[00:00:00] Speaker 04:
141466 and 141656.

[00:00:58] Speaker 03:
Whenever you're ready.

[00:01:02] Speaker 03:
These two appeals have been 1466 and 1656.

[00:01:06] Speaker 03:
They have overlapping issues.

[00:01:09] Speaker 03:
Many portions of the briefs are similar.

[00:01:11] Speaker 05:
Including the procedural issue that we've all been dying to talk about.

[00:01:15] Speaker 03:
The procedural issue that we cannot talk about.

[00:01:19] Speaker 03:
The issues that we raise, we don't raise claim construction issues, but we raise the obviousness issues and again the motivation of recent compliance.

[00:01:28] Speaker 03:
So, let's first start with the 1466 appeal, which has the issues for the 970 pass.

[00:01:37] Speaker 03:
And this deals with actual, excuse me, actuarial policies of insurance and insured profiles.

[00:01:44] Speaker 03:
Claims 1, 3 through 6, and by the way, in our blue brief, I believe we misstated 3,6.

[00:01:50] Speaker 03:
It should be 3 through 6 in the issues, but we apologize for that.

[00:01:54] Speaker 03:
There was a typo.

[00:01:55] Speaker 03:
It's claims 1, 3 through 6, 9 to 15, and 18.

[00:01:59] Speaker 03:
These claims are not obvious because there's no substantial evidence

[00:02:03] Speaker 03:
that the prior art discloses actuarial classes of insurance.

[00:02:07] Speaker 03:
And that's tarot.

[00:02:08] Speaker 03:
Is that the prior art reference?

[00:02:10] Speaker 03:
Yes.

[00:02:11] Speaker 03:
And the reason being is that these groupings have to be groupings related to expected loss.

[00:02:18] Speaker 03:
That's the construction of an actuarial class.

[00:02:21] Speaker 03:
The party's experts agreed that an expected loss

[00:02:26] Speaker 03:
is the probability or frequency of an expected claim under insurance contract due to a covered loss or accident multiplied by the expected claim severity under that insurance contract.

[00:02:40] Speaker 03:
So it has to do with frequency of claims

[00:02:44] Speaker 03:
not just accident risk.

[00:02:47] Speaker 03:
That's what these actuarial groupings are.

[00:02:49] Speaker 05:
But aren't you underplaying, what's the phrase, related to?

[00:02:53] Speaker 05:
Is that in the claim construction?

[00:02:56] Speaker 03:
Related to expected loss?

[00:02:58] Speaker 05:
Right.

[00:02:58] Speaker 05:
So, I mean, if one thing is a function of two variables, it's related to variable number one.

[00:03:07] Speaker 05:
Why is that?

[00:03:09] Speaker 05:
doesn't that mean that even though the other things like how many claims and the size of the claims, there also are variables that ultimately determine the insurance company's risk and therefore the prices.

[00:03:28] Speaker 05:
But those risks and prices are still related to the starting point, which is the driver

[00:03:36] Speaker 03:
Your Honor, I think that would almost reduce the absurdum in the sense that if you say that, for instance, a person's name is related to the expected loss, that's not the kind of group... But that probably isn't.

[00:03:48] Speaker 05:
Pardon me?

[00:03:49] Speaker 05:
That probably isn't, in fact, that example related to...

[00:03:53] Speaker 05:
But you do yourself say that the expected loss is ultimately a product of certain things.

[00:04:02] Speaker 05:
The items in the product, the result is clearly related to each item.

[00:04:08] Speaker 03:
If you look at it that way, it's related to each item separately, but we think the construction was referring to a relatedness to the loss as a whole, not a relatedness to each item separately, and the loss as a whole

[00:04:24] Speaker 03:
is the answer to that equation.

[00:04:29] Speaker 03:
I was trying to avoid that word.

[00:04:30] Speaker 03:
Did I say that right?

[00:04:32] Speaker 03:
I'm not sure what it is.

[00:04:34] Speaker 03:
Elements in the equation because that would say almost anything could be related to expected loss but here the loss has to consider expected loss.

[00:04:43] Speaker 03:
These are actually groupings not just based on risk but based on loss and that's what the board said and loss is more than accident risk.

[00:04:53] Speaker 03:
Therefore, Herod by itself is insufficient to suggest that there's some type of basis for finding in the prior art any groupings related to expected loss.

[00:05:07] Speaker 03:
In fact, the board changed its interpretation and we think changed it the right way, Your Honor.

[00:05:14] Speaker 03:
If you go to the institution decision at A3818,

[00:05:19] Speaker 03:
The board had originally said that this type of actuarial class relates to loss, risk or safety and the board took out the risk or safety aspects and emphasized that it relates to loss and so we think that supports

[00:05:41] Speaker 03:
It's the question you had Judge Toronto about whether, for instance, risk is sufficient.

[00:05:46] Speaker 03:
And that's really the key point here.

[00:05:48] Speaker 03:
It's not sufficient anymore.

[00:05:49] Speaker 03:
The board has said it's not sufficient.

[00:05:52] Speaker 03:
And we agree with the board's claim construction.

[00:05:55] Speaker 03:
So each of the combinations that the board made for these claims, 1, 3 through 6, 9 to 15 and 18, relied on Herod and relied on the fact that this accident risk

[00:06:09] Speaker 03:
would be a sufficient behavioral grouping to be related to expected loss.

