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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 |
August 15, 2005 VOL: 2005.4 |
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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 provides a brief summary of the Patent Act of 2005. This legislation (H.R. 2795) was introduced
in the House of Representatives on June 8.
It could have a significant impact on patent activity and litigation in
the
Our Feature Article presents a first hand account by Jerry Wilson, an innovator in Long Term
Care, who perceived the value of patent protection many years ago – before it
even started to become popular in this industry. He documents what the patent environment was
like in the late 1990’s and what prompted him and his co-inventor, Mike Gamble,
to seek and get a patent on their innovative process.
Your editors
were invited to participate in the second biennial Swiss Re Workshop on Best Practices in IP in July of this
year. We include a summary of that
workshop in this issue.
In addition,
we address how the European Patent Office requires “technological art” to be
included in inventive business methods in order for them to be patentable. This is an important consideration for those
considering patent protection in
Insurance
Networking News recently published an article on insurance patents. It is entitled Carriers
Unaware of IP Ownership Threats and Opportunities and can be found at their
web site, www.insurancenetworking.com.
Some familiar names, including past contributors to this Bulletin, are
quoted. They address how “woefully
oblivious” some insurance carriers are to the increase in the use of patents in
the industry. We trust that this does
not include our readers.
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
An Insurance Patent Experience
By: Jerry Wilson, President,
Every day someone solves a problem.
Occasionally the problem involves a business method that makes the
solution so unique it falls into a special category. It may be patentable because of its
originality. The United States Patent
and Trademark Office (USPTO) will now consider applications to patent such
inventions.
Patenting a business method is a relatively new concept. For instance, a business method patent for an
insurance invention was almost impossible until a relatively short time
ago. We think you will find our
experience in obtaining a patent interesting.
We are insurance general agents and we’ve had many innovative ideas
over the years. The ones that worked
were usually copied in short order.
Ironically, we would find ourselves competing with … ourselves!
We love the senior market. Our
products included annuities, Medicare supplements, last expense whole life,
short-term home recovery care and long-term care.
Long-term care insurance (LTCi) was always the most difficult to
sell. Our prospects ranged from the
super-affluent to middle income. The
affluent were fewer in number and usually wouldn’t buy long-term care at any
price (unless they were unhealthy). Most
others couldn’t afford it. Affordability
was, as we saw it, the problem standing in the way of enormous new business
production. At that time the only way to
lower the premium was to lower the benefit, but lowering the benefit to fit the
pocket book of most could result in a benefit that was worthless. A new concept was needed.
A study for the federal government provided us the paradigm for a new
business method—a solution—possibly the only solution: Resource Utilization Groupings (RUGs). RUGs are, essentially, a way to classify
patients into groupings with common characteristics as to the severity of their
medical condition and their need for care. This pointed the way for a better
benefit design to make LTCi affordable.
It could be done by a tailoring of benefits—by eliminating unnecessary
benefits to some so that necessary benefits could be made available to
all. Effectively, we thought it provided for a more efficient use of Long Term
Care insurance premium dollars and was a better deal, a better design all the
way around.
This was a new business method—it was intellectual property—and, we
thought, it was patentable.
Our very first motivation to apply for a patent in 1997 inspiration we
got from Signature Financial Group's early work on a business method
patent. This was well before the
subsequent State Street Bank decision in 1998.
There was a path of sorts to follow and we couldn’t find any reason why
we shouldn’t proceed. Dumb luck? Perhaps … but when it was all done and the
beautiful Patent Document was put in safe-keeping, we knew we had gained a
great deal from the experience.
It is not easy to describe the entire process. Suffice it to say it was difficult then and
it is more difficult now, but there are certain truisms that would be no
different today.
First, the USPTO is part of the bureaucracy. There are many forms to fill out, fees to pay
and much that has to be written. This
includes history, background, references, citations, formulas, explanations,
opinions and scope and nature of claims.
There can be no allowance for mistakes, even simple typos. If you make them, you will very likely have
to live with them. The patent examiner
may make mistakes, also. Again, if you
don’t catch them, the outcome could be an unintended disaster.
