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Insurance
IP Bulletin
An Information Bulletin on
Intellectual Property activities in the insurance
industry
A Publication of - Tom Bakos Consulting, Inc. and Markets, Patents and Alliances, LLC |
October 15, 2005 VOL: 2005.5 |
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Publisher Contacts
Tom Bakos: (970) 626-3049
tbakos@BakosEnterprises.com
Markets, Patents and Alliances, LLC
Mark Nowotarski: (203) 975-7678
MNowotarski@MarketsandPatents.com
Introduction
In this issue we address the issue of “utility” as it relates to insurance and financial services type business method patents in our Feature Article “Will it Fly?”.
This ties directly to our sidebar comment on the recent In Re Lundgren decision by the USPTO board of appeals. This decision removes the requirement that inventions must be in the “technological arts” (e.g. run on a computer) in order to be patentable. It may open the door, at least a crack, to the possibility of directly patenting new insurance products.
We also point you to some free resources for doing patent research which are surprisingly useful.
In the Statistics section we point out that Class 705/4 (insurance business methods) already has more patents issued through 10/11/05 (24) as in all of last year (23). And, it is apparent that patent activity in all of class 705 is ramping up.
Enjoy the issue. Please let us know if you have any questions.
Our mission is to provide our readers with useful information on how intellectual property in the insurance industry can be and is being protected – primarily through the use of patents. We will provide a forum in which insurance IP leaders can share the challenges they have faced and the solutions they have developed for incorporating patents into their corporate culture.
Please use the FEEDBACK link above to provide us with your comments or suggestions. Use QUESTIONS for any inquiries. To be added to the Insurance IP Bulletin e-mail distribution list, click on ADD ME. To be removed from our distribution list, click on REMOVE ME.
Thanks,
Feature Article
Will
it Fly?
By:
In the spring of 1903, two independent inventors, Orville and Wilbur Wright, filed a patent application on a revolutionary technology for controlling a flying machine. In that application they included pictures of Orville flying it[1].
The reason they provided pictures was to show the patent
office that the invention actually worked.
At that time the
The requirement that an inventor be able to show that their patent pending invention works is part of what is called the “utility requirement” (i.e. 35 U.S.C. 101). Inventors are rarely called upon make this demonstration, but if the examiner requires it, they have to in order to get a patent.
Demonstrating the utility of a physical invention is straightforward. Follow the directions given in the patent, build it, and try it. If one works, they all work. It doesn’t matter who makes it, as long as there is sufficient guidance in the patent application for someone of “ordinary skill in the art” to reproduce the invention.
Remember that patentable subject matter falls into one of four broad categories: machine, article of manufacture, composition of matter, or process. The first three have obvious physical manifestations and, therefore, if required, the “build it and try it” approach can be used to satisfy a utility requirement. Most process inventions involve physical steps (for example, the steps of combining materials) in order to produce a useful result (a new compound material). Thus, a patent can be granted not only for the new composition of matter but for the process used to create it as well. The usefulness of the process is easily determined because it produces a measurable result – the new compound. However, even if it were a new process used to produce an old compound, it might still be patentable since the measure of the usefulness of the process would rely on the fact that it produced the compound – not that the compound was new. But, underlying all of this is the additional requirement that in order for a new process to be patentable the result produced by the process must also be useful in that it provides a practical benefit or helps people complete real world tasks. In patent-speak, it must produce a “concrete, useful and tangible result”.
An important distinction to have in mind throughout this discussion is that “usefulness” is not equivalent to “value”, “commercial value”, or “commercial success”. So, a process is “useful”, for example, if it produces a useful compound, even if the process itself or the compound it produces is not a commercial success.
We realize that the concept of “utility” is a difficult one to describe and understand because the common everyday meanings of the words used are often not applicable in exactly the same way in a patent examination. Patent examination is a process with its own field of art. It takes education and experience to apply it even to the level of “ordinary skill”. With that said, it is with trepidation that we embark on a discussion of “utility” in the field of insurance business method patents. But, we will do our best and hope to encourage comments, suggestions, and questions from our readers.
Evaluating the “utility” of an insurance business method process invention is made difficult by the fact that the ultimate result of the application of the insurance business method is the transfer of the financial consequences of a contingent event from one entity (the insured) to another entity (the insurer) for a premium. Very basically, that “transfer” has some physical manifestations. Broadly, insurance is itself a business method process. However, the time has long since passed when a patent on the basic insurance process could be had. Rather, the insurance business method patents being filed today relate to parts of the insurance business.
