[00:00:00] Speaker 01:
of 141538 and 141549, Progressive Casualty versus Liberty Mutual.

[00:00:42] Speaker 04:
Are you going to help me out here, Mr. Silverman?

[00:00:55] Speaker 01:
You want to start off by refreshing up since you've had so many different cases about what the main issue is in this one?

[00:01:02] Speaker 04:
Yes, the main issue in this case is whether the board correctly construed the claim term real-time

[00:01:13] Speaker 04:
They used an IEEE dictionary of real time to screw the claim.

[00:01:19] Speaker 04:
And that definition from the IEEE

[00:01:24] Speaker 04:
dictionary used the term external process, which was a vague term, and our position was that what the board failed to do was to give that term meaning in the context of intrinsic evidence and the other evidence of record.

[00:01:44] Speaker 03:
So I want to turn your attention to page three of the blowbreak in 1549, and I know it's the same as the other one.

[00:01:55] Speaker 03:
And that is, it says, progressive has long been recognized as an innovator in the delivery of auto information and customer service by the internet.

[00:02:05] Speaker 03:
And you cite to A2324 for that proposition.

[00:02:14] Speaker 04:
Yes, I'm sorry.

[00:02:15] Speaker 03:
Are you familiar with that page to which you're citing?

[00:02:20] Speaker 04:
Generally, yes.

[00:02:21] Speaker 03:
Okay.

[00:02:22] Speaker 03:
It reads to me sort of like a press release.

[00:02:27] Speaker 03:
What's the underlying basis for that?

[00:02:32] Speaker 03:
I think it is a press release.

[00:02:33] Speaker 03:
I think it's a press release too, because it's on PR Newswire, which is a website which contains only press releases.

[00:02:40] Speaker 03:
So as the basis for a statement in your brief,

[00:02:44] Speaker 03:
You're citing to a press release that you issued?

[00:02:48] Speaker 04:
For general context, Your Honor.

[00:02:51] Speaker 03:
For general context.

[00:02:54] Speaker 03:
I find that at least close to improper.

[00:02:58] Speaker 04:
Well, we didn't intend to do anything improper, Your Honor.

[00:03:02] Speaker 04:
This was in the record.

[00:03:04] Speaker 04:
We felt it had a context.

[00:03:07] Speaker 04:
So with respect to the issues, so the other two issues are there was a lack of substantial evidence to support the obviousness conclusion and the board applied 2020 hindsight to a few crimes.

[00:03:21] Speaker 03:
Let's turn to that too.

[00:03:24] Speaker 03:
You state at page two of your brief in 1538 that the board seems predisposed to invalidate the 088 patent

[00:03:34] Speaker 03:
what record is evidence is there of the board's alleged prejudice?

[00:03:40] Speaker 03:
And you may have noted from my previous comment that I was disturbed by references to firing squad and death squad and so on.

[00:03:50] Speaker 04:
But again, Your Honor, in its general context, those are things that have been stated

[00:03:55] Speaker 04:
There's a general perception, I think it's fair to say.

[00:03:58] Speaker 04:
It's a new board.

[00:04:01] Speaker 04:
There's uncertainty and concern about it, but ultimately we have to look with the final grid decision of the board.

[00:04:08] Speaker 03:
To show its predisposition, to show it's prejudice against you?

[00:04:12] Speaker 04:
I don't think we said that there was prejudice against us, and we certainly didn't mean that.

[00:04:17] Speaker 03:
You said it was predisposed to invalidate a pet.

[00:04:21] Speaker 04:
Well, I think based on what they did, I think that's a fair inference.

[00:04:25] Speaker 03:
So whenever a court rolls against you, they're prejudiced.

[00:04:30] Speaker 04:
I wouldn't say that, Your Honor.

[00:04:35] Speaker 03:
Again, I find that kind of argument disturbing.

[00:04:39] Speaker 04:
When we look at what the board actually did, especially if you look at page 20,

[00:04:54] Speaker 01:
Are you referring to 20 of the board's opinion?