The patent examiner will probably not be an expert in
financial/insurance matters. It will be
assumed that you are. You will be
expected to prove it. You will need
legal and actuarial counsel that you can rely on.
You will become convinced the examiner does not understand your
invention, and it will be incumbent on you to explain it to his or her complete
satisfaction. This process compares, in
our opinion, to a complicated lawsuit and, perhaps, a brief.
You must not fear rejection.
There are time frames and remedial processes that come into play when a
patent application is rejected. In many
cases, a rejection is just another way of saying to you, “prove it,” or, “tell
us why we are wrong.”
The good news, however, is that the patent examiner is a human being,
earnest, pleasant, thoughtful, courteous and above all, available, when you
have questions, comments or need help.
Telephone conferences were never a problem. The USPTO people have no preconceived
opinions or judgments, or axes to grind.
They just want everything done right.
We eventually received US Patent # 6,014,632 for our efforts.
Keep in mind, the patent application starts a special clock running—exclusivity for 20 years from the date
the patent application is submitted.
Imagine, even a two or three years head start with a great new idea like
this has the potential for unlimited reward for the inventors/licensees.
Was it easy? No. It cost money and time. Was it worth it? Yes, because the patent protected our long
years of effort and sizable expense.
Imagine a 3% license fee on, say, a hundred million of premium … or a
billion.
Moreover, the additional
compensation (including to the licensee) through sub-licensing possibilities
and arrangements is mind boggling.
There is a vast, underserved middle income market age 50 and over that
is virtually untouched. It is swelling
by the day as “boomers” retire. With
the federal government vigorously conditioning the American public to embrace
private long-term care insurance because of Medicaid and Medicare budgetary
constraints—an insurer couldn’t hope for a better endorsement.
Today, fewer business method patents are being approved and they are
being more closely scrutinized. Maybe the good old days will eventually come to
an end. However, the window of
opportunity, although narrowing, is still open.
The decision to explore the possibilities is the first and most
difficult step.
After that, consult with experts. You need a roadmap to avoid the mine fields and pitfalls along the way. If you are not totally familiar with the process, consider a word of advice based on our actual experience in the trenches—seek help.
Patent News
Swiss Re Conference in Innovation and Intellectual Property in the Financial Services Industry
In July of this year, Swiss Re sponsored their second biannual conference
on innovation and intellectual property in the financial services
industry. The conference was held at
Swiss Re’s Center for Global Dialog outside of
Insurance inventions can be protected by patents in both
Europe and
One of the barriers to getting effective worldwide
patent protection for insurance inventions is the substantial differences
between the
Watch out for “copyleft” infringement.
There was a lot of discussion at the conference about open source software and a new type of intellectual property related to it called “copyleft”.
Most insurance inventions require innovations in software in order to be implemented on a large scale. Copyleft is a new type of intellectual property that promotes innovations in software by encouraging the release of software as “open source”. Open Source software is software where the source code for a particular program is made available to the public and the public is free to improve it, provided the improvements are also made available as open source. A well-known example of open source software is the Linux operating system.
Copyleft refers to a body of specialized copyright licenses that are designed, among other things, to enforce the release of improvements as open source.
Violating a copyleft can be just as disruptive to commercializing a new product as violating a patent. Developers within many IT departments commonly incorporate open source software components into the proprietary software products they are developing if it can make that development go faster. If the open source component is protected by a copyleft, then the company developing the proprietary software product may be obligated to make some or all of the source code of the proprietary software product available as open source.
The good news about copylefts is that, just like patents, they promote innovation by rewarding public disclosure of inventions. It remains to be seen however, to what extent the insurance industry will be able to take advantage of this new type of intellectual property to promote its own innovations.
