Scott Daniels | January 28, 2013
One of the new post-issuance proceedings created by the America Invents Act involves “covered business method” (CBM) patents. The AIA authorizes a party to challenge the validity of such a patent, according to the procedures created by the AIA for post-grant review proceedings. On Friday, in Liberty-Mutual v. Progressive Cas. Ins. Co., CBM2012-00002, the APJs addressed the issue of whether the challenged patent was an eligible CBM patent.
Section 18(d)(1) of the AIA defines a CBM patent as one
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.
(Emphasis added). The PTO’s implementing rules provide guidance on what the AIA means by the “technological inventions” exception.
In determining whether a patent is for a technological invention . . . , the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.
(37 CFR § 42.301(b)).
Claim 4 of the patent in issue was identified by the APJs as being representative. It recites:
A method of insuring a vehicle operator for a selected period based upon operator driving characteristics during the period, comprising, steps of:
generating an initial operator profile;
monitoring operator driving characteristics during the selected period; and
deciding a cost of vehicle insurance for the period based upon the operating characteristics monitored in that period.
In its filings, Petitioner Liberty-Mutual argued that the patent was eligible for CBM review for the following reasons:
- The patent relates to “administration of an insurance policy to adjust insurance premiums based on monitored vehicle data.”
- The patent claims do not recite a “technological invention.”
- The prosecution history of the patent shows that there was no technical feature that was novel and non-obvious.
- The subject matter of the claims as a whole solves a technical problem.
The Patent Owner Progressive replied:
- The claimed invention was similar to a credit card reader which is identified in the PTO Guidelines as an example of subject matter not eligible for CBM review.
- The claimed invention included physical sensors.
- Technical features of the claimed invention were relied upon by the examiner in an earlier reexamination as a basis for confirming patentability of the claims.
- The claimed invention is a technical solution to a technical problem – a sensor obtains actual monitoring data, overcoming the problem that such data had not previously existed.
The APJs sided with Petitioner Liberty-Mutual. They pointed out that sensors are disclosed in the specification, but not recited in the claims. In fact, the claims recite only method steps.
Also, the claims do not include a specific novel and non-obvious technical element. Progressive’s reference to the earlier reexamination did not support its argument because the examiner had not, in fact, relied on any technical feature to confirm patentability of the claims.
Finally, the APJs found that no technical problem had been solved by the claimed method. “Determining a cost of vehicle insurance is a financial problem rather than a technical problem.”
Having rejected Progressive’s CMB review eligibility arguments, the APJs went on to consider the prior art references asserted by Liberty-Mutual and decided to institute review.