It’s quite a challenge to get a business method patent through the European Patent Office.  Whether or not it’s worthwhile depends upon how important your idea is.

Europe doesn’t like business method patents.  In fact, it’s written right in their rules that business methods “as such” are not patentable (Article 52, European patent convention).  A quick search of issued European patents reveals only 12 examples specifically related to insurance business methods (i.e. they had the word “insurance” in their claims).  This is substantially less that the 400 or so issued US patents that fall into the same category.  Getting a European patent on an insurance related invention is clearly a tough proposition.

But it is not an impossible one. 

The key to getting an insurance patent in Europe is to forget about the insurance product and focus on the technology required to bring the product to market.  The technology alone must be inventive.  If you invent a new way to calculate a premium, for example, then you must show that some sort of inventive technology is required to carry out the calculation. 

Telematic auto insurance is a new way to calculate a premium that is patented in Europe (Method And System For Individual Evaluation Of Motor Vehicle Risk, EP700009B1).  Telematic auto insurance calculates premiums by directly measuring driving behavior in a car.  The method for calculating premiums was found to be patentable because the apparatus used to measure driving behavior (e. g. sensors mounted in a car) was a technological invention.

Those who have been following the development of telematic auto insurance may be surprised to learn that the assignee of the European patent, Salvador Minguijon Perez, is not the same as the assignee of the US patents, Progressive Auto Insurance.  Both Progressive and Sr. Perez independently invented their own versions of telematic auto insurance and filed their respective patent applications in Europe and the  US at about the same time.  Sr. Perez, however, beat Progressive by five months.  Hence, according to the European “first to file” rules, Sr. Perez’s application “has priority” over Progressive’s and Sr. Perez gets the European patent.  This is not to say that Progressive can’t get their own telematic auto insurance patents in Europe, but their patents will only be able to cover aspects of the invention that are not already disclosed in Sr. Perez’s patent.  Progressive does have patents on telematic auto insurance process in the U.S.

Both inventors have been able to license their patents and patent applications.  The licensee is Norwich Union.  Norwich Union is an English insurance company that has invested considerable sums of money in developing a commercial version of telematic auto insurance called Pay as You Drive ™.  By taking licenses to both inventors’ intellectual property, Norwich Union has made sure that neither will cause problems in their commercialization efforts.  Some of the licenses, particularly those covering England, are exclusive.  This means that in addition to securing their “freedom to practice”, Norwich has effectively excluded unlicensed competition from England and thus created sustainable competitive advantage that could last for years. 

It is much more difficult to get patents on insurance related inventions in Europe than it is in the US.  At least some aspect of an invention must be technological in nature.  If the idea is important enough, however, getting a European patent can bring substantial returns to not only an inventor, but to his/her licensees as well.  Inventors can earn a reasonable royalty in exchange for publicly disclosing how to make and use their inventions.  Insurance companies that take a license can create sustainable competitive advantage in the marketplace.