Gerald J. Mossignhoff, former commissioner of the
Patent Law
The Patent Act of 2005 – A Summary of Major Provisions
As noted in our last
issue, the Patent Act of 2005 (H.R. 2795) was introduced by Congressman
Lamar Smith on June 8, 2005. Its purpose
is to improve the quality of patents and reduce costs associated with their enforcement. It proposes significant modifications to
patent law in the
We hope the brief summary
of the changes proposed in the Bill that we provide below will serve to keep
our readers informed. Certainly, this
pending Bill deserves the attention of anyone involved in
The Act specifies changes in the following areas:
Right of the First Inventor to File
Currently, in the
These changes are accomplished by adding definitions which recognize that an “inventor” is someone who “invented or discovered the subject matter of the invention”. In effect, it is recognized that more than one inventor of an invention may exist.
A big component of existing patent law relative to inventorship are provisions which specify how someone’s claim to being an earlier inventor are to be resolved. This component of current patent law supports the patent rights of the first-to-invent. These are called “interference” actions because one inventor’s patent application may interfere with another’s. The Patent Act of 2005 amends or modifies provisions of current patent law in order to make them consistent with the change to a first-inventor-to-file approach.
In particular, section 102 is substantially rewritten and simplified. “Interference” rights are redefined to be an “inventor’s rights contest” which addresses the rights of an inventor to patent under revised section 101. References to “interferences” are generally eliminated and the Board of Patent Appeals and Interferences becomes just the Board of Patent Appeals. Other changes to make the patent law consistent with a first-inventor-to-file approach are also made.
In particular, the effect of prior art on patentability is simplified. Prior art must only be “reasonably and effectively accessible” through its use, sale, or disclosure by means not otherwise excepted in the law. This requirement is measured in terms of information that is available to someone of ordinary skill in the art “without resort to undue efforts”.
In testimony it was noted that the existing first-to-invent approach more often that not defaults to a first-inventor-to-file approach because of the complexity of the current law and the difficulty of asserting a prior right to patent in an interference action. This is compounded by the significant cost associated with such a proof.
The belief is that a first-inventor-to-file rule is a recognition of a “best practices” approach.
Right of an Assignee to File
Under current
Under the first-inventor-to-file approach proposed by these amendments, one still must be an inventor to receive a patent. However, the Patent Act of 2005 would make it possible for a person to whom an inventor has assigned (or is under obligation to assign) the invention to file for a patent in the inventor’s name.
The revisions made to redefine the right to patent also amend section 112 to eliminate key language which requires that an applicant “shall set forth the best mode contemplated by the inventor of carrying out his invention”. It is believed that the subjective “best mode” requirement (added by the 1952 Patent Act) is inefficiently applied in litigation.
Duty of Candor Imposed
By the addition of two new sections, 136 and 137, the USPTO is given authority to enforce a “duty of candor and good faith” expected of individuals filing and prosecuting a patent application or assisting in this activity. Under current patent law this enforcement is a function of the federal court system.
Essentially the duty of candor requires any individual involved to disclose on a timely basis any information material to a patent application in a way that does not misrepresent such material. If the USPTO finds that the duty of candor has been breached and misconduct has occurred, a patent can be held unenforceable as well as other consequences can be imposed (including monetary penalties).
Right of the Inventor to Obtain Damages
Section 284 is amended in an attempt to eliminate the “entire market value” approach used to determine damage awards. That is, new language limits a “reasonable royalty” to the contribution to “realizable profit that should be credited to the inventive contribution as distinguished from other features of the combination, the manufacturing process, business risks, or significant features or improvements added by the infringer.”
Conditions are spelled out with respect to a determination of “willful infringement” which can result in treble damages. The Patent Act of 2005 would limit additional damages only to situations in which the plaintiff provided written notice of infringement “identifying with particularity each claim of the patent, each product or process that the patent owner alleges infringes the patent, and the relationship of each product or process to such claim.” That is, vague claims of infringement cannot result in a determination of “willful infringement” and treble damages.
Injunctions
The purpose of this very short section of the Patent Act of 2005 is to make it more difficult for a person claiming infringement to get injunctive relief in patent infringement actions.
Under current law, the threat of an injunction has been used to encourage settlement. The amendment requires the court to “consider the fairness of the remedy in light of all of the facts and relevant interests of the parties associated with the invention.”
