Broad Interpretation of “Financial Product Or Service” and an Abstract Idea Makes Patent Claims Directed to Insurance Valuation Eligible for Covered Business Method Review

The USPTO’s Patent Trial and Appeal Board (PTAB) has instituted a Covert Business Method (CBM) review of three patents claiming methods for obtaining valuation reports relating to damaged vehicles for automobile insurance claim purposes. The PTAB thought that claims of U.S. Patent Nos. 7,912,740, 8,200,513, and 8,468,038 were directed to a “financial product or service” and thus were eligible for CBM review. Further, the PTAB thought it more likely than not that the claims were invalid for reciting patent-ineligible subject matter under 35 U.S.C. § 101, as well as obvious under 35 U.S.C. § 103. The PTAB’s three separate orders regarding the respective patents may be downloaded here, here, and here; the orders are very similar and for convenience this blog post focuses on the order relating to the ’740 patent.

Section 18(d)(1) of the America Invents Act (AIA) defines a “covered business method patent” as one that “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” However, “patents for technological inventions” are explicitly excluded from the scope of covered business method patents.

Claim 1 of the ’740 patent recited “[a] method for obtaining an automobile insurance claim valuation report.” The method steps included transmitting a URL to “allow an operator to input data relating to an insurance claim for a damaged vehicle,” and “processing the entered data to generate evaluation report” that included “a market value for the damaged vehicle,” and then “transmitting the valuation report to the client computer.” In other words, the claim is straightforward and does not, on its face, include any technological innovation.

The PTAB first turned to the question of whether the ’740 patent was eligible for CBM review. Here, the petitioner cited other PTAB decisions finding that insurance processing claims were “financial in nature.” The petitioner also argued that “processing the insurance data to produce a ‘evaluation report’ for a damaged vehicle,” including “an adjusted market price for the vehicle,” encompassed “the financial service of creating an evaluation report for the damaged vehicle.” The PTAB agreed, and further declined to apply the technological invention exception, because the patent claims recited only conventional and generic computer technologies.

The PTAB then agreed with the petitioner that the claims were directed to an abstract idea because “each challenged claim, as a whole, is directed to the fundamental concept of providing a vehicle valuation.” Even if transmission of a URL could not be done by a person, the patent owner “has not at this stage in the preceding asserted that the claims are directed to a specific implementation of computer systems.” In fact, the PTAB believed that the claims here could be done “by the human mind, or with the aid of pencil and paper,” and that the claims’ “only technological features” were “a generic computer implementation system performing generic computer functions.

Further, the claims recited no additional transformative elements providing significantly more than the abstract idea. Instead, the claims at issue here at best recited a computer implementation that was “an attempt to limit the use of the abstract concept to a particular technological environment.” However, simply instructing use of “the Internet to obtain a vehicle valuation, without reciting further, unconventional, features of [the] system was not enough to make the claims patent-eligible.

Without going into too much detail, it is worth noting that, as mentioned above, the PTAB also instituted CBM review of the ’740 patent on Section 103 obviousness grounds. In particular, the PTAB relied on a primary prior art reference despite the fact that the reference only in passing mentioned that it’s disclosed webpages could be used to process an insurance claim. Further, even if the reference did not explicitly disclose a valuation report its system could be used to provide one.

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