Mitchell International, Inc.v.Audatex North America, Inc.

Patent Trial and Appeal Board

Feb 19, 2016

13026842 (P.T.A.B. Feb. 19, 2016)

Trials@uspto.gov Paper No. 24
571-272-7822 Filed: February 19, 2016

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

MITCHELL INTERNATIONAL, INC.,
Petitioner,

v.

AUDATEX NORTH AMERICA, INC.,
Patent Owner.
____________

Case CBM2014-00174
Patent 8,200,513 B2
____________

Before LORA M. GREEN, WILLIAM V. SAINDON, and
PATRICK M. BOUCHER, Administrative Patent Judges.

GREEN, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

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I. INTRODUCTION
Mitchell International, Incorporated (“Petitioner”) filed a Corrected
Petition1 requesting a review of U.S. Patent No. 8,200,513 B2 (Ex. 1008,
“the ’513 patent”) under the transitional program for covered business
method patents. Paper 6 (“Pet.”). Audatex North America, Incorporated
(“Patent Owner”) filed a Patent Owner Preliminary Response. Paper 8
(“Prelim. Resp.”).
After institution of trial, Patent Owner filed a Patent Owner Response
(Paper 12, “PO Resp.”) and Petitioner filed a Reply (Paper 15, “Reply”).
Patent Owner also filed a Contingent Motion to Amend (Paper 13, “PO Mot.
Amend”), to which Petitioner filed an Opposition (Paper 16, “Pet. Opp. Mot.
Amend”), and Patent Owner filed a Reply (Paper 17, “PO Reply Mot.
Amend”). An oral hearing was held on October 19, 2015, 2015. Paper 23.
The Board has jurisdiction under 35 U.S.C. § 6(c). In this Final
Written Decision, issued pursuant to 35 U.S.C. § 328(a) and 37 C.F.R.
§ 42.73, we determine that Petitioner has shown by a preponderance of the
evidence that all claims for which trial was instituted, claims 1–31, are
unpatentable. Furthermore, Patent Owner’s Motion to Amend is denied.
A. The ’513 Patent
The ’513 patent issued on June 12, 2012, with Reza-Sayed Vahidi,
Stan Griffin, Pankaj Desai, Sonja Larson, Robert Cooperrider,
John W. Fitzpatrick, and Sergey Gorelov as the listed co-inventors. The
’513 patent relates generally “to a method and system for entering data

1 Petitioner filed two related Corrected Petitions requesting covered business
method review; CBM2014-00171, involving U.S. Patent No. 7,912,740 B2,
and CBM2014-00173, involving U.S. Patent No. 8,468,038 B2.
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relating to an insurance claim for a damaged vehicle,” wherein the “data is
processed into a valuation report that is transmitted through the world wide
web.” Ex. 1008, 1:14–17.
According to the ’513 patent, when a vehicle is damaged, the owner
of the vehicle may file a claim with an insurance carrier. Id. at 1:19–20. An
insurance adjuster will inspect the damaged vehicle, and if the repair costs of
the damaged vehicle exceed its value, or a percentage of its value, “the
adjuster may ‘total’ the vehicle.” Id. at 1:20–25. The adjuster may enter the
repair costs into an estimate report, which may be sent then to the home
office for approval. Id. at 1:26–28.
The ’513 patent discloses that in order to improve the efficiency of the
process, computer systems and software have been developed to automate
the process. Id. at 1:29–31. For example, PenPro, developed by Automatic
Data Processing, Incorporated (“ADP”), allows a claim adjuster to enter data
through a personal computer, and when the running total of the repair costs
to the damaged vehicle reach a certain percentage of the value of the vehicle,
a visual warning that the cost is approaching the vehicle’s value is displayed,
thus informing the adjuster that the vehicle may have been totaled. Id. at
1:31–41.
A problem with the PenPro system is that the valuation system does
not account for specific variations of the vehicle, such as the condition of the
vehicle or added aftermarket equipment. Id. at 1:42–44. In order to obtain a
more accurate valuation, the adjuster may dial into a more extensive
database, such as Autosource, also provided by ADP. Id. at 1:44–48. As
taught by the ’513 patent, access to Autosource “requires that the computer
be specifically configured to dial the appropriate phone number(s) of the
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Autosource server.” Id. at 1:50–52. The ’513 patent teaches that it would be
more desirable to have the adjuster have easier access to the valuation
database, such as through the world wide web, thereby obviating the need of
the computer to have the phone numbers to reach the database. Id. at 1:53–
56.
Figure 1 of the ’513 patent is reproduced below:

