Progressive Casualty Insurance v. Liberty Mutual Liberty Mutual Insurance

NOTE: This disposition is nonprecedential.

United States Court of Appeals
for the Federal Circuit
______________________

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1466
______________________

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2012-
00002.
------------------------------------------------------------------

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1538
______________________
2 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2012-
00010.
------------------------------------------------------------------

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1549
______________________

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2013-
00002.
------------------------------------------------------------------

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1586
______________________

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2013-
00004.
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PROGRESSIVE CASUALTY v. LIBERTY MUTUAL 3

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Cross-Appellant
______________________

2014-1636, 2014-1637
______________________

Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in No.
CBM2012-00003.
-----------------------------------------------------------------

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1639
______________________

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2013-
00009.
-------------------------------------------------------------------

PROGRESSIVE CASUALTY INSURANCE CO.,
Appellant
4 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

v.

LIBERTY MUTUAL INSURANCE CO.,
Appellee
______________________

2014-1656
______________________

Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. CBM2012-
00004.
______________________

Decided: August 24, 2015
______________________

GARY M. ROPSKI and JAMES ROBERT SOBIERAJ, Brinks
Gilson & Lione, Chicago, IL, argued for appellant. Also
represented by CYNTHIA A. HOMAN, JAMES A. COLLINS,
LAURA A. LYDIGSEN, NICHOLAS ANTONIO RESTAURI, DAVID
LINDNER.

JAMES MYERS and DOUGLAS HALLWARD-DRIEMEIER,
Ropes & Gray LLP, Washington, DC, argued for appellee
and cross-appellant. Also represented by PAUL MICHAEL
SCHOENHARD, JON STEVEN BAUGHMAN, JORDAN ROSSEN,
JONATHAN ROBERT FERENCE-BURKE.

ROBERT J. MCMANUS, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA,
argued for intervenor Michelle K. Lee. Also represented
by SCOTT WEIDENFELLER, THOMAS W. KRAUSE, NATHAN K.
KELLEY.
______________________

Before PROST, Chief Judge, WALLACH, and TARANTO,
Circuit Judges.
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL 5

TARANTO, Circuit Judge.
Liberty Mutual Insurance Company initiated seven
overlapping proceedings against Progressive Casualty
Insurance Company in the Patent and Trademark Office,
challenging many claims of several of Progressive’s insur-
ance-related patents under the statutory program for
review of “covered business method” patents. See GTNX,
Inc. v. INTTRA, Inc., 789 F.3d 1309, 1310 (Fed. Cir. 2015)
(describing transitional program for review of such pa-
tents under 35 U.S.C. §§ 321–329, pursuant to the Leahy-
Smith America Invents Act, Pub. L. No. 112–29,
§ 18(a)(1), 125 Stat. 284, 329–31 (2011)). We now have
before us Progressive’s appeals from the Patent Trial and
Appeal Board’s final written decisions that many claims
are invalid over prior art. See 35 U.S.C. §§ 328, 329. We
affirm. We need not address Liberty’s cross-appeal in one
proceeding, because that cross-appeal concerns claims
held invalid in another proceeding whose result we affirm.
The claims at issue come from five patents: (1) claims
1–20 of U.S. Patent No. 8,140,358; (2) claims 1–78 of U.S.
Patent No. 8,090,598; (3) claims 1 and 3–18 of U.S. Patent
No. 6,064,970; (4) claims 1–46 of U.S. Patent No.
7,124,088; and (5) claims 1–9 and 13–59 of U.S. Patent
No. 7,877,269. The challenged claims of the ’358, ’598,
and ’970 patents relate to pricing automobile insurance
based on vehicle use, such as the number of sudden stops
over a given period. The challenged claims of the ’088 and
’269 patents relate to adjusting insurance policies online.
For oral argument, we organized the appeals from the
Board’s seven decisions into four (single-case or multi-
case) groups. We follow that grouping here and address a
subset of the many issues raised by the parties. We have
jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
6 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

