processing logic, necessary for acquiring specialized data from the
vehicle, can be transferred from the insurer to the unit of risk. Ex. 2004,
19:10-13.
We find Liberty’s argument and the supporting testimony of
Mr. Andrews to be unpersuasive because they narrowly focus on a small part
of the disclosure of the ’650 application, to the exclusion of all other parts
identified and discussed by Progressive and its expert witness. Based on
Liberty’s narrow focus, the cited portions of the disclosure of the ’650
application supplements the disclosures relied on by Progressive, rather than
contradict them. Nothing precludes the individual units of risk, i.e., the
vehicles, from also possessing the rating algorithms. Progressive has
presented persuasive evidence that insurance cost computation occurs at the
insurer, whether or not the rating algorithm also is communicated to
individual units of risk. For instance, Figure 5 of the ’650 application is
reproduced below:
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Figure 5 is a block diagram illustrating the operations performed on
acquired vehicle data, wherein unit of risk 200 designates an individual
vehicle. Ex. 2004, 9:16-17, 19:6-7. In connection with the operations
illustrated in Figure 5, the ’650 application describes that the insurer
receives sensor data 510, processes the raw data, and stores all relevant data
in storage device 518. Ex. 2004, 19:20-24. The ’650 application also
describes, while discussing operations at the insurer, that billing algorithm
530, shown in Figure 4 as located at the insurer, accesses the data stored in
storage device 518 to generate an insurance cost for the unit of risk.
Ex. 2004, 19:30-20:6. None of that is contradicted also by sending the
rating algorithm and specialized processing logic to the vehicle.
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We do not see Progressive as arguing that insurance premium
calculation inherently occurs at the insurer. Rather, it simply takes the
position that the ’650 application directly discloses insurance premium
calculation at the insurer. In that regard, Liberty points to three locations in
Progressive’s patent owner response where inherency is argued. Reply 12
(citing PO Resp. 39, 43, 48). But those arguments concern whether there is
a server at the insurer, whether the insurer’s storage unit provides a
searching function, and whether calculating insurance cost by use of
actuarial classes necessarily involves generation of a rating factor, not
whether insurance cost computation necessarily and inherently must be
performed at the insurer.
We also are not persuaded by Mr. Andrews’ testimony (Ex. 1034
¶ 46) that the ’650 application does not disclose that it is a “server” at the
insurer, which performs the calculation of insurance cost. According to
Mr. Andrews, a “server” is a processor, but a processor is not necessarily a
server. Ex. 1034 ¶ 46. Mr. Andrews cites to this dictionary definition of
“server” (Ex. 1036, 430): “a computer or program that responds to
commands from a client.” Ex. 1034 ¶ 46 (internal quotation marks omitted).
Mr. Andrews testifies: “Nowhere is there any description [in the ’650
application] that any charging and billing processes are requested by a client
device and are then served by a server.” Id. The contention is unpersuasive
for two reasons.
First, Mr. Andrews does not explain why a command must be explicit,
literal, or specific, and why it is not an implicit command to a computer
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simply to send it information, which is expected to trigger a series of
predetermined actions. The rule of broadest reasonable interpretation
applies in the construction of a “server.” Liberty does not explain why the
data transfer from the on-board computer to the insurer does not constitute
an implicit command for a computer at the insurer to take predetermined
actions based on that transferred data. Also, in that connection, a computer
need not be comprised of only a single processor. Liberty does not explain
why multiple processors in one system may not be regarded as a computer.
Second, even assuming that a server must respond to an explicit,
literal, and specific command from a client, claim 1 does not require that that
command be, specifically, an instruction to generate a rating factor or to
calculate an insurance premium. The command can be for any other action,
such as for a client to have access to stored information associated with the
client. The ’650 application describes: “Another important feature of the
subject invention illustrated in FIG. 5 is that the insurer provides a
Webserver 220 to allow a customer to access via Internet 218
communication, the relevant sensor data and event data associated with the
customer.” Ex. 2004, 20:7-9. Therefore, in any event, the customer does
send a command to the insurer, which then responds to the command. In
that regard, Progressive and its expert witness Mr. Zatkovich identify unit
208 in Figure 2 of the ’650 application as the “server.” PO Resp. 39:1-8;
Ex. 2007 ¶ 84. Unit 208 performs the rating, billing, and processing
functions of the insurer. Ex. 2007 ¶ 84. It also includes web server 220,
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which responds to user request to access stored information. Id. On that
basis, unit 208 qualifies as a “server.”
