The End of Free Sharing in the
Insurance Industry
Gerald L. DePardo, Esq.
Partner
McCormick, Paulding & Huber LLP
gdepardo@ip-lawyers.com; ph: 860-549-5290
CAS Spring Meeting, Orlando, FL
June 18, 2007
1
Intellectual Property Overview
1)
2)
Patents (35 USC): Covers: “A new and useful process, machine,
manufacture, composition of matter, or new and useful
improvement thereof”. Right to exclude others from making, using,
selling, offering to sell, & importing the claimed invention.
Must be: New, Non-Obvious, & Patentable Subject matter (no
laws of nature, abstract ideas, or physical phenomena).
Term: 20 years from filing.
Types: Utility, Design (14 yrs), Plant, Provisional (12 months).
Trademarks (15 USC): Indicates source/origin of goods & services.
Word, name, symbol, color, sound. Right to exclude others from
using a “Confusingly Similar” mark for same goods/services.
Must be: Distinctive (fanciful, arbitrary, or suggestive).
Must NOT be: Descriptive (unless it has secondary meaning) or
Confusingly Similar to other marks.
Term: 10 years + renewable as long as used in commerce and
does not become “Generic”.
Types: Word, Design/Logo. TM/SM, ®; Must use as adjective. 2
Intellectual Property Overview (Cont)
3)
4)
Copyrights (17 USC): Covers “original works of authorship” for
literary, dramatic, musical, artistic, and certain others (maskworks, software, multi-media works). Right to exclude others
from copying, distributing, performing and displaying the work.
Protects the “Expression” only, not the “Idea”.
Term: Life of Author + 70 years.
Exceptions: Fair use, parody/criticism, comment, news reporting,
teaching, scholarship, research (17 USC 107).
Trade Secrets (UTSA): Covers information that is not gen. known
to others and provides a competitive/economic advantage.
NO Right to exclude others. But, if stolen, can get remedy (e.g.,
injunction from using it). Property right - can assign, license.
Must take “affirmative steps” to keep secret: mark, control
access, no/managed release, process. Can’t Rev-Engineer.
Term: As long as it remains a secret.
3
Intellectual Property Is Everywhere
Patents
Trade Secrets
(Utility, Design)
(Formula, Software)
Copyrights
Trademarks
(Images, Software)
(Word Marks, Logos)
No “Free Sharing” with these products!
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Even Within Your Company
Inventions/PCM/
Clearance Innovation/R&
Contracts/
Licensing/
Fin. Models
Business Strat.; Leverage IP
CEO/Strat.Plan/Bus.Dev.
D
Finance
Inventions/Info. Prot./TM
IP
IT
Software,
I-Net/Web Site
Product Dev
& e-Security
Invention/TS/Clearance/
Info. Prot./ ISO Policies &
Procedures
Partners/Customers
HR
Employee IP
Comm./IR/S&M
Info. Prot./TM’s
5
Corporate Intellectual Property Overview
IP Coverage Product/
& Portfolio
Process
Management IP Clearance
Technology
Enforcement &
Acquisition & Defense
Licensing
IP Infrastructure
Intellectual Property (IP) = Patents, Trademarks, Copyrights & Trade Secrets
6
More on Patents - Basics
 Bargain: Disclosure for Property Right (“meets and bounds”)
 Property Right: Right to exclude others but NOT a right to make
the invention; Can license, assign, sell, trade, etc.
 First To Invent system - NOT first to file.
 Willfulness – Up to 3 times damages.
 Parts of a patent: Spec. (incl. Figs., Abstract) & Claims
 Infringement –Must meet ALL claim elements. Presumed Valid.
Defines
Property
Rights
Patent Claim
Language
(Elements
A,B,C,D)
Product Has
NOT
Elements
Infringed
A,B,C
Product Has
Elements
A,B,C,D,E
YES
Infringed
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Innovation Areas For Insurance
 Software Algorithms/Models
 Web Graphic User Interfaces (GUI)
 Electronic Transactions / Claims Processing
 Business Methods
 Insurance Products & Processes
8
Three Ways To Protect Innovation
Multiple Coverage Areas
 Patents Processes
implemented by a
computer, computer
logic/machine,
business methods,
utility & designs.
Patents
Trade
Secrets
Copyrights
 Trade Secrets Source code;
back-office
processes.
 Copyrights - Source
code; GUI look & feel.
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Business Method Patents
• Before 1998 - Business Methods were generally excluded as non-patentable
subject matter with mathematical formulas & algorithms.
• State Street Bank v. Signature Financial Group, Inc. (S.Ct.1998) - Patent
for allowing mutual funds to pool assets into a central investment portfolio
– Ct: Methods of doing business (i.e. business models) are patentable as long as
the invention is useful, new, and non-obvious.
• AT&T Corp. v. Excel Communications, Inc. (CAFC 1999) – A business
method for recording information pertaining to telephone calls.
– Ct: Patent Valid. But Examiners still required inventions to be related to the
“technical arts”; i.e. connected to a computer or other electronic device.
• Ex parte Lundgren (USPTO 2005) -Patent for a managerial compensation
scheme; Initially rejected because claims were not linked to a computer or
electronic device; invention was outside the “technological arts”
– Board: No “technological arts” requirement for business method patents.
Method is patentable if it produces a “useful, concrete, and tangible result”.
• USPTO Rules relating to Business Method Patents:
– First Inventor (Prior User) defense allowed - 1999 ; 35 USC 273(a)(3).