A contingent event is a key component of any insurance process. A contingent event is an event which is uncertain with respect to its occurrence, timing, or severity. What makes the concept of “utility” difficult to evaluate is, precisely, this uncertainty in the insurance process. While the “uncertainty” relates to individual insureds, insurance products relate to a multiple of insureds. In this way an insurance company can spread or manage the financial consequences of the risk experienced by each individual. Therefore, it would seem that the “utility” of insurance product inventions, in general, needs to consider the usefulness or practical benefit enjoyed by a multiplicity of insureds not the usefulness relative to any one particular insured.
With respect to any individual, insurance is “useful” in the sense that it stands ready to offset a financial loss created by the actual occurrence of a contingent event by the payment of a benefit amount. That is, if you have automobile collision coverage and never have a crash, you will never have a claim under your policy. In retrospect, you might think you didn’t need the coverage and it didn’t work. On the other hand, if you did have a crash, you would have received a benefit, effectively transferring the financial consequences of your crash to the insurance company. So, is insurance only useful when you need it? Many people think that way. Those of us in the insurance business do not.
Many improvements on the insurance process are being patented. These take the form of what might be called sub-process business methods which address issues in underwriting selection, administration, premium calculation, claims processing, risk definition, and many other aspects of insurance. All are designed to make these insurance processes better in some way, such as faster, cheaper, more effective, more efficient, broader, etc. The true test, of course, of usefulness would involve a demonstration that the alleged result (e.g. faster, cheaper, …) was actually achieved as this would mean the process had a practical benefit with respect to some real world task.
The utility requirement poses a challenge to those who would like to see patents granted directly on new insurance products instead of just on the technological inventions, such as novel computer systems, that enable them. Demonstrating that a new insurance product is useful and, therefore, works is a very different task than demonstrating that a technological invention works.
Essentially, for something to work it must do what it was intended to do and what it was intended to do must be useful, that is, have some practical value. Since, at the moment, insurance “product” claims are generally not allowed by the USPTO, any discussion of how to demonstrate an insurance “product” works is academic. We’ll work ourselves back into this discussion should it ever look like insurance product claims may become a reality. (See sidebar on the recent In Re Lundgren decision)
However, one final point on this before we go.
Whether or not an insurance product works (meaning here the broad sense of doing what it was intended to do) can be a function of whether or not it is patented. Consider the recent test of “free” auto insurance run by Creative Innovators Associates in association with VW and Nationwide.
Creative Innovators Associates invented a new type of insurance product that allowed VW to provide one year of free auto insurance to anyone who bought particular models of their cars in a given test market. Creative Innovators Associates has a patent pending on the underwriting process that allows VW to offer the product. Until the patent issues, they are keeping the process secret. Hence they can offer the insurance product exclusively to VW. Nationwide underwrote the insurance and VW paid the one year premium out of the extra profit they made in selling more cars. They sold more cars because they were the only ones that could offer the free insurance due to their exclusive license.
Without a patent, other car companies would eventually figure out the underwriting process and be able to offer free insurance as well. Once enough companies offer it, the relative advantage will disappear, the increased car sales to any one manufacturer will disappear, car companies will no longer be able to pay for the insurance, and the “free” insurance product will no longer work. With a patent, however, Creative Innovators Associates can enforce exclusivity even after others figure out how to underwrite it and, hence the “free” insurance product will continue to work for them.
In order to get a patent, an inventor must at least theoretically be able to show that their invention works. With physical inventions, this merely involves producing at least one working example. With insurance inventions, however, “working” involves a very large number of individual instances of the product “working” together to produce a concrete, useful, and tangible result. This is due to the uncertain nature of the contingent events at the core of every insurance product which makes actual demonstrations of utility problematic. One of the challenges facing those that would like to directly patent new insurance products is finding a practical way to demonstrate that their new products actually fly.
In Re Lundgren
A major barrier to the possibility of directly patenting new
insurance products in the
The USPTO board of appeals has recently published a
decision, In Re
Lundgren, where they have clearly said that inventions (in the
The decision is “precedential” which means that patent examiners have to follow it. The examiner corps is now drafting new examination guidelines that will enforce the decision.
The immediate effect of this decision is that we no longer
have to say that a given insurance process is carried out by technological
means, such as a computer, in order for it to be patentable in the
The longer term effects of this decision, however, could be much more profound. It opens the door to patenting inventions that are in what is now considered to be non-technological arts. While much of what is being done in the insurance industry (and financial services industry) today involves technology in that it is carried out on a computer, the added ability to seek patent protection on the non-technological arts include in most of what the insurance industry does, such as underwriting methodologies and actuarial science, can add increased breadth to the patent protection provided.