[00:04:57] Speaker 01:
Yes, yeah.

[00:04:57] Speaker 04:
I'm looking at 5029.

[00:05:05] Speaker 04:
This is in the 1538 appeal.

[00:05:13] Speaker 04:
And they made the same comment in both final decisions.

[00:05:17] Speaker 04:
And they said that although the NAIC's disclosure of page 9 does not indicate

[00:05:21] Speaker 04:
explicitly changing the coverage of beneficiaries to respective insurance policy occurs in real time.

[00:05:28] Speaker 04:
One of ordinary skill in the art would have appreciated such transactions maybe instant in nature.

[00:05:35] Speaker 04:
And the only references there are to Mr. Klausner's testimony.

[00:05:41] Speaker 04:
And the problem there was that Mr. Klausner had no insurance industry experience, never worked in it, didn't consult with anybody in that industry.

[00:05:53] Speaker 04:
And in a motion, in a motion to exclude, Liberty said that he does not report to testify as an expert on insurance matters.

[00:06:03] Speaker 03:
What's your basis in your blue brief at 16 and 17 for saying that Klausner makes his living as a professional testifying expert?

[00:06:15] Speaker 04:
During his death from his CV.

[00:06:20] Speaker 03:
His CV says that he makes his living as a consultant and an expert.

[00:06:30] Speaker 04:
And he testifies.

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frequently as well.

[00:06:34] Speaker 04:
But one thing he doesn't do is he doesn't have experience in the insurance industry.

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And yet here he is offering an opinion about that a person with already skill in the art reading the NIC paper would infer that a real-time adjustment of insurance policy would be advantageous.

[00:06:56] Speaker 04:
He doesn't have any background or experience, Your Honor, to know how adjustments were made back then.

[00:07:03] Speaker 04:
And Liberty did have an expert that had industry experience, that was Ms.

[00:07:09] Speaker 04:
O'Neill.

[00:07:10] Speaker 04:
He didn't even consult with her.

[00:07:12] Speaker 04:
And the other thing that Mr. Clausner did that we think was error is he didn't apply the board's claim instruction.

[00:07:18] Speaker 04:
This court made clear in the Muny auction case that when testifying in validity, an expert must compare the construed claims to the prior art.

[00:07:27] Speaker 04:
He never did that.

[00:07:29] Speaker 04:
His expertise was really in computer systems, designing computer systems, and basically his position came down to, well, if somebody in the insurance industry tells me what they want, I can figure out how to program a computer to do it.

[00:07:45] Speaker 04:
But we have to look what the NIC paper actually said.

[00:07:48] Speaker 04:
And again, the board said it doesn't explicitly indicate you change an insurance framework, like changing a beneficiary.

[00:07:57] Speaker 04:
in real time.

[00:07:58] Speaker 04:
The only support was Klausner, who really is in no position to say how reading this paper, someone in the insurance industry would interpret that way.

[00:08:08] Speaker 04:
And the board also relied heavily on page 8 of the NAIC opinion, I'm sorry, NAIC paper, where there's a reference to instant transactions and communications.

[00:08:20] Speaker 04:
And here, there's no description of what those transactions or communications are.

[00:08:26] Speaker 04:
Now, when you look at the entire paragraph, it's talking about what producers can do.

[00:08:31] Speaker 04:
A producer is defined in that paper to be an insurance agent, not the insurance company.

[00:08:36] Speaker 04:
It's the insurance company that makes the adjustments.

[00:08:39] Speaker 04:
So now there are other places in the INC paper where there's some transactions that are described that I think you could fairly say are instant, such as requesting and receiving information to get directions to a repair facility, for example, or reviewing your account online, seeing how much your payment is due, and making the payment.

[00:08:59] Speaker 04:
But an important point I'd like to make here, though, is the real-time adjustment of the insurance policy parameters described in the patent is not an instant transaction.