[00:06:14] Speaker 03:
But it's not because, again, it misses the probability that a claim is filed.

[00:06:20] Speaker 02:
It's not just that... The Liberties expert, Ms.

[00:06:24] Speaker 02:
O'Neill, says that a posited would know how to calculate expected loss cost, discounting the probability that an insured wouldn't file a claim.

[00:06:37] Speaker 03:
She speaks to this at her paragraph 43 and paragraph 47.

[00:06:41] Speaker 03:
We're at the appendix.

[00:06:44] Speaker 03:
I'm going to turn to that now so I can follow along.

[00:06:47] Speaker 03:
A, 45, 56, and 57.

[00:06:52] Speaker 03:
And if we look at what she said, the first statement is really a rather circular statement.

[00:07:03] Speaker 03:
What she says in paragraph 43, and I'm looking at A4557, a Poseida would know that in order to create such behavioral groups relevant to insurance rating, well, Herod doesn't say that there's any group relevant to insurance rating.

[00:07:27] Speaker 03:
An expert can say that, but that's not in Herod as a piece of prior art.

[00:07:31] Speaker 03:
And then she goes further to say which a basida would interpret as actuarial classes, but she doesn't say actuarial classes as interpreted by the board.

[00:07:42] Speaker 03:
The board said that actuarial classes have to be groupings related to expected loss.

[00:07:48] Speaker 03:
And that's not what's discussed here.

[00:07:50] Speaker 03:
And then she said, would necessarily involve analyzing the data collected in HERA to determine any associated expected loss.

[00:07:57] Speaker 03:
This is conclusory speculation drawn with hindsight by looking at HERA.

[00:08:02] Speaker 03:
There's nothing in HERA that suggests these groupings would be used for expected loss purposes in order to create insurance premiums.

[00:08:12] Speaker 03:
What Herod says about insurance is rather vague.

[00:08:17] Speaker 03:
I think the court's probably familiar with it.

[00:08:21] Speaker 03:
Herod at A149 simply has a paragraph that says, this information could be of use to vehicle owners and insurers.

[00:08:37] Speaker 03:
By the same token, safe drivers would be able to demonstrate their competence to insurance companies.

[00:08:42] Speaker 03:
But it doesn't say that there are going to be actuarial classes of insurance based on expected loss that are created as a result of this.

[00:08:51] Speaker 03:
That's based on an interpretation of Mrs. O'Neill in her, what we think is a belated declaration.

[00:09:01] Speaker 03:
Let's get someone into the procedural part.

[00:09:03] Speaker 03:
All of this was so important, it should have been relied on in the petition, and it should have been a basis for them to introduce the evidence at that time, not at a late date in the reply brief, and not at a late date having the board

[00:09:21] Speaker 03:
rely upon this testimony to link to a new claim construction.

[00:09:26] Speaker 03:
The claim construction the board had this time did not have risk in it.

[00:09:30] Speaker 03:
It had expected loss.

[00:09:34] Speaker 03:
Herod talks about some type of behavioral groups that may be related to risk and the board created a new ground for rejection.

[00:09:43] Speaker 03:
by changing the claim construction and then relying on what was said by O'Neill in respect of Herod as relating to expected losses.

[00:09:55] Speaker 03:
The first interpretation by the board was Herod was good enough because it related to accident risk.

[00:10:02] Speaker 03:
Now in the final reading decision they say Herod is good enough even under their interpretation based on expected loss.

[00:10:09] Speaker 03:
So that's a little bit of a problem.

[00:10:12] Speaker 05:
That particular notice argument or procedural argument depends on your claim construction argument.

[00:10:18] Speaker 05:
You have a separate one having to do with Kosaka, which doesn't, is that right?

[00:10:22] Speaker 03:
Well, this one and Kosaka is different, but this doesn't depend on the clay construction.

[00:10:27] Speaker 03:
We agree with the clay construction.

[00:10:29] Speaker 03:
In other words, it's not that we're asking to be changed.

[00:10:31] Speaker 05:
It depends on our argument relative to the clay construction.

[00:10:34] Speaker 03:
I misspoke.

[00:10:34] Speaker 03:
I just want to make sure that we're thinking on that.

[00:10:37] Speaker 03:
Kosaka is the fuzzy logic, which is the part I've brought up before.

[00:10:44] Speaker 03:
The issue with Kosaka relates to other claims.

[00:10:48] Speaker 03:
Here it is our primary discussion for gap spilling on the claims that I just discussed.

[00:10:54] Speaker 03:
If I can finish this quickly, there's also paragraph 49, which is referenced in the O'Neill Declaration, and that is similarly

[00:11:07] Speaker 03:
insufficient.

[00:11:08] Speaker 03:
It says at the bottom of A4559, a posita would recognize that the data collected using the HERA device is used to define actual actuarial classes.

[00:11:19] Speaker 03:
Here she just says behavioral groups.

[00:11:22] Speaker 03:
That's insufficient under the board's construction.

[00:11:25] Speaker 03:
And she says based on measured accident risk, again insufficient, arising from observed driving acceleration patterns.

[00:11:33] Speaker 03:
So O'Neill's declaration and those two paragraphs are insufficient to fill in the gaps from Herod.