It remains to be seen just how much the door will be opened, but at the very least, this decision increases the likelihood of being able to get more and better patent coverage for innovations in insurance and the financial services industry, in general.
Patent Search
A New (Free) Patent Search Tool
http://www.freepatentsonline.com/ is a new patent search tool where you can search and download patents images for free. The search engine is fairly powerful, but the collection is limited compared to what’s available on paid sites (e.g. www.delphion.com).
Freepatentsonline has only US and European patents available. Japanese patent are promised soon. No word yet on when PCT applications will be available.
This site may give paid sites a run for their money when their collection expands. For those on a budget, however, it’s a good place to start. We have added it to our links.
Track
the Progress of Pending
http://portal.uspto.gov/external/portal/pair
lets you look over the shoulder of the patent examiner as a pending
One word of caution, the site can be a little quirky. For example, if you have Norton Internet Security, you will have to shut it off or you won’t get any response from the site. We have added this site to our links although you can get there by clicking through from the USPTO home page.
Patent Q & A
Who gets the patent?
Question: If I make an invention as part of my job, who owns the patent, me or my employer?
Disclaimer: Patents are property. Questions of property ownership rights are
legal questions. The answer below,
therefore, is a discussion of typical practices and is not to be construed as
legal advice of any kind. Readers are
encouraged to consult with qualified counsel to answer their personal legal
questions.
Answer: In the United States1 under current law2 only natural persons can apply for patents. All of the persons who are listed as inventors on a patent are the initial owners of the patent. When an invention is made on behalf of an employer and as part of a person’s job, however, the employer typically files and pays for the patent application and the employee assigns their ownership rights to their employer. The employer then becomes the owner of the patent.
Occasionally an employee will not assign their ownership rights to their employer. This can happen, for example, when an employee leaves a corporation before an application is filed. If the former employee does not want to assign his or her ownership rights, then both sides may find themselves involved in a legal dispute. The situation can be particularly difficult to resolve if there is no prior employment agreement between the former employee and their employer. Employment agreements typically spell out the circumstances under which an employee is obligated to assign patent rights to their employer. The laws from State to State vary so without an employee agreement, there is no guarantee as to who has ultimate ownership rights.
1 In Europe,
2 If the patent reform
act currently before Congress is passed, then Corporations will be able to
apply directly for US patents.
Statistics
An Update on Current Patent Activity
The table below provides the latest statistics in overall class 705 and subclass 4. The data shows issued and published patents and published patent applications for this class and subclass.
Class 705 is defined as: DATA PROCESSING: FINANCIAL, BUSINESS PRACTICE, MANAGEMENT, OR COST/PRICE DETERMINATION.
Subclass 4 is used to identify claims in class 705 which are related to: Insurance (e.g., computer implemented system or method for writing insurance policy, processing insurance claim, etc.).
Highlight of Newly Issued Patents and Applications During
Last Two Months
Our analysis and
summary of issued patents and newly published patent applications is based on a
quick read and interpretation of the published documents. It is not intended to be and should not be
considered to be a complete or exhaustive analysis of the breadth of these
inventions or claimed inventions. This
information is provided to give our readers a way to quickly find patents or
patent applications in their field of interest.
Readers are encouraged to seek competent legal and professional opinions
to determine what a patent or patent application does or does not cover.
Issued Patents
Since our last issue 7 new patents with claims in class 705/4 have been issued: 1 is L&H; 3 are P&C; and 3 can be applied in all lines. All of these new issues have Assignees recorded. Patents are assigned to classes based on their claims. See the detailed list for a brief description of these new patents.
Published
Patent Applications
Thirty (30) new patent applications with claims in class 705/4 have been published since our last issue. They are broken down by product line or type area as follows:
Health: 10
P&C: 7
Life: 6
All: 6
Pension: 1
TOTAL: 30
Again,
a reminder -
Patent applications have been published 18 months after their filing date only since March 15, 2001. Therefore, there are many pending applications not yet published. A conservative assumption would be that there are about 150 applications filed every 18 months in class 705/4. Therefore, there are, probably, about 625 class 705/4 patent applications currently pending, only 473 of which have been published.
Because the pending patents total above includes all patent applications published since March 15, 2001, applications that have been subsequently issued will also appear in the issued patents totals.
Resources
These are links to web sites which contain information helpful to understanding intellectual property.