[00:09:10] Speaker 04:
The claim and the preferred embodiment, which is an exemplary of the claims, talks about a series of interactions where you go back and forth.

[00:09:18] Speaker 04:
The policyholder transmits information.

[00:09:21] Speaker 04:
If the insurance company has to evaluate it, they might request further information.

[00:09:25] Speaker 04:
It's not until a number of transactions have been completed that the insurance policy parameter can be adjusted.

[00:09:36] Speaker 04:
And the patent even explains and prefer to embody that any time during their process, the policyholder can cancel and stop this.

[00:09:44] Speaker 04:
So even after there's been some transactions, that the insurance policy parameter is not adjusted.

[00:09:51] Speaker 04:
So we don't think that, we think it was hindsight was used to read into instant transactions, that that's a real time adjustment of an insurance policy parameter.

[00:10:03] Speaker 04:
We believe that that hindsight was used by relying on Mr. Klausner, who didn't really have expertise in the insurance industry.

[00:10:14] Speaker 04:
And that the court, I'm sorry, the board did not give due consideration to Ms.

[00:10:19] Speaker 04:
Caccione, who actually worked in the insurance industry, was a contributor to the NIC paper.

[00:10:25] Speaker 04:
had first-hand knowledge of how people in the insurance industry understood the endorsement policy changes to insurance policies, how they were done in 1998, and she testified that they wouldn't understand the NIC paper to suggest an instant or real-time adjustment of an insurance policy.

[00:10:45] Speaker 04:
So we think there's a lack of substantial evidence that the NIC paper discloses

[00:10:51] Speaker 04:
The real-time adjustments of insurance policy, the board used hindsight to rely on that.

[00:10:58] Speaker 04:
Now, if I can go to claim interpretation, we think that there's also reversible error on the issue of claim interpretation because the board adopted a broadest reasonable interpretation that was divorced from the specification and the record evidence.

[00:11:15] Speaker 04:
What the board did is they failed to tailor the use of this term external process that's used in a dictionary definition to its meaning in the context of the patent.

[00:11:27] Speaker 04:
And by doing so, the board elevated these abstract words in the dictionary definition above the intrinsic evidence and legally erred.

[00:11:35] Speaker 04:
And Philip says that's legal error.

[00:11:37] Speaker 04:
We submit the correct instruction of actual time

[00:11:41] Speaker 04:
is that an external process, that the actual time an external process occurs means during the same internet session.

[00:11:50] Speaker 04:
And that's what's disclosed in the patent.

[00:11:53] Speaker 04:
There's undisputed evidence from Dr. Jaffay.

[00:11:57] Speaker 04:
That's how one of Ordnance Field and the Art would interpret this.

[00:12:00] Speaker 04:
And the board's construction's term matters, because it's erroneous construction that opened the door to the board's application of hindsight in assessing obviousness.

[00:12:11] Speaker 04:
And that clean construction should frame the obviousness analysis.

[00:12:15] Speaker 04:
And without a proper context for understanding words like external process,

[00:12:20] Speaker 04:
One cannot understand what the time frame is for the action that must be performed during this external process.

[00:12:27] Speaker 04:
Now here the NAC paper is not a technical paper.

[00:12:30] Speaker 04:
There are no flow diagrams, no technical description.

[00:12:33] Speaker 04:
It was purely aspirational.

[00:12:36] Speaker 04:
And it was talking about possible uses of what insurance companies might be able to do in the future, provided no detail.

[00:12:45] Speaker 02:
It wasn't purely aspirational.

[00:12:48] Speaker 02:
The sentence at page 13 of NAIC that

[00:12:54] Speaker 02:
It's quite striking, it's not absolutely complete, but the last complete sentence on that page, in addition to obtaining quotes, customers currently have the ability from at least one auto insurer to complete the entire transaction online.

[00:13:12] Speaker 02:
Now that doesn't say

[00:13:14] Speaker 02:
completed in what you would call a single session, whatever exactly that means, but that's not aspirational.