For the foregoing reasons, we determine that Progressive has shown
that there is written description in the disclosure of the ’650 application to
support the various limitations in claim 1 regarding the server and its
functionalities.
With regard to the claim features concerning server, as discussed
above in connection with the disclosure of the ’650 application, Progressive
explains, persuasively, that the disclosure of the ’076 application “contains
substantially similar disclosure” as that of the ’650 application. PO Resp.
58-61. With regard to the evidence relied on by Progressive, Liberty does
not identify any disclosure that is contained in the ’650 application
disclosure, but not the ’076 application disclosure. Furthermore, with regard
to the generation of a rating factor, Progressive identifies (PO Resp. 60-61)
additional disclosure in the ’076 application, including the following:
In the exemplary embodiment, the discount section 818
of the operational summary 814 indicates that a total discount
852 is based upon a calculation including an upload bonus 854,
a rating factor, such as a safety score 856 and a usage discount
858.

Ex. 2012, 32:23-25. Liberty does not refute specifically the additional
disclosures from the ’076 application, as cited by Progressive. Instead,
Liberty’s arguments pertaining to the ’076 application are essentially the
same as those discussed and rejected above in the context of the discussion
of the disclosure of the ’650 application.
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Accordingly, we determine that Progressive has shown that there is
written description in the ’076 application to support the various server
features required by claim 1.
3.
Claim 9 depends on claim 1 and recites “where the processor, the
memory, and the wireless transmitter are in communication within a portable
device.” Progressive identifies onboard computer 300 shown in Figure 3 of
the ’650 application as the portable device including the processor, the
memory, and the wireless transmitter. PO Resp. 50. Citing the testimony of
Mr. Zatkovich (Ex. 2007 ¶ 109), Progressive argues that onboard computer
300 is portable because (1) it is relatively small in size, as shown in Figure 3,
comparable to the size of a gas tank cover, and (2) the ’650 application
discloses that it employs plug-and-play type of connectors to connect to
other components. PO Resp. 50. The arguments are unpersuasive.
Patent drawings do not define the precise proportions of elements and
may not be relied on to show particular sizes if the specification is silent on
the issue. Hockerson-Halberstadt Inc. v. Avia Group, Int’l, Inc., 222 F.3d
951, 956 (Fed. Cir. 2000). The disclosure of the ’650 application is
otherwise silent on the issue of the size of unit 300. Also, small size of a
unit facilitates the unit’s portability, but does not require it. Progressive
does not discuss the benefits of small size to units which are not portable,
and does not represent that there is none. The same is true with respect to
the argument that onboard computer 300 uses plug-and-play type of
connectors. Using plug-and-play type of connectors facilitates the unit’s
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portability, but does not require it. Progressive does not discuss the benefits
of plug-and-play connectors in units which are not portable, and does not
represent that there is none.
Progressive further notes that in Figure 4 of the ’650 application,
onboard computer is labeled as “on-board data logging and/or
communication device.” PO Resp. 50 (emphasis and internal quotation
marks omitted). Citing the testimony of Mr. Zatkovich (Ex. 2007 ¶ 110),
Progressive asserts that the name discloses that the chipset for the wireless
transmitter is present within onboard computer 300. PO Resp. 50-51. The
argument, as well as the supporting testimony of Mr. Zatkovich, is not
persuasive for two reasons. First, the disclosure of the ’650 application itself
states: “The communications link to a central control station is
accomplished through the cellular telephone, radio, satellite or other wireless
communication system 314.” Ex. 2004, 11:20-22. As shown in Fig. 3 of the
’650 application, device 314 is external to onboard computer 300. Second,
the “communication” part of the name for unit 300, as shown in Fig. 4,
likely refers to communication with other onboard devices, and not with the
remote central control station. In that regard, note that the disclosure of the
’650 application states: “The computer 300 essentially communicates with a
number of on-board vehicle devices for acquisition of information
representative of various actual vehicle operating characteristics.” Ex. 2004,
11:28-30.