Figure 1, reproduced above, “is a schematic of a network system that can be
used to receive data relating to an insurance claim for a damaged vehicle and
transmit a valuation report for the damaged vehicle through the world wide
web.” Id. at 1:66–2:2. The system includes at least one client computer, 12,
that is connected to the network 14, wherein the network may be the
internet. Id. at 2:29–33. The system may also include web server 16,
connected to network 14, and application server 18. Id. at 2:35–36.
Application server 18 may then be coupled to valuation server 20, which
contains the database, to generate and process the valuation report. Id. at
2:37–39.
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Figure 12 of the ’513 patent is reproduced below.

Figure 12, reproduced above, “is an illustration of a valuation report.” Id. at
2:8. Included in the report is an adjusted market value for the vehicle,
indicated by 150 (id. at 4:14–15), as well as a “Salvage/Other” field (id. at
Fig. 12).

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The flowchart of Figure 3 of the ’513 patent is reproduced below.

Figure 3, reproduced above, “is a flowchart showing a business transaction
conducted through the system.” Id. at 2:4–5. The ’513 patent discloses
further that “[w]hile . . . exemplary embodiments have been described and
shown in the accompanying drawings, . . . such embodiments are merely
illustrative of and not restrictive on the broad invention.” Id. at 4:27–30.
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B. Illustrative Claim
Claims 1, 10, 18, and 25 are the independent claims of the challenged
patent, and they are directed to a method, a system, a server, and a computer
program storage medium, respectively. Claim 1, reproduced below, is
illustrative of the claims at issue:
1. A method for obtaining an automobile insurance claim
valuation report, comprising:
receiving a uniform resource locator over an electronic
communication network from a client computer;
providing a web site that corresponds to the uniform resource
locator, the web site provides at least one web page that relates to an
insurance claim for a damaged vehicle;
receiving data relating to the insurance claim;
processing at a server the received data to automatically generate
a valuation report for the damaged vehicle; and,
transmitting the valuation report to the client computer over the
electronic communication network through the web site.
Ex. 1008, 4:36–49.

C. Instituted Grounds of Unpatentability
The following grounds of unpatentability were instituted for covered
business method review:
Claims Basis Reference
1–31 § 101
1–31 §§ 102(b)/103(a) Reimel2

2 Reimel et al. (“Reimel”), WO 01/071458 A3, published Sept. 27, 2001
(Ex. 1010).
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D. Standing
We determined, in the Decision on Institution, that the ’513 patent is a
covered business method patent, as defined in § 18(a)(1)(E) of the America
Invents Act and 37 C.F.R. § 42.301, because at least one claim of the ’513
patent is directed to a covered business method. Dec. 7–10. Patent Owner
does not dispute our previous analysis in its Patent Owner Response. Thus,
after considering the record again, we reaffirm our determination in the
Decision on Institution and conclude that the ’513 patent is eligible for a
covered business method patent review.