Continuation Applications
Under current patent law patent applications can be “kept alive” by filing continuations. It is felt that there has been abuse in this by applicants who use the procedure to track the commercial development of a technology and update their inventions related to this technology in order to encompass what others may be doing.
However, it is recognized that there are many instances where continuation applications are entirely appropriate and necessary. Therefore, the proposed new section 123 allows the Director to establish regulations to “limit the circumstances” under which continuation applications which claim the filing date of a prior application (other than a divisional application) may be filed.
Post Grant Opposition Procedures
A new Chapter 32 is added by the Patent Act of 2005 which inserts a new post grant opposition procedure under which anyone can request the USPTO to reconsider any claims granted in an issued patent. Such a request could be made either:
- within 9 months after the grant of a patent; or
- within 6 months after notification by the patent holder alleging infringement.
In order to make a post grant opposition procedure and participation by the general public more workable, section 122 is amended to effectively require that almost all patent applications be published after 18 months. Another amendment to section 122 effectively allows the public a period of time to submit prior art relative to a patent application which they feel the USPTO should consider or should have considered during the examination of the application.
These changes are viewed as a way for the interested public to address any perceived errors or mistakes made by the USPTO in granting a patent or point to specific prior art the USPTO ought to consider during the examination of an application.
Transitional Rules
Transitional rules make the change to a first-inventor-to-file approach effective with respect to patent applications filed one or more years after the enactment of the Patent Act of 2005. Special effective date transition rules apply with respect to nonprovisional patent applications filed before the effective date of the amendments that introduce the first-inventor-to-file rule.
The Right of an Assignee to File, the change in the right of an inventor to obtain damages, and injunctive relief would be effective from the date the Act became effective except that they would not apply with respect to any action brought in any court before such date.
The Duty of Candor requirements would apply to any patent issued on or after the effective date of the Act. However, a patent owner may elect, with respect to a patent issued prior to the effective date of the Act, to be under the jurisdiction of the USPTO rather than a federal court with respect to any action brought on or after the effective date of the Act.
Any regulations the Director introduces to control continuation applications would be effective with respect to patent applications filed on or after the effective date of the Act. Such regulations cannot be effective until one year after the effective date of the Act.
The changes making patent application publication after 18 months almost universal would become effective with respect to patent applications filed on or after the enactment of the Act.
The added Post Grant Opposition Procedures would become effective on the date of enactment of the Act except that no opposition proceeding request can be made until one year after the effective date of the Act and the Director may establish an even later date for such opposition proceedings. This opposition procedure would only apply to patents filed under the first-inventor-to-file rule.
The amendments allowing the submission of prior art by third parties would become effective one year after the enactment of the Act.
Conclusions
The most significant
elements of this proposed amendment to
- the move to a first-inventor-to-file rule
- the elimination of some “subjective” elements from current law: “best mode” requirement eliminated; “definition of “willful infringement” clarified; and duty of candor clarifies “inequitable conduct”
- creation of a post grant opposition system.
The end result is supposed to be greater clarity and less costly legal actions to defend or assert patent rights.
Please recognize that this is a brief summary of a complex set of amendments and these amendments are subject to change as the bill works its way through congress. We refer you to the Intellectual Property Owner’s web site, http://www.ipo.org/, for updates on the bill and its current contents.
Patent Tech
Prospects for
Getting Insurance Patents in Europe
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.
But it is not an impossible one.
The key to getting an
insurance patent in
Telematic auto insurance
is a new way to calculate a premium that is patented in
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
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
It is much more difficult
to get patents on insurance related inventions in Europe than it is in the
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. To understand the full range of a patent or
intended range of a patent application, the original document must be studied
and analyzed.
Issued
Patents
Since our last issue 3 new patents with claims in class 705/4 have been issued. Patents are assigned to classes based on their claims. See the detailed list for a brief description of these new patents.
Published
Patent Applications
Seventeen 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:
P&C: 7
Life: 4
Health: 4
Systems: 2
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) - http://www.uspto.gov
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 (6/15 – 8/8/05) in Class 705/4
6,895,390 Filed: April 20, 2000 Issued:
May 17, 2005 Pendency: 5.08 years
L&H System
for monitoring increasing income financial products
ASSIGNEE: None
FIELD: Annuity Income – increasing income
financial product
PROBLEMS: The fact that prior art did not disclose certain important
administrative problems associated with an increasing income financial product.
