Progressive UBI Patents Cancelled

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Liberty Mutual Insurance has succeeded in having three of Progressive Insurance’s seven patents on usage-based insurance business methods and other claims cancelled by the Patent Trial and Appeal Board.

“While we’re disappointed in the rulings by the Patent Trial and Appeal Board (PTAB), these decisions were not entirely unexpected given the rules for conducting the proceedings and the end results patent owners have received thus far. The rulings issued are just one step in the process and we’ll continue to defend our intellectual property through all of the available channels,” Jeff Sibel, a Progressive spokesperson said. “Our patents are valid until we exhaust all of the appeals process," Sibel said in a later conversation.

See also: Progressive's Snapshot Passes 10 Billion Mile Marker

Progressive’s ’598 patents relate to a system for monitoring and communicating operational characteristics and operator actions, including speeds driven, to determine the insurance cost for the unit of risk, according to the final court decision, entered on March 13, 2014. “We hold that claims 1-78 of the ‘598 patent are unpatentable,” PTAB said in the decision.

“Assuming this is upheld, this should accelerate adoption of telematics in insurance, since fear of patent infringement has been a reason for some insurers to put off evaluating the potential of telematics more seriously,” said Matt Josefowicz, partner and managing director of Novarica, an insurance strategy and technology consulting company.

Progressive filed suit alleging infringement of Progressive’s UBI patents against Safeco Insurance, a Liberty Mutual company, on June 18, 2010; and, in January, 2011, filed a second suit against the company and another against Allstate. Suits against State Farm Mutual Auto Insurance and Hartford Fire Insurance were filed on April 30, 2012. The suits were later consolidated. Allstate settled with Progressive in October, 2011.

See also: Usage-Based Insurance and the New Arsenal of Patent Law

In December 2012, Progressive announced it would license its UBI intellectual property, but not UBI technology or rating methods, essentially offering immunity from lawsuits to insurers that would enter the agreement.

At least one insurer, United Services Automobile Association (USAA), licensed Progressive’s intellectual property in late June of last year. According to Progressive, USAA agreed to not rate insurance based on driving habits before April 2015, and to pay a royalty equal to USAA's “countrywide Private Passenger Auto insurance direct written premiums for the most recently reported year, multiplied by two basis points (0.02 percent).” The agreement was executed through April 2022. USAA declined comment on the cancellation of the patents.

See also: Progressive, USAA Enter UBI Licensing Agreement

Liberty Mutual took another approach, asserting that Progressives patents should be cancelled as per the “covered business method” proceeding, which was enabled by the America Invents Act.

See also: Progressive's Dave Pratt on the Evolution of UBI

“There are all sorts of patent issues that have gone through the industry over the past years, I can’t think of any previously where people have sat still,” said John Lucker, principal, Deloitte, global advanced analytics. “In this case, there were players who literally sat still,” he said, adding that an uncertain value proposition also has contributed to slow uptake by smaller insurers.

“Certainly, we are pleased by the decision; but do not wish at this time to discuss how it will influence our telematics initiatives nor speculate on its impact on the industry,” said Glenn Greenberg, a spokesman for Liberty Mutual.

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