[00:11:40] Speaker 03:
And based on the appropriate claim construction, there should not have been the obvious misdetermination based on Herod.

[00:11:48] Speaker 03:
As for COSACA, that comes into claims 4 through 5 and 16 through 17, and that's the issue of the prepayment amount.

[00:11:58] Speaker 03:
The question there is whether COSACA's so-called prepayment amount is a base cost of insurance, and this is one where there is no significant substantial evidence to suggest that that's anything other than

[00:12:16] Speaker 03:
something like a debit card, something like an easy pass card, some type of account from which insurance payments could be drawn, but not that it's based on, not that it's a base cost in insurance, it's based on the things we talked about, rating factors, historical data, actual driving conditions, and the like.

[00:12:40] Speaker 03:
So without that, there is no

[00:12:45] Speaker 03:
There is no base cost of insurance.

[00:12:48] Speaker 03:
Kosaka doesn't discuss that this little bank, if you will, this prepayment amount is going to vary among insurers.

[00:12:56] Speaker 03:
It's going to vary among people that are using it.

[00:12:59] Speaker 03:
It simply says there's a prepayment amount.

[00:13:02] Speaker 03:
And the link to make that a base cost of insurance.

[00:13:05] Speaker 05:
You mean it's not going to vary among insurers?

[00:13:08] Speaker 03:
Insurers, yes.

[00:13:09] Speaker 03:
I said the wrong thing.

[00:13:13] Speaker 03:
The question then became on the procedural issue and the new ground that we were raising is the ground with respect to Herod in that Herod, because of the claim construction change, was presented as a new ground for rejection by the board and that was improper.

[00:13:35] Speaker 03:
The second, with the fuzzy logic being added,

[00:13:43] Speaker 03:
That relates to the evidence that should have been brought in earlier if the petitioner were suggesting, if Liberty were suggesting that Kosaka's fuzzy logic was something that was known to one of ordinary skill in the insurance industry generally and could be used to be applied in the insurance industry in connection with the type of claim that's set forth here.

[00:14:13] Speaker 03:
that information that was brought in at a late date through the O'Neill Declaration and also through four or five different references, dealing with the point not whether fuzzy logic was disclosed in Kosaka, but whether fuzzy logic was well known in the insurance industry.

[00:14:31] Speaker 05:
Can I ask, let me just ask or tell you what I'm remembering being concerned about on Kosaka,

[00:14:42] Speaker 05:
fuzzy logic and notice.

[00:14:45] Speaker 05:
Maybe this was the earlier case or maybe it's the same.

[00:14:49] Speaker 05:
I took it that you had kind of two types of objections, notice-based objections regarding Kosaka and fuzzy logic.

[00:14:59] Speaker 05:
One is the one I think that you just articulated that it was improper to allow the kind of evidence and rely on the kind of evidence about what a relevant skilled artisan would understand about fuzzy logic.

[00:15:14] Speaker 05:
I want to put that aside.

[00:15:18] Speaker 05:
Perhaps that one is sort of within that ambit of the issue of what a skilled artist would understand was known to you.

[00:15:29] Speaker 05:
But I thought you had a separate point.

[00:15:32] Speaker 05:
And the board said,

[00:15:34] Speaker 05:
Oh, we haven't noted this before, but there's a piece of Kosaka that says, use insurance tables.

[00:15:42] Speaker 05:
Now, that one feels to me intuitively like a quite new ground, which nobody had put you on notice of before.

[00:15:54] Speaker 05:
But my problem with that, which I had heard it to earlier, was that that's just an alternative ground and it doesn't affect the outcome because the board, if the board was right in saying, we find a skilled artisan would have known enough about fuzzy logic and how to do it, that makes it curious.

[00:16:14] Speaker 05:
The separate point, which the board also articulated,

[00:16:18] Speaker 05:
Oh, never mind all this fuzzy logic business.

[00:16:21] Speaker 05:
It turns out on page three or something of Kusaka, they say you can use insurance tips.

[00:16:30] Speaker 03:
Isn't that a problem?

[00:16:32] Speaker 03:
You're right, Your Honor.

[00:16:33] Speaker 03:
They do appear to be separate grounds, although they never really developed the common insurance table.

[00:16:39] Speaker 03:
They said, yeah, this is a new thing.

[00:16:40] Speaker 03:
We're going to throw it out.

[00:16:41] Speaker 03:
You can use the common insurance table.

[00:16:43] Speaker 03:
We never had a chance to respond to that.

[00:16:45] Speaker 03:
And it really depends on which way the court determines is the appropriate ground to decide this case.

[00:16:53] Speaker 03:
If it's on common insurance table, it's clearly, as the court said,

[00:16:56] Speaker 03:
something we never had a chance to respond to a total surprise.

[00:17:00] Speaker 03:
If it's on fuzzy logic, you have my argument as to why fuzzy logic information is there.

[00:17:04] Speaker 03:
Too late and should have been brought in sooner.

[00:17:08] Speaker 03:
I do want to talk about, I have three minutes or so left, talk about the other appeal, which is very similar, except it deals with Bouchard as a primary reference instead of Kosaka.

[00:17:20] Speaker 03:
So we don't have the fuzzy logic issue.