[00:13:22] Speaker 02:
It suggests my implication that it's very, very far from widespread, but it exists.

[00:13:30] Speaker 04:
I would have a couple points to make in response to that, Your Honor.

[00:13:34] Speaker 04:
it's not really clear what this entire transaction is, although it's in the context of a paragraph that talks about buying insurance online, which is different than adjusting a policy.

[00:13:47] Speaker 04:
The other thing, there's really no disclosure to suggest

[00:13:50] Speaker 04:
how this is completed online.

[00:13:52] Speaker 04:
Things can be completed online in many ways and there's nothing to suggest except hindsight that this transaction was completed in real time.

[00:14:01] Speaker 04:
Again, whatever that transaction is.

[00:14:02] Speaker 02:
Is that what you're meaning by how in the real time?

[00:14:06] Speaker 02:
That's not the technical inner communication protocols and stuff which is not part of what you're claiming.

[00:14:12] Speaker 04:
Yeah, I would say it's part of the how.

[00:14:16] Speaker 04:
It's the real time.

[00:14:18] Speaker 04:
But again, the claim is not just directed or drafted broadly to real-time adjustments.

[00:14:24] Speaker 04:
There's a number of specific software modules that require specific steps that must be executed in accordance with the limitations of the claims.

[00:14:34] Speaker 04:
And there's nothing here that helps bridge the gap between this generic statement

[00:14:39] Speaker 04:
and the claimed invention.

[00:14:42] Speaker 01:
You're well into your rebuttal, so why don't we hear from the others.

[00:14:45] Speaker 04:
Thank you, Your Honor.

[00:14:45] Speaker 04:
I reserve the rest for rebuttal.

[00:15:17] Speaker 00:
May I please support?

[00:15:20] Speaker 00:
The NAIC document gives four examples that show instantaneous adjustment and certainly suggest it and provide substantial evidence.

[00:15:30] Speaker 00:
Number one, they tell you there are instant transactions and that's at A5096 in the 088.

[00:15:38] Speaker 00:
And the board concluded that that encompasses instantaneously adjusting an insurance policy parameter

[00:15:46] Speaker 00:
and credits Klausner.

[00:15:49] Speaker 00:
Then number two, the NAIC says automation vendors are already designing websites that allow you to determine the type of the amount of coverage and make changes in the policy, thereby establishing an insurance agency that's accessible to policyholders and consumers 24 hours a day.

[00:16:14] Speaker 00:
24 hours a day, you can make changes in your policy.

[00:16:19] Speaker 00:
Customers currently, third example, customers currently have the ability from at least one auto insurer to complete the transaction online.

[00:16:27] Speaker 00:
That's from A5101.

[00:16:29] Speaker 00:
And my previous example about automation in vendors was A5105.

[00:16:36] Speaker 00:
The fourth example is one insurer already had the ability

[00:16:41] Speaker 00:
to allow policyholders to make payments and extend the term and avoid cancellation when the offices were closed, A5102.

[00:16:54] Speaker 00:
It's not simply that you submitted a payment.

[00:16:57] Speaker 00:
You actually were able to make sure you had insurance going forward when the offices were closed.

[00:17:07] Speaker 00:
Is NAIC sufficiently technical?

[00:17:10] Speaker 00:
I would argue it is more technical than the disclosure in 088 and 269.

[00:17:15] Speaker 00:
And if you take a look at the glossary, you will see how to build a website in a description that is more detailed than in the patent.

[00:17:22] Speaker 00:
And if you look at the front of it, in A5091 and A5093 through 95, they give you a detailed internet commerce, accessing the internet,

[00:17:36] Speaker 00:
the World Wide Web.

[00:17:39] Speaker 00:
It explains how insurance policies are sold and serviced over the internet, A5095 through 97, and it even describes electronic applications, electronic signatures, and security, and that's an A5099

[00:17:56] Speaker 00:
Now, I'll notice progressive in this argument, and often they like to ignore Lockwood.

[00:18:02] Speaker 00:
Lockwood was 1984.