II. ANALYSIS
A. Claim Construction
In a covered business method patent review, claim terms in an
unexpired patent are interpreted according to their broadest reasonable
construction in light of the specification of the patent in which they appear.
37 C.F.R. § 42.300(b); see also In re Cuozzo Speed Techs., LLC, 793 F.3d
1268, 1278–80 (Fed. Cir. 2015) (“Congress implicitly approved the broadest
reasonable interpretation standard in enacting the AIA,” and “the standard
was properly adopted by PTO regulation.”), cert. granted, sub nom. Cuozzo
Speed Techs. LLC v. Lee, 84 U.S.L.W. 3218 (U.S. Jan. 15, 2016) (No. 15-
446); accord Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1328
(Fed. Cir. 2015) (“[T]hough the rules governing IPR matters at issue in
Cuozzo will not necessarily govern all PGR/CBM matters, we see no basis
for distinguishing between the two proceedings for purposes of the PTAB’s
use of BRI in claim construction here.”).
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Under the broadest reasonable interpretation standard, and absent any
special definitions, claim terms are given their ordinary and customary
meaning as would be understood by one of ordinary skill in the art in the
context of the entire disclosure. In re Translogic Tech., Inc., 504 F.3d 1249,
1257 (Fed. Cir. 2007). An inventor may rebut that presumption by
providing a definition of the term in the specification with reasonable clarity,
deliberateness, and precision. In re Paulsen, 30 F.3d 1475, 1480 (Fed. Cir.
1994). In the absence of such a definition, limitations are not to be read
from the specification into the claims. In re Van Geuns, 988 F.2d 1181,
1184 (Fed. Cir. 1993).
1. “insurance claim”
Claims 1, 10, 18, and 25 include the phrase “data relating to [an]
insurance claim [for a damaged vehicle].”
In the Institution Decision, we noted that the “Specification of the
’513 patent does not limit the phrase ‘data relating to an insurance claim for
a damaged vehicle,’ but . . . provides examples such as the VIN, the vehicle
make, mileage, and condition.” Dec. 12. We, thus, construed “data relating
to an insurance claim for a damaged vehicle,” as encompassing, but not
being limited to, any data that would be used in making an insurance claim.
Id. at 12.
In its Response, Patent Owner notes that it does not disagree with the
interpretation of “data” we adopted in the Decision on Institution (PO Resp.
1), but contends that the “proper construction for the term ‘insurance claim’
should be a ‘request to recover market value or repair cost in association
with an insurance policy.’” PO Resp. 3. In asserting that construction,
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Patent Owner relies on the following portion from the Background of the
Specification.
When a vehicle such as an automobile is damaged the
owner may file a claim with an insurance carrier. A claims
adjuster typically inspects the vehicle to determine the amount of
damage and the costs required to repair the automobile. If the
repair costs exceed the value of the automobile, or a percentage
of the car value, the adjuster may “total” the vehicle. The owner
may then receive a check equal to the value of the automobile.
Id. at 3–4 (quoting Ex. 1008, 1:19–26). According to Patent Owner, the
“entire intrinsic record is focused on an insurance claim that relates to either
repairing or totaling a damaged vehicle.” Id. at 5.
Petitioner responds that the Specification never restricts the term
“insurance claim” to a particular type of request, and does not discuss
limiting it to a repair cost. Reply 10. In fact, Petitioner argues, Figure 12 of
the Specification provides for the market value before and after an accident.
Id. Petitioner also cites the testimony of Professor James Christopher
Westland, Patent Owner’s expert, who states that “insurance claims take on
a variety of forms.” Id. (quoting Ex. 1015, 77:11–19, 78:11–23).
We have carefully considered Patent Owner’s arguments, but we do
not agree that the broadest reasonable interpretation of “insurance claim,”
when read in light of the Specification, is a “request to recover market value
or repair cost in association with an insurance policy.” The portion of the
Specification Petitioner is relying upon is only describing the state of the art
at the time of invention. Moreover, it uses terms such as “may” and
“typically,” and, thus, does not explicitly define “insurance claim” as Patent
Owner would have us do.
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Thus, we see no reason to deviate from the construction of the claim
term “data relating to an insurance claim for a damaged vehicle” that we
adopted in the Decision on Institution; that is, as encompassing, but not
being limited to, any data that would be used in making an insurance claim.
Dec. 12. Moreover, even if we were to adopt Patent Owner’s more limited
construction of “insurance claim,” Patent Owner does not explain how that
would further limit the data that would be entered, and in fact, Patent Owner
notes (PO Resp. 1) that it does not disagree with the interpretation of “data”
we adopted in the Decision on Institution.
We note further that Patent Owner argues that the District Court in the
co-pending litigation construed “insurance claim” as a “request to recover