[00:17:22] Speaker 03:
We have similar arguments with respect to Harris, as to the claims that I mentioned in 4-1, 3-6, 9-18.

[00:17:30] Speaker 03:
But then with respect to

[00:17:33] Speaker 03:
I'm sorry, 1, 3 to 18 in that one.

[00:17:37] Speaker 03:
We also have claims 4, 5, and 16 to 17 that relied on Pouchard.

[00:17:43] Speaker 03:
And this is where the board really erred in laying out a reason to combine.

[00:17:48] Speaker 03:
This is where the board laid out some statements from what they called the Florida Guide that are now turning to

[00:18:02] Speaker 03:
This is the language that supposedly gives us the...

[00:18:09] Speaker 03:
the reason to combine and it says that the Florida guide tells you you have to create an insured profile.

[00:18:19] Speaker 03:
But that's not what the claim talks about.

[00:18:21] Speaker 03:
The claims talk about creating a profile and then going further for claim for monitoring the vehicle operator driving characteristics, etc., etc.

[00:18:32] Speaker 04:
Mr. Robski, I'll just remind you, you're on your rebuttal time.

[00:18:35] Speaker 04:
Oh, sorry.

[00:18:36] Speaker 04:
I think you're going to want to save some of that.

[00:18:38] Speaker 03:
I have been watching this.

[00:18:39] Speaker 03:
I will save for rebuttal.

[00:18:40] Speaker 03:
But that's our point.

[00:18:41] Speaker 03:
The reason to combine is inappropriate and not clearly laid out and not sufficient.

[00:18:48] Speaker 03:
Thank you.

[00:19:14] Speaker 04:
Mr. Myers.

[00:19:16] Speaker 01:
Thank you.

[00:19:17] Speaker 01:
May it please the court?

[00:19:21] Speaker 01:
Progressive arguments here are essentially a repeat of the arguments that they made at the oral hearing.

[00:19:28] Speaker 01:
And I recommend taking a look at the transcript.

[00:19:30] Speaker 01:
You'll see that it's almost exactly the same.

[00:19:33] Speaker 01:
And that's at A5084 through 5173.

[00:19:38] Speaker 01:
They're not entitled to a redo or a substitution or mulligan.

[00:19:43] Speaker 05:
The question here is... I'm confused.

[00:19:46] Speaker 05:
I thought it's generally a good thing that litigants coming to this court are making the same arguments they made below.

[00:19:53] Speaker 01:
The question presented is whether there's substantial evidence for the board's findings.

[00:20:00] Speaker 01:
And that is not what Progressive is arguing.

[00:20:04] Speaker 01:
They're arguing for this court to replace the board's determination.

[00:20:09] Speaker 01:
There's no claim construction here.

[00:20:12] Speaker 01:
So this isn't de novo.

[00:20:15] Speaker 01:
They got the claim construction they asked for.

[00:20:18] Speaker 01:
The issue is whether or not the federal circuit will find that there is substantial evidence, a reasonable basis for the board's fact findings, which leads to the conclusion of obviousness.

[00:20:33] Speaker 01:
And it is those fact findings that were made by the board which progressive contest in the same way they did before the board.

[00:20:41] Speaker 01:
That's my point, Your Honor.

[00:20:43] Speaker 01:
So let's turn to what's the substantial evidence and why this court should be satisfied that the board did a good job.

[00:20:55] Speaker 01:
So the first thing that I would say, Your Honor, on this issue of Herod, let me give you a little bit of a background about that reference.

[00:21:02] Speaker 01:
What Herod did was it monitored a group of drivers' behavior in the United Kingdom.

[00:21:09] Speaker 01:
It determined their acceleration patterns and their speeds.

[00:21:14] Speaker 01:
And based on that, it grouped them into behavioral groups based on their acceleration and their speed.

[00:21:22] Speaker 01:
And it concluded that they could predict accident risk.

[00:21:27] Speaker 01:
The argument that Progressive makes here is essentially there's a disconnect between predicting accident risk and insurance loss.

[00:21:38] Speaker 01:
And there are several places where the board disagrees.

[00:21:42] Speaker 01:
Let's turn to number one.

[00:21:44] Speaker 01:
The Paterson reference itself was a measure and a study which was done in acceleration patterns.

[00:21:52] Speaker 01:
And at A7135, and I'm going to read it, just a portion of it.

[00:21:58] Speaker 05:
Can I just ask you, you started by saying the board disagreed and I was expecting to hear a citation to something in the board decision.

[00:22:05] Speaker 01:
Where did the board specifically... The board specifically found that

[00:22:09] Speaker 01:
at A7041 that Herod disclosed to a posita the use of actuarial classes and that it was related to expected loss at 7032 through 43.

[00:22:22] Speaker 05:
I have to stop you.

[00:22:25] Speaker 05:
There's too many different pagination numbers here.

[00:22:28] Speaker 01:
I understand.

[00:22:28] Speaker 01:
And this is then the Bouchard one, which is appeal number 141656.

[00:22:35] Speaker 01:
And I've chosen Bouchard because it covers all the claims.

[00:22:38] Speaker 01:
So if you agree with 1656, the 970 Pat Claims are canceled.

[00:22:45] Speaker 05:
And so... I'm sorry, so what was the page then in the board decision in that one?