A
The first group of appeals consists of Progressive’s 14-
1636 and 14-1639 appeals and Liberty’s 14-1637 cross-
appeal. The appeals are from two final written decisions
of the Board that address the ’358 patent. In CBM 2012-
3, 2014 WL 651401 (Feb. 11, 2014), the Board invalidated
all claims but 1, 19, and 20 for obviousness. In CBM
2013-9, 2014 WL 651402 (Feb. 11, 2014), the Board inval-
idated all claims of the ’358 patent for obviousness. As
Progressive and Liberty agreed at oral argument, Oral
Arg. (14-1336, -1337, -1339) at 13:30–14:40, the decision
in CBM 2012-3 need not be addressed if we affirm the
decision in CBM 2012-9—which we do.
As a preliminary matter, we reject Progressive’s ar-
gument that, under 35 U.S.C. § 325(e)(1), the Board was
estopped from entering its CBM 2013-9 decision. Section
325(e)(1) provides:
PROCEEDINGS BEFORE THE OFFICE.—The petitioner
in a post-grant review of a claim in a patent under
this chapter that results in a final written deci-
sion under section 328(a), or the real party in in-
terest or privy of the petitioner, may not request
or maintain a proceeding before the Office with
respect to that claim on any ground that the peti-
tioner raised or reasonably could have raised dur-
ing that post-grant review.
Progressive argues that § 325(e)(1) bars the Board’s entry
of its CBM 2013-9 decision because the Board posted that
decision to its electronic docketing system just over an
hour after, but the same day as, it posted the CBM 2012-3
decision.
There are two problems with Progressive’s contention.
First: § 325(e)(1) by its terms does not prohibit the Board
from reaching decisions. It limits only certain (requesting
or maintaining) actions by a petitioner. Nothing in the
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL 7

provision, or chapter 32 more generally, equates that
limitation on a petitioner with Board authority to enter a
decision. Cf. § 327(a) (Board may enter decision even
after petitioner settles and drops out of the proceeding).
Second: § 325(e)(1) does not say when a final decision
begins to have estoppel effect (on the petitioner). Here,
the Board stated in its two decisions that they were being
entered “concurrently.” CBM 2012-3, 2014 WL 651401, at
*2; CBM 2013-9, 2014 WL 651402, at *1. The Board
previously agreed to the parties’ joint request to “syn-
chronize the timelines in both trials” because the reviews
involved the same parties, the same patent, and overlap-
ping prior-art references. A8387 (14-1639 appeal). We
see nothing in the statute (or any regulation or other
source) that forecloses the Board’s treatment of the two
same-day decisions as simultaneous and therefore outside
§ 325(e)(1)’s scope, regardless of the precise times of
posting on an electronic docketing system. See also
§§ 325(d), 326(a)(4) (conferring authority on the PTO to
decide how to deal with multiple related proceedings).
On the merits, we conclude that the Board did not err
in invalidating all of the ’358 patent’s claims in CBM
2013-9. We address two of Progressive’s challenges to
that ruling—one procedural, the other substantive.
Progressive argues that the Board committed a proce-
dural error by relying, in its final written decision, on a
portion of Kosaka, a published Japanese patent applica-
tion (Jap. Pub. App. H4-182868), that neither Liberty’s
petition nor the Board’s institution decision had relied on.
Kosaka describes a device that determines insurance
premiums by evaluating risk in moving bodies. It de-
scribes an embodiment that uses fuzzy logic, and the
Board, in its institution decision, pointed to Kosaka’s
fuzzy-logic processor and memory as disclosing certain
limitations of Progressive’s patent claims. Progressive
responded in its patent-owner response that a relevant
8 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