– New USPTO examination procedures for business method patent applications,
including an additional level of examination.
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Where to File?
 Where to File For Business Method Patents:
 United States
 Australia
 Possibly: Europe, Canada, Japan, Singapore
 EPC policy - no business method or software patents are
allowed; However, a patent on a business method is possible
if some technical considerations or technical effect is
involved in the invention.
 Americans are filing business method patents in Europe in
case they are allowed in the future.
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When Have You “Invented” Something?
Goal
INVENTION
AREAS
“Wheel” of
Invention
Problem
Solution
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Invention & Patenting Process
2. Record
Invention
(Form &
Description)
1. Idea/
Invention
• From Work Product
• Brainstorming Session
• Other activities.
Submit to Law
Dept./ Patent
Atty
To Step 5
at USPTO.
Appv’d
3. Make
Filing
Decision
4. Prepare &
File Patent
Application
Rejection/Response Cycle
Pay Maint. Fees:
3.5, 7.5, 11.5 yrs
5. Publish
Appl.
(18 mo.)
6. Receive
Rejection
from
USPTO.
7. Respond
to Rejection
(Amend
Claims).
8. Patent
Grant
Claims
Allowed
US
Patent
Pendency Time: 2-5 years
13
Patent Time Line
5-15 Years Out - Max Value
BUSINESS
TODAY
2-5 Years from Filing to Grant
12 Month “OnSale /Publish”
Grace Period
US Only
18 Month US & Foreign Publication
12 Month Foreign Filing Deadline
Time Line
18 Month
Publication window
look-back into
competition.
20 Year Life
Patent applications filed today will be in effect for 20 years
from filing. So they need to look ahead to protect not only
today’s product but future variations to gain max. benefit.
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Insurance Patents Issued By Year
(Class 705 / Subclass 4 as of 4/10/07)
44
45
40
36
35
30
25
30
29
23
20
21
19
20
15
15
9
10
5
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Class 705 = Data processing: Financial, Business Practice, Management, or
Cost/Price Determination (i.e., “Business Methods”).
 Subclass 4 = Insurance, e.g., computer implemented system or method for
writing insurance policies, processing claims, etc.
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Insurance Patents Pending By Year Published
(as of 4/12/07)
180
164
156
160
140
169
148
128
120
100
80
56
60
40
30
20
0
2001
2002
2003
2004
2005
2006
2007
 Patent applications are published in the US 18 months after filing date, since
March 15, 2001. So there are still some patent applications filed prior to this date
that are pending but not yet published (issued).
There are about 200 patent applications filed every 18 months in class 705/4.
 Thus, there are about 857 currently pending patent applications [ 851 (total published
appls) + 200 (not yet published) - 194 (issued, assuming about a 4 year pendency period)].
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Recent Events in Patent Law
Supreme Court:
 KSR International v. Teleflex (4/07) - Eliminated rigid teaching-suggestionmotivation (TSM) test for obviousness.
 MedImmune v. Genentech (1/07) - Licensee can challenge validity of
patent without breaching license agreement.
 eBay v. MercExchange (5/06)- Harder to get Injunctions (may impact
patent trolls). Need to balance equity factors (Irreparable Harm, Public Policy,
Balance of Hardships, Availability of Legal Remedies).
Other:
 Congress reviewing patent law reform legislation:
1st to file; Prior user rights; Post grant review, Re-exam (www.IPO.org).
 Damages: RIM Settlement pays $450 Million (Blackberry) ; $1.52 billion verdict
angst Microsoft (Feb. 2007).
 Ocean Tomo Auction (April 2007) - most money paid for a patent:
$3.02 Million - Patents on Video on Demand (Image Telecom Corp).
$2.86 Million - Mobile Social Networking (RovingRadar, Inc.) Pat. 6,618,593.
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KSR Int’l Co. v. Teleflex Inc. Case - 4/30/07
Standard: New & Non-Obvious over Prior Art
Invention
Claimed
A,B
Compare
A = Adjustable pedal assembly
B = Electronic sensor that
detects position of the pedal
Prior Art
Prior Art
Patent 2
Patent 1 +
Teaches
Teaches A
B
Combine Refs. 1 & 2
to get the invention.
Holding: Patent Invalid as Obvious in view of Refs 1&2. No
need to have any teaching, motivation, or suggestion to
combine references 1 and 2.
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Implications of KSR
• Raises the bar - more difficult to get patents on minor
variations of the prior art.
• Teaching-Suggestion-Motivation (TSM) not a rigid rule.
• To claim non-obvious, can still argue “secondary” factors
(Graham v John Deere - 1966)
– commercial success, long felt but unsolved needs, failure of
others, unexpected results, & others.
• To invalidate a patent (obvious), can now argue:
– “Obvious to try”, where there are a finite number of identified
predictable solutions.
– Consider teachings “beyond” the inventor’s “field of endeavor”.
– Can use “common sense” without risk of “hindsight” problem.
– Look at “demands” known to the design community or present in
the “marketplace”.
• May see more legal challenges to patents (DJ Actions).
• Need to reevaluate patents licensed in and out.
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Useful Free IP Websites
1) www.uspto.gov - United States Patent &
Trademark Office - main site. Lots of great
information about patents, trademarks &
copyrights.
2) www.espacenet.com - European & International
Patents
3) www.freepatentsonline.com - Get free copies of
patents with images (.pdf)
4) www.ipo.org - Intellectual Property Owners
Association.
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