[00:22:50] Speaker 01:
Is in 7041, and then there are surrounding discussions in 7032-43.

[00:22:58] Speaker 01:
Okay, thank you.

[00:23:05] Speaker 01:
And in particular references to Paterson,

[00:23:08] Speaker 01:
It's 7032 through 37.

[00:23:10] Speaker 01:
Now it's 7135.

[00:23:15] Speaker 01:
What Paterson says is by the fact that the policyholders know that their driving pattern is being controlled and recorded, this will, dropping a few words, this will reduce driving speed, number of accidents, and consequently also the size of disbursements

[00:23:37] Speaker 01:
from the insurance companies.

[00:23:39] Speaker 01:
So the link between accidents and payments by the insurance company explicitly in the prior art reference at 7135.

[00:23:49] Speaker 01:
Second, the Florida guide says that insurers charge on a non-discriminatory basis, but one of the basis they can charge on frequency of accidents, and that's at A7164.

[00:24:05] Speaker 01:
Now, the 970 patent itself says you can create an actuarial class that's predictive of loss based on accident statistics, and that's A7039 through 43, column one, lines 28 through 30.

[00:24:25] Speaker 01:
And then, based on acceleration data, using the claimed invention, and that is A7089,

[00:24:35] Speaker 01:
column 641.

[00:24:37] Speaker 01:
So the patent itself says you can use acceleration data to create an actuarial class.

[00:24:45] Speaker 01:
It says you can use accident statistics to get there.

[00:24:49] Speaker 01:
So it's not just Ms.

[00:24:51] Speaker 01:
O'Neill's testimony.

[00:24:54] Speaker 01:
I would add in addition to the paragraphs that were cited by the progressive in their argument,

[00:25:03] Speaker 01:
that O'Neill's expert opinion at paragraphs 21 and 22 and at 24, and that is A10607 through 08, makes the statement flat out that you take a look at the actuarial behavior, you put them into groups,

[00:25:27] Speaker 01:
that what you then do is determine the accidents, and with the accident information, you can make predictions of loss and estimates.

[00:25:36] Speaker 01:
And in her rebuttal affidavit, she says, progressives submitted the actuarial statement of principles, and what I'm talking about doing, making estimates of future loss, is countenanced by the actuarial statement of principles,

[00:25:54] Speaker 01:
And that's exactly the job of an actuary.

[00:25:58] Speaker 01:
And that is in fact what the board picked up in their decision in A7041.

[00:26:05] Speaker 01:
So you have as a basis substantial evidence that Herod discloses an actuarial class that relates to insurance loss.

[00:26:15] Speaker 01:
You have Paterson, the Florida guide,

[00:26:18] Speaker 01:
The 970 patent itself, both the old way of doing it, accident statistics in the first columns, the background of the patent, and patterns of acceleration, which was what was used in Herod, using their new invention in column six.

[00:26:36] Speaker 01:
And then you have O'Neill's expert opinion, and all of that information was the basis for the board's decision.

[00:26:47] Speaker 01:
Now what the board said ultimately and with respect to Bouchard was that given the high level of knowledge of a posita and the well-known principles and conventions of insurance and the expert testimony of Liberty's expert, it was obvious that a person of ordinary skill in the art would do what the law required

[00:27:09] Speaker 01:
and use non-discriminatory actuarial classes based on an insurance profile with policy limits and deductibles to determine a base cost of insurance, that's an A7025 and a 26.

[00:27:26] Speaker 01:
It is also an A702022.

[00:27:28] Speaker 01:
And again, that's in the Bouchard final written decision.

[00:27:34] Speaker 01:
Now, I'd like to turn from the examples, unless there are questions, from the Bouchard to Kosaka, because there are several issues, I think, with respect to Kosaka, that deserve some further answer and commentary.

[00:27:51] Speaker 01:
Drop my water.

[00:27:52] Speaker 01:
Excuse me, Your Honor.

[00:27:55] Speaker 01:
The first is the issue of fuzzy logic.

[00:27:59] Speaker 01:
And let's turn for a second to that.

[00:28:01] Speaker 01:
The court on, excuse me, the board determined two things.

[00:28:08] Speaker 01:
One, in both 358 and in 970, that fuzzy logic was well known for insurance.

[00:28:17] Speaker 01:
And that's A49 in 970 and A5036 and 37 in 358.

[00:28:26] Speaker 01:
The board also said

[00:28:28] Speaker 01:
excuse me, you don't even have to use fuzzy logic because if you read Kosaka as a whole, which you should do, you should read the entire reference, it says you don't have to use fuzzy logic, you can use standard insurance lookup tables

[00:28:45] Speaker 01:
That's an A51 in the nine soda.

[00:28:48] Speaker 05:
Is it right that neither the board in its institution decision nor you in your petition ever pointed to the specific passage about insurance tables in Kosaka and said, independent of fuzzy logic,

[00:29:11] Speaker 05:
That supplies the required element here.

[00:29:16] Speaker 01:
I would say absolutely yes, Your Honor, for the following reason.

[00:29:20] Speaker 01:
Prior art is presumed to be enabling.

[00:29:23] Speaker 01:
And what it was cited for to make a prima facie case in our petition?

[00:29:27] Speaker 01:
was to show that Osaka provided an insurance determination module with sensors on the vehicle that allowed you to make a real-time determination of insurance.