skilled artisan would neither have experience with nor
understand fuzzy logic. The Board rejected the argument
in its final written decision, relying in part on Kosaka’s
statement that “ ‘determination [of risk evaluation values]
may be carried out without using fuzzy logic’ ” by using a
“ ‘common insurance table’ ” instead. A5036 (quoting
A5162) (14-1639 appeal). Neither Liberty’s petition nor
the Board’s institution decision had pointed to the insur-
ance-table passage of Kosaka; it was raised for the first
time, as teaching claim limitations, in Liberty’s post-
institution reply brief—after Progressive no longer had a
full opportunity to respond to it with evidence.
Liberty, along with the Director of the PTO, argues
that the Board’s reliance on the previously unmentioned
passage in Kosaka was not a “new ground of rejection”
because that label applies only in examination and reex-
amination. See 37 C.F.R. § 41.50(b); 37 C.F.R. § 41.77(b).
But the Administrative Procedure Act imposes its own
similar obligations on Board actions, including in covered
business method reviews. For example, 5 U.S.C.
§ 554(b)(3) requires that “[p]ersons entitled to notice of an
agency hearing shall be timely informed of . . . the mat-
ters of fact and law asserted”; § 554(c) requires that
agencies give “all interested parties opportunity for . . .
the submission and consideration of facts [and] argu-
ments . . . [and] hearing and decision on notice”; and
§ 556(d) “entitle[s]” a party “to submit rebuttal evidence.”
Indeed, § 554(b)(3) has been applied to mean that “an
agency may not change theories in midstream without
giving respondents reasonable notice of the change” and
“the opportunity to present argument under the new
theory.” Rodale Press, Inc. v. FTC, 407 F.2d 1252, 1256–
57 (D.C. Cir. 1968). The APA’s requirements may well
embody, in substance, the inquiry at the heart of the new-
grounds-of-rejection analysis: “whether applicants have
had fair opportunity to react to the thrust of the rejec-
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL 9

tion.” In re Biedermann, 733 F.3d 329, 337 (Fed. Cir.
2013) (internal quotation marks and citation omitted).
We need not pursue the legal analysis to a conclusion,
even if Progressive has a substantial argument that the
Board—by relying on a factual assertion about the teach-
ing of a passage of Kosaka that Progressive had no oppor-
tunity to respond to—committed a notice error. If there
was error, it was harmless. The Board did not rely solely
on the insurance-table passage of Kosaka. It inde-
pendently rejected Progressive’s lack-of-knowledge argu-
ment, making a determination supported by the evidence
that a relevant skilled artisan would have understood
fuzzy logic. In light of the independent ground, any error
regarding the insurance-table passage in Kosaka did not
affect the outcome.
Progressive also attacks the substance of the Board’s
obviousness conclusion, which was based on Kosaka and
an informational booklet by the Geostar Corporation
called Understanding Radio Determination Satellite
Service (RDSS). Specifically, Progressive argues that the
Board lacked evidence to find, and did not adequately
articulate, a motivation for a relevant skilled artisan to
combine the two references. Motivation to combine is a
question of fact that we review for substantial evidence.
In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000).
The Board’s affirmative explanation for its finding of
a motivation to combine is cursory. It consists of a single-
paragraph recitation of three points from Liberty’s peti-
tion, some not even addressing motivation to combine,
followed by the Board’s declaration of agreement. The
Board’s affirmative treatment would have benefited from
elaboration to display the needed effort to place itself into
the mindset of the hypothetical person of ordinary skill in
the art considering prior-art knowledge without hindsight
use of the patent claims as a guide.
10 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

Nevertheless, the Board’s findings make its rationale
clear, and the brief citations to the record accompanying
the enumeration of Liberty’s points provide substantial
evidence to support that rationale in the present setting.
In particular, the Board found that a relevant skilled
artisan would have understood the benefits of the RDSS
model (using a central terminal for resource-intensive
computing) for use in an insurance system. CBM 2013-9,
2014 WL 651402, at *13. The Board adequately support-
ed this proposition with a declaration from Liberty’s
expert Scott Andrews, which stated that a relevant skilled
artisan would realize that “various components of Kosaka
. . . could be advantageously implemented at a remote
central computer system/server of the insurer” because
“processing at a central computing system” would allow
one to “tak[e] advantage of, e.g., larger storage capacity,
centralized collections of data involving multiple custom-
ers, and faster and more sophisticated computing capabil-
ities.” A7846–47 at ¶¶ 37–38 (14-1639 appeal). We have
been presented no persuasive reason to conclude that the
Andrews evidence is insufficient to support the Board’s
finding here.
B
Progressive’s appeal in 14-1586 challenges the Board’s
determination in CBM 2013-4, 2014 WL 1252839 (Mar.
13, 2014), that all claims of the ’598 patent are anticipat-
ed by at least one piece of prior art (with some claims also
held to claim matter that is unpatentable because of
obviousness). Progressive’s chief argument seeks to
antedate the prior art based on the contention that the
’598 patent is entitled to the benefit of the earlier priority
date of its immediate parent application, U.S. Patent
Application No. 09/571,650. The Board rejected that
contention, finding that the “interface module” required
by all claims of the ’598 patent lacks written-description
support in the ’650 application.
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL
11