United States Patent and Trademark Office (USPTO): Homepage - http://www.uspto.gov
United States Patent and Trademark Office (USPTO): Patent Application Information Retrieval - http://portal.uspto.gov/external/portal/pair
Free Patents Online - http://www.freepatentsonline.com/
World
Intellectual Property Organization (WIPO) - http://www.wipo.org/pct/en
Patent Law and Regulation - http://www.uspto.gov/web/patents/legis.htm
Patent Agent services – http://www.marketsandpatents.com/
Actuarial services – http://www.BakosEnterprises.com
Newly Issued
Patents (8/15 – 10/11/05) in Class 705/4
6,934,686 Filed:
June 30, 2000 Issued: August
23, 2005 Pendency: 4.2 years
P&C Warranty
transaction system and method
ASSIGNEE: i2
Technologies US, Inc. (
FIELD: Warrantees on consumer purchased items
PROBLEMS: The customer typically has limited options regarding the features and price of the warranty.
SOLUTIONS: The invention provides a customer with one or more customized warranty package options tailored to a customer’s particular needs based on information gathered by the system. The invention allows the customer to select one or more of the warranty package options and to communicate that selection to one or more warranty providers. The warranty providers are given the ability to bid on the selected warranty package, and the customer can then choose one or more of the bids.
6,937,990 Filed:
December 21, 1999 Issued: August 30,
2005 Pendency: 5.7 years
ALL System for syndication of insurance
ASSIGNEE: Walker
Digital, LLC (
FIELD: Insurance syndication
PROBLEMS: There is a need for a
more efficient system, preferably implemented on a wide area communication
network such as the Internet, whereby a stake in an insurance syndicate may be
made widely available as an investment vehicle.
SOLUTIONS: A large number of
persons hold credit cards with unused credit lines. These unused credit lines
potentially could be pledged in making an investment, which would enable the
cardholder to realize a source of income from an otherwise untapped personal
asset. Such a pledge could be secured against default by freezing a portion of
the credit line.
6,938,006 Filed:
June 26, 2001 Issued: August
30, 2005 Pendency: 4.2 years
ALL Sales method and system for selling tangible
and intangible products
ASSIGNEE: Sony
Corporation (
FIELD: Marketing/distribution of insurance
products in combination with associated other products
PROBLEMS: Currently it is
necessary to access separate Internet sites to buy intangibles like insurance
and associated tangibles like an item to be insured.
SOLUTIONS: A sales system by which users, or customers, of Internet shopping are able to buy combinations of intangibles and tangibles by a single access operation and an operational procedure as simple as possible. Such a sales system also allows the selling side to provide the sale of combinations of intangibles and tangibles which no previous system has done before, thereby significantly enhancing the sales efficiency.
6,944,597 Filed:
October 30, 2001 Issued: September
13, 2005 Pendency: 3.9 years
P&C Providing termination benefits for employees
ASSIGNEE: Spincor
LLC (
FIELD: Termination benefits to employees
involuntarily terminated
PROBLEMS: Many employers incur
large costs for non-voluntary terminations of their employees.
SOLUTIONS: The invention
overcomes previous concerns about the risks associated with adverse selection
by employers in connection with employment termination insurance products and
makes such products feasible and profitable.
.
6,947,881 Filed:
July 7, 1999 Issued:
September 20, 2005 Pendency: 6.2 years
P&C Shared vehicle system and method with
vehicle relocation
ASSIGNEE: Honda
Giken Kogyo Kabushiki Kaisha (
FIELD: The sharing of a fleet of vehicles
(electric) among a number of users
PROBLEMS: Public transportation
systems do not entirely satisfy individual transportation requirements. In addition, the excessive use of private
vehicles creates parking and other problems.
Therefore, there is a need for an efficient and convenient way to
share the use of private vehicles. An
example is given of such a shared vehicle system that uses electric
vehicles. NOTE: It is not obvious in a
quick reading why any of the claims of this invention were assigned to class
705/4.
SOLUTIONS: User groups are
created such that they can share a group of vehicles. The vehicles are positioned in such a way
based on user data to make access to the vehicles convenient.
6,947,904 Filed:
July 25, 2000 Issued:
September 20, 2005 Pendency: 5.2 years
L&H System and method for incorporating mortally
risk in an investment planning model
ASSIGNEE: Macey-Holland
& Co., LLC (
FIELD: Retirement planning system
PROBLEMS: Retirement planning is a
frustrating exercise because the future is uncertain. Deterministic
models provide no indication of the likelihood that retirement goals will be
achieved.
SOLUTIONS: A retirement
planning system that uses Monte Carlo techniques to vary the life span of an
investor and/or to vary the rate of return of a portfolio so as to more
completely describe an investor's chances of achieving a retirement goal can be
used to generate the probability that retirement goals can be achieved.