Accordingly, we determine that Progressive has not shown that there
is written description in the ’650 application to support the feature recited in
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claim 9 requiring a portable device containing the processor, the memory,
and the wireless transmitter.
With regard to the claim feature concerning portability of a device
containing the processor, the memory, and the wireless transmitter,
Progressive asserts, persuasively, that the disclosure of the ’076 application
“contains substantially similar disclosure” as that of the ’650 application.
PO Resp. 61. Progressive relies on the same arguments it asserted in the
context of the disclosure of the ’650 application, which we have determined
to be unpersuasive. Accordingly, we determine that Progressive has not
shown that there is written description in the ’076 application to support the
feature recited in claim 9 requiring a portable device containing the
processor, the memory, and the wireless transmitter.
4.
Claim 19 depends on claim 1 and further recites “where the server is
further configured to calculate an insured’s premium under the insured’s
insurance policy based on the rating factor, or a surcharge or a discount to
the insured’s premium, based on the rating factor.” Progressive provides
detailed explanations, with citations to the record and to the supporting
testimony of Mr. Zatkovich and Mr. Miller, of why there is written
description in the disclosures of the ’650 application and the ’076
application to support the above-quoted recitation of claim 19. PO Resp. 51-
52, 61-62. Progressive’s arguments are persuasive, and Liberty presents no
argument beyond those already discussed above in the discussion of claim 1.
Accordingly, we determine that Progressive has shown that there is written
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description in the ’650 application and the ’076 application to support the
above-quoted recitation of claim 19.
5.
Claim 20 depends on claim 1 and further recites “where the server is
further configured to process selected vehicle data that represents one or
more aspects of operating the vehicle with data that reflects how the selected
vehicle data affects an insured’s premium under an insured’s insurance
policy.” In pages 52-53 and 62-63 of its patent owner response, Progressive
provides detailed explanations, with citations to the record and to the
supporting testimony of Mr. Zatkovich and Mr. Miller, of why there is
written description in the disclosures of the ’650 application and the ’076
application to support the above-quoted recitation of claim 20. Progressive’s
arguments are persuasive, and Liberty presents no argument beyond those
already discussed above in the discussion of claim 1. Accordingly, we
determine that Progressive has shown that there is written description in the
’650 application and the ’076 application to support the above-quoted
recitation of claim 20.
E. Liberty’s Motion to Exclude Evidence
Liberty seeks to exclude certain declaration testimony of
Progressive’s expert witnesses Ivan Zatkovich (Ex. 2007 ¶¶ 10-149) and
Michael J. Miller (Ex. 2005 ¶ 15 and Ex. 2013 ¶¶ 2-5). Paper 55 (“Pet.
Mot.”) at 4. As the movant, Liberty has the burden of proof to establish that
it is entitled to the requested relief. 37 C.F.R. § 42.20(c).

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Citing to Rule 702 of the Federal Rules of Evidence (“Fed. R. Evid.”),
Liberty argues that Mr. Zatkovich 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.” Pet. Mot. 5.
Liberty also argues that, even as to the subject of telematics only,
Mr. Zatkovich’s qualifying experience must have been acquired as of the
date of invention of the ’358 Patent, e.g., the January 1996 filing date of the
earliest ancestral patent application in the chain of applications leading back
from the ’358 patent. Pet. Mot. 6.
We disagree that Mr. Zatkovich must be qualified both in the field of
insurance and in the field of vehicle telematics to give useful testimony in
this proceeding. It is only the “hypothetical” person of ordinary skill in the
art who possesses ordinary skill in each of the fields involved in a claimed
invention. The qualifications of Mr. Zatkovich, as summarized in his
curriculum vitae (Ex. 2008), qualifies him to give expert testimony on the
subject of vehicle telematics, computer systems, and network
communications. With regard to Mr. Zatkovich’s alleged lack of ordinary
skill on the specific subject of insurance, the Board weighs his testimony
accordingly, taking into account the limited extent of his expertise.