The correctness of the written-description finding is
the only issue raised by Progressive that warrants discus-
sion—which can be brief. The adequacy of a written
description is a question of fact, and we review the
Board’s finding for substantial evidence. Noelle v. Leder-
man, 355 F.3d 1343, 1348 (Fed. Cir. 2004). Substantial
evidence is present here.
All claims require that the interface module produce
either a “driver safety score” or “driver safety data.” See,
e.g., ’598 patent, col. 28, lines 44–49. The Board con-
strued “driver safety score” as “a calculated insurance risk
value associated with driver safety”; it construed “driver
safety data” as “encompassing ‘driver safety score’ and
other data associated with driver safety.” CBM 2013-4,
2014 WL 1252839, at *7. In either case, Progressive
shows only that the ’650 application discloses an interface
module that calculates insurance premiums and that this
calculation is based on “rating factors,” which might be of
a variety of types, not merely factors based on safety.
Progressive fails to show error in the Board’s finding that
the ’650 application does not disclose an interface module
producing a “driver safety score” or “driver safety data,”
which are particular examples of possible “rating fac-
tors”—examples not described in the ’650 application.
Progressive’s overarching argument is that a “rating
factor” is a type of “driver safety score” or “driver safety
data.” But as the Board found, that gets matters back-
wards: a “rating factor” is broader than the two claim
terms. Id. at *7, *15. The ’598 patent’s own written
description refers to “a total discount [that] is based upon
a calculation including . . . a rating factor, such as a safety
score,” ’598 patent, col. 22, lines 19–21, with other exam-
ples of “rating factors” including “a daytime mileage
adjustment, a nighttime mileage adjustment and a high
risk mileage adjustment,” id., col. 23, lines 11–13. Sub-
stantial evidence supports the notion that these latter
examples are not associated with driver safety, as “mile-
12 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

age” suggests that they track risk levels based on a vehi-
cle’s amount of use independent of how safely one drives.
In short, the ’650 application’s disclosure of a component
producing a rating factor does not, without more, imply
disclosure of the particular types of rating factor required
by the ’589 patent’s claims—namely, a driver safety score
or driver safety data. And Progressive has pointed to no
other disclosures that might suffice; in particular, Pro-
gressive acknowledged at oral argument that it was not
contending that the “estimated cost” disclosed in the ’650
application is a driver safety score or driver safety data.
Oral Arg. (14-1586 appeal) at 41:14–42:08; see also CBM
2013-4, 2014 WL 1252839, at *15 (“There is no dispute
that an insurance cost is not a driver safety score.”).
We conclude that substantial evidence supports the
Board’s written-description-based determination that the
’598 patent is not entitled to the ’650 application’s priority
date. Progressive has raised no other significant chal-
lenge to the CBM 2013-4 decision, which we affirm.
C
Progressive’s appeals in 14-1466 and 14-1656 chal-
lenge the Board’s invalidations, for obviousness, of all
claims of the ’970 patent. In CBM 2012-2, 109 U.S.P.Q.2d
1833 (Jan. 23, 2014), the Board invalidated all claims but
7 and 8. In CBM 2012-4, 2014 WL 2213411 (Jan. 23,
2014), the Board invalidated all claims without exception.
Progressive raises only two issues that warrant dis-
cussion. Our discussion of one, a notice-error challenge
involving the insurance-table portion of Kosaka, can be
limited to the observation that the notice-error challenge
here is not meaningfully different from the notice-error
challenge raised in Progressive’s 14-1639 appeal. In Part
A, supra, we have rejected the challenge in that appeal.
We do so in the present appeals too.
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL
13

