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

In the final written decision of the second covered business method (CBM) patent review, the Patent Trial and Appeals Board (PTAB) cancelled all claims under review, noting that instituting a CBM review based on a patent-eligible subject matter challenge is an all-or-nothing proposition; as long as the subject matter of at least one claim is directed to a covered business method, then all of the claims of the patent are eligible for covered business method patent review.  Liberty Mutual Insurance Co. v. Progressive Casualty Insurance Co., Case CBM2012-00002 (PTAB, Jan. 23, 2014) (Lee, APJ).

Petitioner Liberty Mutual filed for CBM review of a patent, which Progressive asserted against Liberty Mutual in a district court action. The invention relates to a method of determining a premium for automobile insurance based on data concerning a vehicle’s monitored operational characteristics and also the driver’s monitored driving characteristics—and allegedly provides a more fair and precise way to determine the premium.

After institution of the proceeding, Progressive argued that the Board exceeded its statutory authority, urging that the decision should have been made on a claim-by-claim basis. Progressive argued that “[a]n analysis of one claim in a patent sheds no light on whether any other claim in the patent is directed to a covered business method.”

In the final written decision, the Board disagreed with Progressive’s claim-by-claim argument for CBM review, explaining that it erroneously equated the word “patent” in the authorizing statue to “claim.” Analyzing the relevant portion of Section 18(d)(1) of the America Invents Act (AIA), the Board explained that the statute defines the term “covered business method” to mean “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.”  The Board reasoned that Congress would have used the term “claim” if it had indeed intended that CBM review was to be conducted on a claim-by-claim basis.  The Board also noted that nothing in the legislative history of the AIA or other parts of the AIA required it to deviate from the plain meaning of the language of Section 18(d)(1) and that Progressive had not identified any statutory provision or legislative history that mandated that each claim subject to CBM review must meet the statutory test for a covered business method claim.

Practitioner Note:  Because CBM review is “all or nothing” and hinges on the character of just a single claim, petitioners may be able to overcome time-bar issues for inter partes review (IPR) under Section 315(b) by characterizing the most favorable claim in a target patent as a covered business method. CBM review also admits additional grounds of challenge as compared to IPR, such as ineligible subject matter, lack of written description and enablement.