We also disagree that Mr. Zatkovich’s technical experience must have
been acquired prior to January 1996. Liberty cites no authority supporting
its position in that regard.
Liberty seeks to exclude ¶ 15 of Mr. Miller’s declaration (Ex. 2005)
and ¶¶ 2-5 of Mr. Miller’s supplemental declaration (Ex. 2013). Pet. Mot. 6-
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7. The basis of Liberty’s underlying objection is that, although Mr. Miller in
¶ 15 of his declaration (Ex. 2005) referred to a publication titled “Risk
Classification Statement of Principles,” published by the American
Academy of Actuaries in 1980, with which his testimony is allegedly
consistent, Progressive did not provide timely a copy of the publication to
Liberty. Instead, in response to Liberty’s objection, Progressive filed a
supplemental declaration of Mr. Miller (Ex. 2013), which in ¶¶ 2-5 indicates
(1) that Mr. Miller was a member of the American Academy of Actuaries
from 1975 to 2010, (2) that Exhibit 2012 in CBM2012-00002 is a true and
correct copy of a publication titled “Risk Classification Statement of
Principles,” published by the American Academy of Actuaries in 1980, (3)
that Exhibit 2012 in CBM2012-00002 is widely accepted and followed by
members of the actuarial profession, and (4) that Exhibit 2012 in CBM2012-
00002 is the same publication referred to in ¶ 15 of Mr. Miller’s declaration
(Ex. 2005).
Progressive ultimately filed a copy of the publication at issue, as
Exhibit 2018, together with its opposition to Liberty’s motion to exclude
evidence. Progressive should have served a copy of the publication at the
time it filed the patent owner response, or at the time it filed the
supplemental declaration of Mr. Miller, and not waited until the time of its
opposition to Liberty’s motion to exclude evidence. Under 37 C.F.R.
§ 41.51(b)(1)(i), “[u]nless previously served or otherwise by agreement of
the parties, any exhibit cited in a paper or in testimony must be served with
the citing paper or testimony.” The wording “previously served” in
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37 C.F.R. § 41.51(b)(1)(i) is construed to mean within the same proceeding
before the Board, and does not cover related proceedings.
Liberty does not dispute that prior to the filing of the patent owner
response, Progressive had served Liberty, in related proceeding CBM2012-
00002, a copy of Exhibit 2012 in CBM2012-00002. Liberty also does not
dispute that Exhibit 2012 in CBM2012-00002 is the publication referenced
in ¶ 15 of Mr. Miller’s declaration (Ex. 2005). Given that Progressive,
through the supplemental declaration of Mr. Miller, informed Liberty that
the publication at issue is the same as Exhibit 2012 in CBM2012-00002,
there is no prejudice to Liberty for not having been served, at the time of
Progressive’s patent owner response, with the publication. Under the
totality of these circumstances, and given that there is no pattern of repeated
violations of 37 C.F.R. § 41.51(b)(1)(i) by Progressive, we decline to
exclude the testimony of Mr. Miller.
Liberty’s Motion to Exclude Evidence is denied.
F. Progressive’s Motion to Exclude Evidence
Progressive seeks to exclude the reply declarations of Liberty’s
expert witnesses, i.e., Exhibit 1032, the reply declaration of Mary L. O’Neil,
and Exhibit 1034, the reply declaration of Scott Andrews. Paper 58 (“PO
Mot.”).
For reasons discussed below, the motion is denied.
Progressive asserts that the reply declarations of Ms. O’Neil and
Mr. Andrews are improper because they cite to evidence not relied on
originally in Liberty’s petition. According to Progressive, if Liberty wanted
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to rely on such evidence, it should have done so in its petition, and not
waited until the time of filing of Liberty’s reply. In that regard, Progressive
cites to 37 C.F.R. §§ 42.304(b)(4) and 42.304(b)(5), and asserts that a
petition to institute a covered business method patent review must be
accompanied by all of the evidence upon which the Petitioner relies in
challenging patentability. PO Mot. 2:3-5.
The mere fact that the reply declarations cite to evidence not
specifically referred to or discussed in Liberty’s petition is insufficient to
establish impropriety of such evidence, much less inadmissibility under the
Federal Rules of Evidence. The very nature of a reply is to respond to the
opposition, which in this case is the patent owner response. See 37 C.F.R.