market value or repair cost in association with an insurance policy.” PO
Resp. 3. But as noted by the Court of Appeals for the Federal Circuit in
Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc), the
claims “must be read in view of the specification, of which they are a part”
(internal quotations and citation omitted). In addition, the court has also
admonished that the specification “is always highly relevant to the claim
construction analysis. Usually, it is dispositive; it is the single best guide
to the meaning of a disputed term.” Vitronics Corp. v. Conceptronic, Inc.,
90 F.3d 1576, 1582 (Fed. Cir. 1996). Thus, even using the claim
construction standards set forth in Phillips, as discussed above, there is
nothing in the Specification of the ’513 patent that would limit the claim term
“insurance claim” as Patent Owner would like.
Moreover, our construction is also supported by the testimony of
Patent Owner’s expert, Professor Westland. Professor Westland testified
that “insurance claims take many different characters, and even within the
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automotive field, it’s how the contract is written that determines exactly
what in a specific circumstance an insurance claim is. . . . My own expert
opinion is that insurance claims take on a variety of forms.” Ex. 1015, 77:6–
19.
2. “valuation report for the damaged vehicle”
Claims 1, 10, 18, and 25 recite a “valuation report for the damaged
vehicle.”
In the Institution Decision, we determined that the broadest reasonable
construction of the claim term “valuation report for the damaged vehicle”
encompasses both the valuation of the vehicle before it has been damaged,
as well as the valuation of the vehicle after it has been damaged. Dec. 12–
14.
Patent Owner contends that that the “proper construction for the term
‘valuation report for the damaged vehicle’ should be ‘a report that provides a
value of the vehicle that was damaged, before the vehicle was damaged,
based on factors including mileage, condition, and geographic location.’”
PO Resp. 5. Patent Owner argues that if “insurance claim” is given its
proper construction of “a request to recover market value or repair cost,”
then the construction of a “valuation report for the damaged vehicle” relating
to a pre-damaged valuation logically follows. Id.
In the Decision on Institution, we construed this term in view of
Figure 12 of the Specification of the ’513 patent, which shows a valuation
report that appears to provide the value of the vehicle before any damage, as
well as a salvage value (that is, the value of the vehicle after it has been
damaged). Dec. 14. We noted further that the Specification does not appear
to provide an explicit definition for the term “valuation report for the
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damaged vehicle.” Id. Patent Owner acknowledges that Figure 12 has a
salvage field, but asserts that “there is no discussion in the specification
about this field[ and t]here is no disclosure of a process for calculating a
salvage value.” PO Resp. 5–6.
Notably, however, Patent Owner does not point us to any portion of
the Specification that suggests we should limit the “valuation report for the
damaged vehicle” to “a report that provides a value of the vehicle that was
damaged, before the vehicle was damaged, based on factors including
mileage, condition, and geographic location.” And the claims themselves
include the term “damaged vehicle,” reciting “valuation report for the
damaged vehicle.” Thus, we see no reason to deviate from our construction
of the claim term “valuation report for the damaged vehicle” in the Decision
on Institution as encompassing both the valuation of the vehicle before it has
been damaged, as well as the valuation of the vehicle after it has been
damaged. Dec. 12–14.
3. Other Claim Terms
We determine that we need not interpret expressly other claim
limitations for purposes of this decision. See, e.g., Wellman, Inc. v. Eastman
Chem. Co., 642 F.3d 1355, 1361 (Fed. Cir. 2011) (“[C]laim terms need only
be construed ‘to the extent necessary to resolve the controversy.’”) (internal
citations omitted).
B. Patentable Subject Matter Under 35 U.S.C § 101
Petitioner asserts that claims 1–31 of the ’513 patent are not directed
to patent-eligible subject matter under 35 U.S.C. § 101. Pet. 13–19. In
particular, Petitioner takes the position that the challenged claims are
directed to an abstract idea, and no other component recited in the claims
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transforms the patent-ineligible concept to a patent-eligible application of
that concept. Id.
A patent may be obtained for “any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof.” 35 U.S.C. § 101. The Supreme Court has held that this provision
contains an important implicit exception: laws of nature, natural
phenomena, and abstract ideas are not patentable. Alice Corp. Pty. Ltd. v.
CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014); Gottschalk v. Benson, 409
U.S. 63, 67 (1972). Moreover, “[p]henomena of nature, though just
discovered, mental processes, and abstract intellectual concepts are not
patentable, as they are the basic tools of scientific and technological work.”
See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289,