What remains is Progressive’s challenge to the Board
finding of a motivation to combine certain references—
some focused on vehicle-use monitoring but not premium
determination, others focused on premium determination
but not vehicle-use monitoring. The Board relied on the
finding that the prior-art Florida Guide, a 1988 shoppers’
guide for automobile insurance in Florida, taught that
insurers were required to generate insured profiles in
issuing policies. That rationale is incomplete in isolation,
and the Board did not set forth in one place the totality of
its rationale for finding a motivation to combine. Never-
theless, although the Board’s full rationale must be pieced
together through a reading of the Board’s full decisions at
issue, the Board’s findings make its rationale clear, and
substantial evidence supports that rationale. In particu-
lar, the Board made two key findings that, when put
together, provide sufficient reason to combine the refer-
ences at issue.
First, the Board reasonably found that a relevant
skilled artisan would have had knowledge of basic actuar-
ial principles, standards, and practices, which, crucially,
aim to determine insurance premiums based on an accu-
rate assessment of risk. See, e.g., CBM 2012-2, 109
U.S.P.Q.2d 1833, at *11, *15–16, *22–23. For example,
the Board relied on portions of the Florida Guide and
declarations from Liberty’s expert Mary O’Neil. The
passages relied on show that insurers set insurance
premiums at prices commensurate with projected risk (in
part to comply with nondiscrimination laws). E.g., id. at
*10, *13–14, *21–23; see also A164–68 (Florida Guide);
A3564–65 at ¶¶ 20–22, A3567–68 at ¶ 26 (Ms. O’Neil’s
original declaration); A4538–41 at ¶¶ 8–13 (Ms. O’Neil’s
rebuttal declaration). Thus, as the Board recognized, a
relevant skilled artisan would have been motivated to
develop more reliable methods for creating and applying
actuarial classes, see CBM 2012-2, 109 U.S.P.Q.2d 1833,
at *27–28—something consistent with both Kosaka and
14 PROGRESSIVE CASUALTY v. LIBERTY MUTUAL

the ’970 patent itself. A121 (-1466 appeal) (Kosaka identi-
fying, as a problem to be solved, that insurance systems
“do not consider the role of the insurance agreement
customer’s environment and movements in governing risk
levels”); ’970 patent, col. 2, lines 47–51 (“[T]he limited
amount of accumulated relevant data and its minimal
evidential value towards computation of a fair cost of
insurance has generated a long-felt need for an improved
system.”).
Second, the Board reasonably found that a relevant
skilled artisan would have had familiarity with the idea of
use-based insurance, as, among other things, the ’970
patent itself acknowledges that it had “ ‘been suggested to
detect and record seatbelt usage to assist in determina-
tion of the vehicle insurance costs.’ ” ’970 patent, col. 2,
line 66 through col. 3, line 2; CBM 2012-2, 109 U.S.P.Q.2d
1833, at *11 (citing this part of the ’970 patent); id. at *20
(citing the same). References directly and indirectly
related to insurance confirm such knowledge. See, e.g.,
A120 (14-1466 appeal) (Kosaka); A146 (14-1466 appeal)
(Black Magic); A149 (14-1466 appeal) (Herrod); A7135
(14-1656 appeal) (Pettersen).
Therefore, because a relevant skilled artisan would
have been motivated to make insurance determinations
more accurate and would have known of at least some
use-based actuarial methods, he or she would have been
motivated to look at use-monitoring methods in other
safety-related contexts to see what else might yield help-
ful actuarial data. The Board did not clearly state this
rationale in any single portion of its decisions. But see
CBM 2012-2, 109 U.S.P.Q.2d 1833, at *10–11, *27–28;
CBM 2012-4, 2014 WL 2213411, at *10–11, *20. Never-
theless, the rationale is apparent when the decisions are
read as a whole. Because substantial evidence supports
this motivation-to-combine rationale, we affirm the
Board’s CBM 2012-2 and CBM 2012-4 decisions.
PROGRESSIVE CASUALTY v. LIBERTY MUTUAL
15

D
Progressive’s 14-1538 and 14-1549 appeals challenge
the Board’s invalidations, for obviousness, of all claims of
the ’088 and ’269 patents in CBM 2012-10, 2014 WL
869413 (Feb. 24, 2014), and CBM 2013-2, 2014 WL
824373 (Feb. 24, 2014), respectively. We have fully con-
sidered Progressive’s arguments and find them unpersua-
sive. We affirm the Board’s decisions without further
discussion.
CONCLUSION
For the foregoing reasons, the judgments of the Board
are affirmed.
No costs.
AFFIRMED