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Old 06-30-2010, 06:35 AM
nowa nowa is offline
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Default Progressive sues Liberty Mutual for patent infringement

Progressive has just sued Liberty Mutual for infringing one of its PAYD patents.

Given that 90+% of all patent cases are settled. What's the best way to settle this one?

In response to the comments below, I thought I would give a little more background and provide examples of how other insurance companies have reacted in similar situations. Responders can then provide their opinions on which options might make the most sense for Liberty Mutual and Progressive.

The specific patent that Progressive is asserting is US 6,064,970. You can read it on Google patents here.

Patents cover only what’s in the claims. Here is an example of one of the claims from this patent:

We claim :
4. A method of insuring a vehicle operator for a selected period based upon operator driving characteristics during the period, comprising, steps of:
a) generating an initial operator profile;
b) monitoring operator driving characteristics during the selected period; and
c) deciding a cost of vehicle insurance for the period based upon the operating characteristics monitored in that period.


Anyone that performs steps a, b and c of this claim would be infringing this patent.

Conventional response strategies include:

Fight it – This is how Transamerica responded to Lincoln Financial’s lawsuit related to Lincoln’s patent on annuities with guaranteed minimum withdrawal benefits. Transamerica lost at the district court level, but won at the appeals level. Total legal costs were probably in the range of $10 million. The Hartford also pursued this strategy when it was sued by Bancorp Services for violating Bancorp’s patent on Stabilized Value COLI, BOLI. The Hartford lost at both the district court level and the appeals level. They settled with Bancorp for about $80 million.

Negotiate a license for a fee– Liberty Mutual would pay Progressive a certain percent of premium for its UBI customers. Baltimore Life did this for rights to a Reversionary Annuity patent with some unique features.

Negotiate a license of other considerations – Both Progressive and Liberty Mutual are actively developing their UBI offerings. Liberty Mutual might offer rights to some of its intellectual property in exchange for a license to Progressive patents. Progressive and UK insurer Aviva had a similar arrangement several years ago.

Design around it - Liberty Mutual could modify its product so that it doesn't infringe any of the claims of Progressive's patent. The challenge is to design a product that doesn't infringe any of the claims of this patent or any of the other Progressive patents in this area. Before Blackberry settled its patent infringement lawsuit with NTP, they claimed that they had developed a design around.

Cross license - If Liberty Mutual had patents on its own UBI developments, it could consider cross licensing these with Progressive. Thomas Edison did this with his chief rival, Joseph Swan, for their competing light bulb patents. Unfortunately it doesn't appear as if Liberty Mutual has any patents to cross license.

Last edited by nowa; 07-05-2010 at 10:40 AM.. Reason: add clarification and provide specific options to discuss
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Old 06-30-2010, 09:16 AM
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I would like to see more details of what specifically Liberty is being accused of infringing upon. The article is pretty vague.
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Old 06-30-2010, 09:53 AM
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http://www.businessinsurance.com/art...0504/306279968

Quote:
the Liberty Mutual products utilize more than mileage data. Instead, they appear to capture and use data in ways similar to Progressive's own product named MyRate(R), which Progressive says is covered by their patent. According to Progressive, MyRate uses data from a customer's vehicle to not only prove miles driven, but also when the vehicle is driven and how often what they consider "hard braking" takes place. They say all three -- proven mileage, when driving takes place, and how often "hard braking" occurs -- are used to calculate potential discounts to their customer's insurance policy.
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Old 06-30-2010, 10:14 AM
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insurance companies are using data from customer's vehicles such as when driven and how often hard braking occurs? how do they get this data?
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Old 06-30-2010, 10:22 AM
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Quote:
Originally Posted by Evil monkey View Post
So they are claiming that certain rating variables are patentable. I hope they lose.
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Old 06-30-2010, 10:38 AM
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Quote:
Originally Posted by MountainGirl View Post
insurance companies are using data from customer's vehicles such as when driven and how often hard braking occurs? how do they get this data?
they install a black box on the car. you get a discount for doing so.
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Old 06-30-2010, 10:41 AM
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Originally Posted by tommie frazier View Post
they install a black box on the car. you get a discount for doing so.
ooooh, i haven't heard about this. interesting.
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Old 06-30-2010, 08:05 PM
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Straight From My Id Straight From My Id is offline
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Quote:
Originally Posted by nowa View Post
Progressive has just sued Liberty Mutual for infringing one of its PAYD patents.

Given that 90+% of all patent cases are settled. What's the best way to settle this one?
You are (by a substantial margin) the most knowledgeable poster here on the topic of insurance patents. Instead of throwing that question out, why don't you share your thoughts?

Thanks.
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Old 06-30-2010, 09:51 PM
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What is the patent exactly?
Is it on the use of the rating variable? or is it on the device collecting the information?
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Old 08-29-2010, 04:16 PM
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Tiffany<3 Tiffany<3 is offline
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The patent is on the methodology in using the "black box" to retroactively rate a vehicle's premium.

IMO, they SHOULD lose because patenting a methodology is like patenting a mathematical formula. Not to mention that this is also an anti-competitive practice.

Also, as I was reading the patent, the methodology is too vague. It should be specific enough that we know exactly what the steps are in rating the vehicles.

My 2 cents: Progressive is going to lose, not because of the technicalities, but because people hate insurance companies and they are not going to give insurance companies a monopoly over any specific rating process. NEVER.
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