1293–94 (2012) (internal quotations and citation omitted). Notwithstanding
that a law of nature or an abstract idea by itself is not patentable, the
practical application of these concepts may be deserving of patent
protection. Id.
In Alice, the Supreme Court reaffirmed the framework set forth
previously in Mayo “for distinguishing patents that claim laws of nature,
natural phenomena, and abstract ideas from those that claim patent-eligible
applications of those concepts.” Alice, 134 S. Ct. at 2355. The first step in
the analysis is to “determine whether the claims at issue are directed to one
of those patent-ineligible concepts.” Id. If the claims are directed to a
patent-ineligible concept, the second step in the analysis is to consider the
elements of the claims “individually and ‘as an ordered combination’” to
determine whether there are additional elements that “‘transform the nature
of the claim’ into a patent-eligible application.” Id. (quoting Mayo,
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132 S. Ct. at 1298, 1297). In other words, the second step is to “search for
an ‘inventive concept’—i.e., an element or combination of elements that is
‘sufficient to ensure that the patent in practice amounts to significantly more
than a patent upon the [ineligible concept] itself.’” Id. (brackets in original)
(quoting Mayo, 132 S. Ct. at 1294). For example, the prohibition against
patenting abstract ideas “‘cannot be circumvented by attempting to limit the
use of the formula to a particular technological environment’ or adding
‘insignificant post-solution activity.’” Bilski v. Kappos, 130 S. Ct. 3218,
3230 (2010) (quoting Diamond v. Diehr, 450 U.S. 175, 191–92 (1981)).
1. Are Claims 1–31 Directed to an Abstract Idea?
As the first step of our analysis, we must determine whether the
claims at issue are directed to a patent-ineligible concept, such as an abstract
idea. See Alice, 134 S. Ct. at 2355.
Petitioner contends that claim 1 is directed to the abstract concept of
“valuing a damaged vehicle based on information about that vehicle.” Pet.
15. Specifically, Petitioner contends that “all that the claims do is collect
information about a damaged vehicle and use that information to calculate
the vehicle’s value.” Id. According to Petitioner, that is a “core insurance
practice that has been carried out by claims adjusters for ages,” and could
also be practiced in the mind, or by using pen and paper. Id. at 16.
Upon review of Petitioner’s arguments and supporting evidence, as
well as considering the arguments and evidence of Patent Owner, we
determine that the claims at issue here are directed to an abstract idea. The
Supreme Court held that the claims in Alice were drawn to the abstract idea
of intermediated settlement. Alice, 134 S. Ct. at 2358. Alice involved “a
method of exchanging financial obligations between two parties using a
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third-party intermediary to mitigate settlement risk.” Id. at 2356. Like the
method of hedging risk in Bilski, 130 S. Ct. at 3240—which the Court
deemed “a method of organizing human activity”—Alice’s “concept of
intermediated settlement” was held to be “a fundamental economic practice
long prevalent in our system of commerce.” Alice, 134 S. Ct. at 2356.
Similarly, the Court found that “[t]he use of a third-party
intermediary . . . is also a building block of the modern economy.” Id.
Thus, the Court held that “intermediated settlement . . . is an ‘abstract idea’
beyond the scope of § 101.” Id. With respect to the first step of the patent-
eligible analysis under the Mayo framework, the Court concluded that in
Alice that “there is no meaningful distinction between the concept of risk
hedging in Bilski and the concept of intermediated settlement” in Alice and
that “[b]oth are squarely within the realm of ‘abstract ideas’ as we have used
that term.” Id. at 2357.
Here, we observe that each challenged claim is directed to the
fundamental concept of providing a vehicle valuation using information
about the vehicle. Patent Owner contends that, unlike the claims in Parker
v. Flook, 437 U.S. 584 (1978), the claims at issue in the instant proceeding
are not drawn to an algorithm. PO Resp. 12–14. When the claims are
analyzed as a whole, as urged by Patent Owner (PO Resp. 10), however, the
claims recite nothing more than the collection of information to generate a
valuation report for a damaged vehicle. Moreover, all the steps could be
performed without the use of a computer. Specifically, the steps and
calculations covered by the claims essentially require determining the value
of a damaged vehicle by entering data related to an insurance claim, such as
mileage and vehicle condition, and processing the data to generate a
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valuation report for the damaged vehicle; a calculation that can be performed
by the human mind, or with the aid of pencil and paper. See, e.g., Mortgage
Grader, Inc. v. First Choice Loan Servs. Inc., No. 2015-1415, 2016 WL
362415, at *7 (Fed. Cir. Jan. 20, 2016) (noting that the steps of the claims
could be performed by a human without the use of a computer in concluding
that the claims at issue were drawn to an abstract idea).
The fact that the claims at issue are not per se drawn to an algorithm