[00:29:40] Speaker 01:
The claim language in meeting the claim limitations was in no way related to fuzzy logic.

[00:29:47] Speaker 01:
Now what happened was Progressive came back and they said, wait a minute, because of fuzzy logic it won't work.

[00:29:54] Speaker 01:
And we said two things in response.

[00:29:56] Speaker 01:
One of them was, wait a minute, it was known.

[00:30:01] Speaker 01:
It was known to use fuzzy logic and number two,

[00:30:05] Speaker 01:
Fuzzy logic isn't even required.

[00:30:07] Speaker 01:
And at a procedural level, and a reason you should have some trust in the board... I'm sorry, I'm sorry.

[00:30:12] Speaker 05:
Progressive, in its patent on the response, said fuzzy logic isn't required in... No, no, I'm sorry.

[00:30:20] Speaker 01:
The Liberty put that in their reply.

[00:30:23] Speaker 05:
In the reply, right.

[00:30:24] Speaker 01:
And the board agreed.

[00:30:27] Speaker 01:
What you need to know as a procedural matter is that Progressive took the depositions

[00:30:34] Speaker 01:
of the experts that supported those replies.

[00:30:39] Speaker 01:
They were entitled to submit observations and they did not make any motion to do a sir reply.

[00:30:47] Speaker 01:
They had opportunities to make arguments on these points.

[00:30:53] Speaker 05:
Did they have a legal right to submit evidence, as perhaps the APA and 556 would suggest they do?

[00:30:59] Speaker 05:
Yes.

[00:30:59] Speaker 05:
They did.

[00:30:59] Speaker 01:
They did.

[00:31:00] Speaker 05:
They had the opportunity, one, to do a trans... After they heard about this.

[00:31:05] Speaker 01:
Right.

[00:31:05] Speaker 01:
They had the opportunity to cross-examine and to post, which they did.

[00:31:09] Speaker 05:
Submit their own... They then had the opportunity... I'm sorry.

[00:31:11] Speaker 05:
I think I get to... When I start talking, I think you need to stop and let me, because I sometimes speak a little slowly.

[00:31:17] Speaker 05:
I took it as a given that they did not have a right to submit their own new expert declarations, for example, about the factual question of what a relevant skilled artisan would understand from the newly cited page of Kosaka.

[00:31:36] Speaker 01:
They don't as a matter of right, Your Honor.

[00:31:38] Speaker 01:
You're correct.

[00:31:39] Speaker 01:
They had the opportunity to cross-examine.

[00:31:42] Speaker 01:
They had an opportunity, our witnesses, they had an opportunity

[00:31:46] Speaker 01:
to make observations about it.

[00:31:48] Speaker 01:
They also had the opportunity to approach the board and ask for that opportunity to file expert declarations on points, and they didn't do it.

[00:31:59] Speaker 01:
So they were unable, using cross-examination, they were unable through the observation process to make a dent in the testimony.

[00:32:10] Speaker 01:
And in addition, they made no effort to say, we need to have a CERN reply.

[00:32:15] Speaker 01:
They didn't present their argument.

[00:32:19] Speaker 01:
Your Honor, I can't predict how the board would have answered it going into the past, but the board has made it clear that if you have a reason

[00:32:32] Speaker 01:
for out of fairness to get a cert reply or present some evidence, they had regularly allowed it and they have over the several thousand cases that are ongoing before the board.

[00:32:46] Speaker 01:
Progressive didn't do it.

[00:32:48] Speaker 01:
Now I can't predict what would have happened if they had, but they certainly did cross-examine, they did file observations, they even moved to exclude

[00:32:59] Speaker 01:
And the board considered it and said, listen, you've got to take the reference as a whole, number one.

[00:33:05] Speaker 01:
Number two, the issue of enablement here is something that didn't belong in the petition.

[00:33:14] Speaker 01:
And then the second piece of it is, this was all proper rebuttal and reply, and you should have expected it.

[00:33:21] Speaker 02:
I find it difficult the way the server applies are ever permitted if the board is acting as a firing squad and a death squad.

[00:33:31] Speaker 01:
Well, Your Honor, I don't believe that they are.

[00:33:34] Speaker 01:
Oh.

[00:33:35] Speaker 01:
So the board is interested, I believe, in establishing and maintaining a fair procedure.

[00:33:44] Speaker 01:
And I don't know if there are more questions about COSACA.

[00:33:48] Speaker 01:
I'm glad to address them.

[00:33:51] Speaker 01:
or with respect to Bouchard in the 970.

[00:33:55] Speaker 04:
Well, your time.

[00:33:56] Speaker 04:
It's not flagged, but it will be in 20 seconds.

[00:34:01] Speaker 01:
Thank you, Your Honor.

[00:34:22] Speaker 00:
May it please the court?

[00:34:25] Speaker 00:
I'm going to focus on Progressive 1, as I refer to it.

[00:34:27] Speaker 00:
That's 1466, and in particular the issue of Kosaka.

[00:34:33] Speaker 00:
So when the board adjudicates under 328 the patentability question, it decides, based on the entirety of the record, whether or not those claims are patentable.