[00:18:04] Speaker 00:
That is a program, a software program that went through a network that allowed you to go into a mall, a department store, and you could apply for, get quotes, make adjustments, and get a policy on the spot.

[00:18:22] Speaker 00:
And according to Lockwood, all in 1984,

[00:18:25] Speaker 00:
all carried out automatically.

[00:18:27] Speaker 00:
What was the objective of Lockwood?

[00:18:30] Speaker 00:
It was intended to give the impression that you were dealing with a live person, A5156.

[00:18:38] Speaker 00:
Now what happens is Ms.

[00:18:41] Speaker 00:
O'Neill testifies, well wait a minute.

[00:18:44] Speaker 00:
This idea that changes is more difficult than the new policy, that doesn't make any sense.

[00:18:50] Speaker 00:
When you're underwriting, you perform the identical functions.

[00:18:53] Speaker 00:
A large part of this is the same.

[00:18:56] Speaker 00:
And the board credited Ms.

[00:18:59] Speaker 00:
O'Neill's testimony, and in fact at

[00:19:03] Speaker 00:
and predictably uses prior art elements according to their established functions and obvious improvement at A5029.

[00:19:14] Speaker 00:
And the board found that Liberty presented sufficient evidence that issuing new policies and adjusting existing policies involved many identical functions, that is at A5029.

[00:19:31] Speaker 00:
What about progressive's testimony?

[00:19:34] Speaker 00:
What do the board have to say about it?

[00:19:36] Speaker 00:
Their findings, their fact findings.

[00:19:38] Speaker 00:
Number one, progressive attempted to focus the board on distorted readings of selected passages.

[00:19:45] Speaker 00:
The sides for that, and they're multiple, are A5017, A5018, A5019,

[00:19:55] Speaker 00:
A5021 through 23, and that's from the 0885 final written decision.

[00:20:03] Speaker 00:
What happened here was the Progressive linked their computer expert, Jafay, to Caccione, and that is in A7169.

[00:20:15] Speaker 00:
And then Caccione testifies that the traditional way of handling underwriting was with email and sending email and manual processing.

[00:20:26] Speaker 00:
And then Jafay says, that I should say is that A7233.

[00:20:32] Speaker 00:
Then Jafay relies on Cachione as to the state of the art.

[00:20:37] Speaker 00:
So Jafay, who'd written papers on real-time automation, suddenly says, oh, Cachione says people use email and manual processing.

[00:20:48] Speaker 00:
That is what I'm going to say is the knowledge of the insurance industry.

[00:20:53] Speaker 00:
Well, what was traditional is not the state of the art.

[00:20:56] Speaker 00:
They used the wrong legal standard for the whole basis for it.

[00:21:01] Speaker 00:
And Jafay relies upon catching on for that.

[00:21:05] Speaker 00:
A7169.

[00:21:07] Speaker 00:
The board points out that it's not the correct standard.

[00:21:11] Speaker 00:
That's A5018 through 20.

[00:21:15] Speaker 00:
The board points out that Progressive fails to discuss the AIC disclosures as a whole.

[00:21:21] Speaker 00:
And that's A5017 through 19.

[00:21:25] Speaker 00:
and a five zero to one through two three and the board correctly find that liberty mutuals experts are more credible the insurance expert miss o'neill and mister clausner at a five zero one eight through two one

[00:21:41] Speaker 00:
I'm the board.

[00:21:42] Speaker 01:
Let me reassure you that we've read the board opinion.

[00:21:45] Speaker 01:
We're intimately familiar.

[00:21:46] Speaker 01:
So you might, if you have anything else, if not.

[00:21:50] Speaker 00:
I finished at that section with your honor and I appreciate it.

[00:21:53] Speaker 00:
One last thing on the real time plank construction.

[00:21:57] Speaker 00:
Progressive represented to the board.

[00:22:00] Speaker 00:
They took the position that construction of the term real time was quote, not necessary to confirm patentability of the claims.