does not insulate them from being found an abstract idea. The claims in
Alice were drawn to “a computer-implemented scheme for mitigating
‘settlement risk’ . . . by using a third-party intermediary.” Alice, 134 S. Ct.
at 2351–52. The claims at issue in Mortgage Grader were drawn to a
computer-implemented system that allowed borrowers to shop anonymously
for loan packages from a plurality of lenders. Mortgage Grader, 2016 WL
362415, at *1. Thus, the fact that the claims in those cases were not
specifically drawn to an algorithm did not prevent them from being drawn to
an abstract idea.
We are persuaded that, similar to the concept of intermediated
settlement in Alice, the concept of risk hedging in Bilski, and the concept of
shopping anonymously for loan packages in Mortgage Grader¸ the concept
at issue here—obtaining a vehicle valuation report for a damaged vehicle—
is “a fundamental economic practice long prevalent in our system of
commerce,” and “squarely within the realm of ‘abstract ideas.’” Alice, 134
S. Ct. at 2356–57; Bilski, 130 S. Ct. 3231. Accordingly, we determine that
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Petitioner has demonstrated that the challenged claims are directed to a
patent-ineligible abstract idea.
2. Additional Transformative Elements
Turning to the second step in the analysis, we look for additional
elements that can transform the nature of the claim into a patent-eligible
application of an abstract idea, that is, whether the claims do significantly
more than simply describe that abstract idea. Ultramercial, Inc. v. Hulu,
LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (citing Mayo, 132 S. Ct. at 1297).
We determine whether the claims include an “inventive concept,” i.e., an
element or combination of elements sufficient to ensure that the patent in
practice amounts to significantly more than a patent on the abstract idea
itself. Alice, 134 S. Ct. at 2357. The relevant inquiry here is whether
“additional substantive limitations . . . narrow, confine, or otherwise tie
down the claim so that, in practical terms, it does not cover the full abstract
idea itself.” Accenture Global Servs., GbmH v. Guidewire Software, Inc.,
728 F.3d 1336, 1344–45 (Fed. Cir. 2013) (internal quotations and citations
omitted). The Supreme Court in Alice cautioned that merely limiting the use
of an abstract idea “to a particular technological environment” or
implementing the abstract idea on a “wholly generic computer” is not
sufficient as an additional feature to provide “practical assurance that the
process is more than a drafting effort designed to monopolize the [abstract
idea] itself.” Alice, 134 S. Ct. at 2358 (internal quotations and citations
omitted).
Petitioner contends that “the claims lack any form of an inventive
concept because they merely employ conventional and generic components,
such as a client computer, web pages, and a web server, to collect insurance
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data and value a vehicle.” Pet. 16 (citing Ex. 1009 ¶¶ 23–24). According to
Petitioner, the elements added by the claims do not add any meaningful
limitation to the abstract idea of valuing a damaged vehicle based on
information regarding that vehicle. Id. at 17. In other words, Petitioner’s
position is that the claimed methods and systems for providing a vehicle
valuation are nothing more than a generic computer programmed to perform
the steps of the abstract concept.
We agree with Petitioner’s analysis that the claims do not add
additional substantive limitations that transform their nature into a patent-
eligible application of an abstract idea. The only technological features
recited in the claims at issue in this proceeding are generic computer
implementation systems performing generic computer functions. As
acknowledged by Patent Owner’s expert, the claims do not improve the
function of the computer, they do not solve a problem unique to the internet,
nor are they tied to a particular machine or apparatus. Ex. 1015, 223:4–20;
231:9–232:1. Simply utilizing a generic computer system to generate a
vehicle valuation report is not enough to transform a patent-ineligible claim
into a patent-eligible invention. See Bancorp Servs. LLC v. Sun Life
Assurance Co. of Canada, 687 F.3d 1266, 1279 (Fed. Cir. 2012) (finding a
claim not patent-eligible when “the computer simply performs more
efficiently what could otherwise be accomplished manually”); SiRF Tech.,
Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 2010) (“In order
for the addition of a machine to impose a meaningful limit on the scope of a
claim, it must play a significant part in permitting the claimed method to be
performed, rather than function solely as an obvious mechanism for
permitting a solution to be achieved more quickly.”).
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Nearly every computer has the capability of performing basic
calculation, storage, and transmission functions. See Alice, 134 S. Ct. at
2360. At most, the computer implementation involved in the claims at issue
here is an attempt to limit use of the abstract concept to a particular
technological environment. Claims that simply instruct the practitioner to
implement the abstract idea with routine, conventional activity do not