[00:34:43] Speaker 00:
In this particular instance, after trial was instituted and everybody knew that Kosaka was on the table,

[00:34:48] Speaker 00:
Progressive filed a patent on a response that argued multiple things about why Kosaka was not a viable basis for unpatentability, including it's not enabled, it's not consistent with Herod's crisp logic.

[00:35:02] Speaker 00:
In the reply, Liberty filed responding declarations that explained why it was, and it pointed out that Kosaka itself undercuts the argument about fuzzy logic, because there on the face of the document is the teaching that you don't need to use it.

[00:35:18] Speaker 00:
What the APA and due process and everything else requires is that you have notice of the issues of fact of law to be adjudicated.

[00:35:29] Speaker 00:
It cannot be said in this case that Progressive did not know that this question about Kosak and fuzzy logic wasn't on the table because they raised it.

[00:35:36] Speaker 05:
So there are two questions about Kosaka and fuzzy logic.

[00:35:39] Speaker 05:
One is whether a skilled artisan would have known what the heck Kosaka was talking about.

[00:35:43] Speaker 05:
Enabled.

[00:35:44] Speaker 05:
Enabled.

[00:35:45] Speaker 05:
Well, I'm not entirely sure those are the same thing, but let's assume they're the same thing.

[00:35:49] Speaker 05:
And the other is whether Kosaka taught not using fuzzy logic.

[00:35:54] Speaker 05:
And that had not been part of the proceeding before.

[00:35:57] Speaker 05:
I took it as given that that proposition, that Cossaca did not require use of fuzzy logic, and a skilled artisan would have understood that and taken a lesson from the non-fuzzy logic part of Cossaca to start getting motivated to combine things to make this obvious, that that just hadn't appeared in the proceeding until the reply that Liberty filed.

[00:36:25] Speaker 00:
Invented in your question, Your Honor.

[00:36:26] Speaker 00:
is does the statute, the AIA trial statute, require that what the board says in the final written decision in explaining why the claims are or are not unpatentable have been articulated by the board before?

[00:36:38] Speaker 00:
And the answer is no.

[00:36:40] Speaker 05:
No, I don't think that was embedded.

[00:36:41] Speaker 05:
I think it has to, I think what under the APA, 554 and probably 556,

[00:36:47] Speaker 05:
is it incorporates what I have trouble thinking of as a different substantive standard from the new ground of decision, regulatory standard, that, what is it, the gist or whatever the language is that is used?

[00:37:03] Speaker 05:
A froth.

[00:37:04] Speaker 05:
A froth, yes.

[00:37:05] Speaker 05:
has to be communicated so that the parties A, know what they need to address, and B, have an opportunity to put on evidence, including on the factual question here, what Kosaka would mean to a relevant skilled article.

[00:37:20] Speaker 00:
So Your Honor, that idea of thrust, the reason why the new grounds doctrine from the examinational model is just not compatible here,

[00:37:27] Speaker 00:
The thrust in that context is, what did the examiner say before you got to the board for the board to serve its appellate function?

[00:37:36] Speaker 00:
This is an examinational model.

[00:37:38] Speaker 00:
So that the board, if it says something that goes beyond what the examiner said, which was supposed to be a locked-in basis for why your claims weren't unpatentable, they've exceeded their statutory authority under Section 6 as an appellate body, and it goes back.

[00:37:51] Speaker 00:
Here, the thrust to borrow that language from the new grounds law doesn't come until the 328 decision.

[00:37:59] Speaker 05:
That's where the board explains, pursuant to its statutory mandate... Right, but I guess what I want to... I just want to be clear.

[00:38:07] Speaker 05:
It doesn't matter who gives the patentee the notice, whether it's the petitioner or the board.

[00:38:15] Speaker 05:
But if nobody gives the patentee the notice and the opportunity to address what is substantively a different point, there's a real fairness problem about it not having the opportunity to address it.

[00:38:28] Speaker 00:
Right, but here they did.

[00:38:30] Speaker 05:
That's a different... Correct.

[00:38:32] Speaker 00:
I'm talking about the more global legal issue of what can the board do and not do in its...

[00:38:37] Speaker 00:
final written decision without violating procedural rights.

[00:38:42] Speaker 02:
Well, in essence what you're saying is they can rely on the evidence before them.

[00:38:46] Speaker 02:
That's correct, Your Honor.

[00:38:48] Speaker 05:
And here in particular, and my friend articulated- I'm sorry, even if nobody had made an assertion about that evidence?

[00:38:54] Speaker 00:
Your Honor, um, sorry.

[00:38:59] Speaker 00:
What, I'm good, thank you.

[00:39:01] Speaker 00:
What 328 says, thank you.

[00:39:03] Speaker 05:
Why don't you talk about the APA?

[00:39:05] Speaker 05:
I don't think 328 refills the APA.

[00:39:07] Speaker 00:
No, it does not.

[00:39:08] Speaker 00:
But there's a relationship between the APA issues and 328.

[00:39:13] Speaker 00:
What the APA requires is that you have notice of the facts and law before you get to that hearing.

[00:39:17] Speaker 00:
And here, clearly the trial record had fleshed out this question of whether or not COSACA requires you to use fuzzy logic.

[00:39:25] Speaker 00:
It's on the face of COSACA.

[00:39:26] Speaker 00:
It's in the reply.