[00:22:08] Speaker 00:
That's an A6997.

[00:22:11] Speaker 00:
Progressive doesn't point to any portion of the SPAC that talks about the same online internet session.

[00:22:19] Speaker 00:
The broadest reasonable interpretation is the IEEE definition.

[00:22:24] Speaker 00:
And the board itself says,

[00:22:26] Speaker 00:
Progressive is trying to add an unnecessary limitation here, and we're confused about what the same online internet session would be.

[00:22:35] Speaker 00:
But most importantly, it doesn't matter.

[00:22:39] Speaker 00:
Because this is a 103 obviousness, and NAIC says, wait a minute, you can make changes 24 hours a day when the office is closed.

[00:22:50] Speaker 00:
Lockwood allows you to do it on an automated basis.

[00:22:54] Speaker 00:
You can complete the entire transaction.

[00:22:56] Speaker 00:
And what we find is it would be obvious to be able to provide a website that would allow you to make real-time adjustments in the insurance policy no matter how you define real-time for purposes of this proceeding.

[00:23:16] Speaker 00:
I have no further point.

[00:23:17] Speaker 00:
Thank you.

[00:23:26] Speaker 04:
Thanks, John.

[00:23:27] Speaker 04:
Just a few points.

[00:23:29] Speaker 04:
Liberty just argued that its theory is that instant transactions, at least Tyler said it, that instant transactions

[00:23:35] Speaker 04:
encompass instant adjustments.

[00:23:37] Speaker 04:
As I explained earlier, adjustments are not instant.

[00:23:40] Speaker 04:
Adjustments are the result of a series of transactions that must be completed.

[00:23:46] Speaker 04:
Also, the NIC paper in page 9, where it talks about transactions that four times that the insurance company, that's without internet service.

[00:23:58] Speaker 04:
Then it talks about what might happen if

[00:24:00] Speaker 04:
in the future.

[00:24:02] Speaker 04:
But one of the interactions too is making claims.

[00:24:05] Speaker 04:
It's undisputed that when a claim is made, an investigation must take place.

[00:24:08] Speaker 04:
So that can't be an instant transaction.

[00:24:13] Speaker 04:
And then on page 14, counsel referred to that section.

[00:24:17] Speaker 04:
The key words there, it talks about maintaining an existing policy, making payments to maintain an existing policy.

[00:24:23] Speaker 04:
Well, when you make the payment, you're not changing an insurance policy, a parameter of the policy, you're just fulfilling your contractual obligation to make the payments on the schedule that was agreed to.

[00:24:34] Speaker 04:
And then on Lockwood, first of all, Lockwood was not the basis for the board's decision to invalidate the independent claim.

[00:24:45] Speaker 04:
It was just the dependent claim.

[00:24:49] Speaker 04:
And the only support for Lockwood is Miss O'Neill's testimony in paragraph 40, where she just gets conclusory testimony.

[00:24:58] Speaker 04:
They had to be advantageous to make changes online.

[00:25:01] Speaker 04:
Miss O'Neill had experience in the actuarial part of the insurance industry.

[00:25:05] Speaker 04:
Now she's opining on the technology, and we submit that that's not substantial evidence.

[00:25:11] Speaker 01:
Final thought, Tom?

[00:25:14] Speaker 04:
Yeah, I want to apologize to the court that we made some arguments that the court found troubling.

[00:25:21] Speaker 04:
Lesson learned, just ask the court to... We apologize, and we do want to focus on the merits of the case.

[00:25:30] Speaker 04:
Again, when we focus on the merits, we think there were sub-reversible errors on claim construction, lack of substantial evidence, and the legal conclusion of oddness.

[00:25:39] Speaker 03:
The lesson that you should learn is that if you make a statement that is unsupported, inaccurate, or hyperbolic, that it will cost you time to explain it.

[00:25:53] Speaker 01:
Thank you.

[00:25:54] Speaker 01:
The cases are submitted and we thank all counsel for their participation.