§ 42.23(b). The need for relying on evidence not previously discussed in the
petition may not have existed until a certain point has been raised in the
patent owner response. Much depends on the specific arguments made in
the patent owner response.
For instance, if the patent owner response simply states that the
petition is lacking because it fails to address a certain claim limitation, then
it would be too late to address that limitation, for the first time, in the reply.
On the other hand, if the Patent Owner Response makes an argument that
reasonably could not have been anticipated by Petitioner, the Petitioner
properly may, as a part of its reply, rely on new evidence or cite to different
portions of the same prior art reference.
As the movant, Progressive has the burden of proof to establish that it
is entitled to the requested relief. 37 C.F.R. § 42.20(c). Here, notably,
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Progressive’s motion does not contain any meaningful discussion of the
arguments Progressive has made in its patent owner response, which
reasonably might or might not have triggered Liberty’s reliance on the
testimony Progressive now seeks to exclude. Without such an analysis,
Progressive has not shown that the reply declarations of Mary L. O’Neil and
Scott Andrews exceed the proper scope of reply evidence.
Progressive asserts that Liberty needs the evidence relied on in the
reply to make out a prima facie case for the petition. PO Mot. 2-3.
However, without meaningful explanation from Progressive, it is not
apparent to us, and we do not determine that to be the case. In that regard,
note that in the Decision on Institution, the Board determined that Liberty
had shown that it was more likely than not that it would prevail in showing
unpatentability of claims 1-20 of the ’358 patent.
Furthermore, while Progressive’s motion specifically discusses only
selected paragraphs of the reply declarations of Ms. O’Neil and
Mr. Andrews, it seeks to exclude the entirety of the reply declarations.
PO Mot. 2-4. That, in itself, is sufficient basis to deny the relief requested.
As the moving party, Progressive should ensure that the relief requested is
commensurate in scope with its substantive analysis and supporting
evidence.
Finally, Progressive cites to no authority applying the Federal Rules
of Evidence to the situation of a motion to exclude reply evidence allegedly
exceeding its proper scope. A motion to exclude evidence is not the vehicle
intended for resolution of such an issue. Note, for instance, that a motion to
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exclude evidence must identify where in the record an objection was
originally made. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756,
48,767 (Aug. 14, 2012). Progressive’s motion to exclude does not identify
where in the record an objection originally was made about the reply
declarations allegedly exceeding their proper scope.
Progressive’s Motion to Exclude Evidence denied.
III. CONCLUSION
Liberty has shown, by a preponderance of the evidence, that claims
2-18 of the ’358 patent are unpatentable based on each of the ground of
unpatentability on the basis of which this trial was instituted with respect to
claims 2-18, as listed below:

Claims Basis References
2 § 103 Nakagawa and Chang
3, 6, 7 § 103 Nakagawa and Stanifer
4 § 103 Nakagawa and Beaverton
5, 8 § 103 Nakagawa and Scapinakis
9 § 103 Nakagawa and Hunt
10, 11, 13-15 § 103 Nakagawa and Lowrey
12 § 103 Nakagawa, Lowrey, and Qualcomm MSM6500
16, 17, 18 § 103 Nakagawa and Bouchard

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IV. ORDER
In consideration of the foregoing, it is
ORDERED that claims 2-18 of the ’358 patent are CANCELLED;
FURTHER ORDERED that Liberty’s Motion to Exclude Evidence is
denied; and
FURTHER ORDERED that Progressive’s Motion to Exclude
Evidence is denied.

PETITIONER:

J. Steven Baughman
James R. Myers
Nicole M. Jantzi
Ropes & Gray
Email: steven.baughman@ropesgray.com
Email: james.myers@ropesgray.com
Email: nicole.jantzi@ropesgray.com

PATENT OWNER:

Calvin P. Griffith
James L. Wamsley, III
John V. Biernacki
Jones Day
Email: cpgriffith@jonesday.com
Email: jlwamsleyiii@jonesday.com
Email: jvbiernacki@jonesday.com