[00:39:28] Speaker 00:
My colleague mentioned some of the things that Progressive tried to do to eliminate that issue before it got to the oral hearing.

[00:39:36] Speaker 00:
The one actually that didn't talk about was perhaps maybe the most important one.

[00:39:39] Speaker 00:
They tried to exclude that particular material from the trial proceedings.

[00:39:47] Speaker 00:
In the final written decision, the board adjudicates Progressive's motion to exclude, quote, what Liberty's expert relied upon new portions of Kosaka.

[00:39:56] Speaker 00:
It doesn't have to use fuzzy logic.

[00:39:58] Speaker 00:
That's an A-64.

[00:40:00] Speaker 00:
And it rejected it.

[00:40:01] Speaker 00:
Notably, Progressive did not pursue an appellate review of that particular aspect of the board's final written decision.

[00:40:07] Speaker 00:
They had ample procedural protection on this particular issue.

[00:40:11] Speaker 04:
Do you agree with your friend that they should have or could have filed a motion to reconsider or whatever it is, so that they could have submitted an additional, if they thought it was necessary?

[00:40:20] Speaker 00:
Yes.

[00:40:20] Speaker 00:
I'm sorry, Your Honor.

[00:40:21] Speaker 00:
Yes, Your Honor.

[00:40:22] Speaker 00:
Certifies are granted.

[00:40:23] Speaker 00:
in these trials.

[00:40:25] Speaker 00:
I mean, under 425, 37 CFR 425, the Board has wide latitude to craft how these proceedings move forward to accommodate the various interests.

[00:40:37] Speaker 04:
I mean, in some examples... Yeah, but can we be satisfied and guided by the logic that the Board

[00:40:45] Speaker 04:
appreciates and understands the APA requirements that Judge Toronto is following, so that if they get a motion to supplement and to do a sur-reply, their evaluation consists of raising the questions about the fairness and the opportunity to respond and so forth.

[00:41:01] Speaker 04:
Is that the way this is done?

[00:41:03] Speaker 00:
Yes, Your Honor.

[00:41:04] Speaker 00:
I mean, for example, just to give an example, in one IPR, 2013, 00063,

[00:41:12] Speaker 00:
The board permitted a surreply on the question of anteating priority.

[00:41:16] Speaker 00:
They gave the patent owner an example or the option to file a surreply to respond on the priority issue.

[00:41:23] Speaker 00:
I mean there are examples across all of these IPRs and covered business method patents and PGRs.

[00:41:29] Speaker 00:
Suffice it to say, if the board is confronted with this particular issue, and the board says, no, no surreply, that's an issue that this court can review, because it ultimately blows into the 328 final written decision.

[00:41:43] Speaker 00:
But I think it is fair to say.

[00:41:45] Speaker 04:
Well, the cousin of a surreply is they move to strike.

[00:41:50] Speaker 04:
And you've already acknowledged to us that they're not going to appeal a denial of motion to strike.

[00:41:55] Speaker 04:
Why isn't the same case of denial of a surreply?

[00:41:58] Speaker 00:
Your Honor, I think that I recognize what you're saying.

[00:42:03] Speaker 00:
I think it's a long way of saying that there are multiple avenues available to a patent owner to pursue in these proceedings, some expressly enumerated in the regulations, some not, but available to you to ask for.

[00:42:15] Speaker 00:
One that nobody's mentioned is the fact that pursuant to 4200-300B, the board can extend these proceedings by six months pursuant to the statutory authority in the AIA.

[00:42:27] Speaker 00:
That was not something they pursued.

[00:42:29] Speaker 00:
Maybe that's something they didn't ask for rehearing of the final decision.

[00:42:32] Speaker 04:
Did the regulation, whatever you cited, did that provide certain grounds for extending it over six months?

[00:42:38] Speaker 00:
It's good cause.

[00:42:39] Speaker 00:
Good cause, your honor.

[00:42:41] Speaker 00:
So this is all, and I apologize, I see I'm way past my time, but this is all a long way of saying there's any number of things that a party like Progressive can use.

[00:42:50] Speaker 00:
Some of them they did, some of them they didn't, but are all sufficient to protect under the APA and the due process clause.

[00:42:58] Speaker 04:
Thank you.

[00:43:04] Speaker 04:
Wow this is not moving on as rapidly as I had hoped.

[00:43:08] Speaker 04:
Here we are.

[00:43:09] Speaker 03:
I'll make this very short as I have very little time.

[00:43:14] Speaker 03:
We think that at the very least these appeals should be remanded to the board for proper proceedings due to the late filing and late new grounds that were added both on the Herod reference in the change of the claim construction as well as the fuzzy logic and the common insurance table issue.

[00:43:34] Speaker 03:
If the board or the court on the other hand decides that there is not sufficient substantial evidence to show that Herod has

[00:43:43] Speaker 03:
the so-called actuarial class of insurance related to expected loss, that would be sufficient in itself without remand for a reversal.

[00:43:52] Speaker 03:
The same would be true in terms of COSACA as it relates to the prepayment calculation.

[00:43:59] Speaker 03:
Is there no further questions?

[00:44:02] Speaker 03:
Thank you.

[00:44:02] Speaker 03:
Okay, thank you.

[00:44:02] Speaker 04:
The case is submitted.