6,954,741 Filed:
August 6, 1999 Issued: October
11, 2005 Pendency: 6.2 years
ALL Computerized dispute resolution system and
method
ASSIGNEE: Cybersettle.com,
Inc. (
FIELD: Claim dispute resolution
PROBLEMS: Conventional alternative
dispute resolution systems, although sometimes helpful, are costly and the
results are often unacceptable.
SOLUTIONS: A automated series of
rounds in which the demands and offers of two opposing parties are matched
against a predetermined set of guidelines in an effort to reach a
settlement. All of this is based on
input received from the opposing parties.
This falls into class 705/4 because it can incorporate dispute
resolution of insurance claims.
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Class 705/4
Patent Applications Published between (approximately) August 8,
2005 and October,13 2005 (In order latest to earliest) |
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CATAGORY |
Publication
Number |
TITLE |
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Life
– Optimizes
state guarantee fund coverages |
Method for
optimizing state guarantee fund coverage for insurance transactions |
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Health – Claim
settlement system |
Method and
system for settling a patient's medical claim |
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Health – Better
cost projection method |
Cost
projections for diagnoses Assignee = United
Health Group Incorporated |
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Health – Insurance
system |
Method of
managing the business of a medical scheme |
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|
Health – Insurance
system – see above |
Method of
managing the business of a medical scheme Inventors
are from |
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Life
– Life
settlements |
Capital
market products including SPIA securitized life settlement bonds and methods
of issuing, servicing and redeeming same |
|
|
Health – Loans
collateralized by health claims |
Loan
advancing system |
|
|
Health – Vision
protection insurance |
Systems and
devices for vision protection policy Assignee = AFLAC |
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|
Health – Voluntary
system to identify and track uninsured population |
System and
method for identifying and servicing medically uninsured persons |
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P&C – System to
verify presence of insurance |
Automated
system and method for providing accurate, non-invasive insurance status
verification NOTE:
No patent agent/attorney involved – filed by inventor only. |
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P&C – Well
drilling |
Method and
apparatus and program storage device adapted for visualization of qualitative
and quantitative risk assessment based on technical wellbore design and earth
properties Assignee =
Schlumberger Technology Corporation |
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Health – Vision
protection insurance |
Vision care
and protection policy Assignee = AFLAC Similar
to 2005020894 above – contains “product” claims. |
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P&C – Method to
identify uninsured motorists |
Method and
apparatus for identifying uninsured motorists |
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P&C – Insurance
against mortgage loan inaccuracies |
Business
structure for providing a representation and warranty insurance for mortgage
loans |
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P&C – Method to
identify high concentration of risk |
Systems and
methods for determining concentrations of exposure Assignee = Risk
Management Solutions Inc. (based
on PCT application) |
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Life – Pre-need
insurance services |
Preneed
insurance services system |
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ALL – Insurance
claim processing |
Systems and
methods for using data structure language in web services |
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Life
– Life
settlements, online auction |
System for
facilitating life settlement transactions |
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Life
– Matches
customer needs with service provider abilities |
Method and
system for conducting customer needs, staff development, and persona-based
customer routing analysis Assignee =
Citibank (based
on PCT application) |
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Pension
– Use
life settlements to fund pension plans |
Method of
enhancing value of pension system assets |
|
|
Health
– Integrates
health spending accounts into payment systems |
Integrating
defined contribution accounts into a claim payment processing system Assignee = The
Trizeito Group (based
on PCT application) |
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P&C – Account
management in underwriting processes |
Account
level participation for underwriting components Assignee =
Accenture Global Services GMBH (based on PCT application) |
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|
P&C – Insuring
data protection services |
Systems and
methods for providing insurance in conjunction with a data protection service
Assignee = VIRTUAL
BACKUP, INC. |
|
|
Life
– Premium
financing |
Methods for
reducing and eliminating risk exposure in life insurance transactions |
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|
ALL
– Rating
system data collection |
Supplemental
rating and financial review questionnaire Assignee = A.M
BEST COMPANY, INC., NJ |
|
|
ALL
– Insurance
application processing |
System and
method for electronically creating, filing and approving applications for
insurance coverage Assignee = Real
Consulting Inc. (based
on PCT application) |
|
|
ALL
– Insurance
application processing |
Systems and
methods for performing data collection |
|
|
ALL
– Insurance
application processing |
Method and
system for electronically routing and processing information |
|
|
Health
– Describes
healthcare marketplace |
Business
method and system for providing an on-line healthcare market exchange for
procuring and financing medical services and products Assignee = MED BID
EXCHANGE LLC, |
|
|
ALL
– Web
based marketing |
System and
method for performing Web based in-view monitoring Assignee = Capital
One Financial Corporation |
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