SOLUTIONS: A data processing system for implementing and administering
an investment account structure consisting of increasing income contracts that
pay out from commingled funds increasing income to survivors of a group. The original principal is distributed to
heirs of group members upon expiration of the contract caused by the death of
all group members or time.
6,915,266 Filed: July 31, 2000 Issued:
July 5, 2005 Pendency: 5.0 years
L&H Method and system for providing evaluation
data from tracked, formatted administrative data of a service provider
ASSIGNEE: None
FIELD: Administrative
services to a medical service provider
PROBLEMS: Medical service providers encounter problems with billing
for the services they perform because of the need to comply with the varying
requirements of the many different entities they deal with. The billing software provided by third
parties is difficult to select from because reliable information regarding said
third party providers is unknown and these systems are not amenable to
competition because the software systems used are incompatible.
SOLUTIONS: An agent-neutral system for processing administrative data
of a medical service provider is described.
In
summary, this is a method for reducing costs to medical service providers, especially
small medical practices, by establishing an agent-neutral coordinator which
systemizes the outsourcing of administrative processes to practice management
agents.
The
agent-neutral coordinator creates and maintains agent-neutral operational standards
and agent-neutral internet-integrated computer system standards, where
agent-neutral means that the practice management agents comply with the
coordinator system's operational and data processing standards and software
standards, thereby substantially eliminating costs to the medical service
provider for switching between the practice management agents.
6,922,720 Filed: March 7, 2002 Issued:
July 26, 2005 Pendency: 3.3 years
P&C Systems and methods for insuring data over
the internet
ASSIGNEE: Portogo, Inc. (
FIELD: Insuring
the security of information handling systems
PROBLEMS: Not all users of systems that transmit data electronically
have access to, can effectively utilize because of the need for in-house
technical support, or can afford commercially available security measures which
utilize, for example, the encryption of data.
SOLUTIONS: A system to insure, bond, or underwrite the electronic
transmission and receipt of data for a fee is described.
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Class 705/4 Patent Applications Published between (approximately) June, 15 2005 and August 8, 2005 (In order latest to earliest) |
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CATAGORY |
Publication
Number |
TITLE |
|
Life – Agency value of
insurance policies |
Object
oriented demographically predictive insurance agency asset evaluation system
and method |
|
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Life – Utilizing VLI in
College Funding |
Process for
creating a financial plan for funding of college education |
|
|
Health – Claims processing |
||
|
P&C – Liability insurance |
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P&C – Hazardous substance
insurance |
Assignee = |
|
|
All – Data retrieval system |
System and method for providing global information on risks and related hedging strategies |
|
|
Health – Automate compliance
with Medicare billing guidelines |
System and method for automatic conditioning of clinically related billing |
|
|
All
Underwriting – On line interface to legacy systems |
||
|
P&C – New insurance against
economic damage caused by goods purchased from supplier |
System and method for assisting a buyer in selecting a supplier of goods or services |
|
|
P&C – Using collateralized
deductibles to reduce malpractice ins., etc. premiums |
||
|
Health – Utilizes health and
drug claims to develop healthcare knowledge database |
||
|
P&C –Provides link of
medical credentials to Medical malpractice Ins. |
Credentialer/medical
malpractice insurance collaboration Assignee = The Premium Group, Inc. |
|
|
P&C – Auto Insurance, stop
loss for balance sheet protection of vehicle fleet owners |
||
|
Life – provides benefits to
offset effects of change in tax law |
||
|
Health – expert system for
claim scrubbing or editing |
Systems and methods for automated classification of health insurance claims to predict claim outcome |
|
|
P&C – provides insurance to
offset cost of backing up lost data and covers cost associated with inability
to restore from backup |
||
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Life – Underwriting, system
to evaluate financial impact of specific sets of underwriting criteria |
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