transform an abstract idea into patent eligible subject matter. Ultramercial,
772 F.3d at 716. The claims simply instruct the practitioner to use the
internet to obtain a vehicle valuation, without reciting further
unconventional features of that system.
Patent Owner contends that the claims as construed, when considered
as a whole, “do not pre-empt the concept of obtaining a valuation report,”
because the valuation report could be provided by fax or by mail, without
using the claimed method and systems. PO Resp. 11. In addition, Patent
Owner argues that the Decision on Institution states that the challenged
claims “simply instruct a practitioner to implement the abstract idea with
routine, conventional activity,” without providing guidance as to which
limitations were conventional or known. Id. at 14.
Patent Owner’s arguments, however, support our conclusion that the
claims are patent-ineligible. The claims merely take a known method of
providing a valuation of a damaged vehicle, and add the concept of
transmitting that report over the internet. See, e.g., Ex. 1008 1:60–62
(providing a “BRIEF SUMMARY OF THE INVENTION” as “[a] method
and system for entering data relating to an insurance claim for a damaged
vehicle and transmitting a valuation report for the damaged vehicle through
the world wide web”). The fact that the valuation report could be sent by
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fax or mail does not save the claims from being patent-ineligible, because, as
noted above, simply utilizing a generic computer system to generate a
vehicle valuation report is not enough to transform a patent-ineligible
abstract idea into a patent-eligible invention.
As to Patent Owner’s argument that we did not provide guidance in
our Decision on Institution as to which limitations were “conventional” or
“known,” as acknowledged by the Specification of the ’513 patent, it was
routine practice in the insurance industry to provide a vehicle valuation
report for a damaged vehicle. As provided by “BACKGROUND OF THE
INVENTION” in the ’513 patent, when a vehicle is damaged, a claims
adjuster inspects the vehicle, determines the cost to repair the vehicle, and
enters the repair cost and other information into an estimate report. Id. at
1:19–28. The report may be then sent to the home office for approval. Id. at
1:28–30. As acknowledged by the ’513 patent, software products that
improved the efficiency of that process were also known. Id. at 1:30–52.
Thus, the ’513 patent itself is evidence that the claim limitations of obtaining
data related to an insurance claim and providing a valuation report for a
damaged vehicle were known and conventional.
In the context of patent-eligible subject matter, we discern no
meaningful distinction between independent claim 1, a method claim, and
independent claims 10, 18, and 25, drawn to a system, server, and a
computer program storage medium, respectively, as those claims simply
recite the same functions as the process steps of claim 1. We have also
reviewed the dependent claims, and, for similar reasons as discussed above,
we determine that those claims do not add any limitations that would
transform the claim into patent-eligible subject matter. Moreover, Patent
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Owner does not point to any specific limitation in any of the dependent
claims that would change the patent-eligibility analysis.
In view of the foregoing, we determine that Petitioner has shown by a
preponderance of the evidence that claims 1–31 are directed to patent-
ineligible subject matter under 35 U.S.C. § 101.
C. Anticipation/Obviousness over Reimel (Ex. 1010)
Petitioner asserts that claims 1–31 are unpatentable as anticipated or
rendered obvious by Reimel. Pet. 19–76. Petitioner also relies on the
Declaration of Bill Kuebler. Ex. 1009. We determine that Petitioner has
established by a preponderance of the evidence that claims 1–31 are
anticipated by, or rendered obvious by, Reimel.
1. Reimel (Ex. 1010)
Reimel discloses “an on-line vehicle appraisal system for appraising a
value of a vehicle.” Ex. 1010, 4:8–9. The system may include
a web server connected to a data network accessible by a
customer, a database containing vehicle data for a plurality of
vehicles and that is accessible by the customer via the web server,
a web page memory that stores web pages for presentation to the
customer by the web server in a predetermined sequence, and a
processor that calculates the value of the vehicle. The presented
web pages elicit information from the customer including at least
the condition of a plurality of features of the vehicle, and this
vehicle condition information as well as data stored in the
database is used by the processor to calculate the value of the
vehicle. The processor uses an objective vehicle valuation
algorithm that, among other things, accounts for the differential
effects of multiple flaws in the vehicle. Preferably, the web
server further presents a printable certificate to the customer
listing the calculated value of the vehicle and the vehicle data and
vehicle condition information for the vehicle, where the vehicle
data includes a vehicle identification number (VIN) for each
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vehicle and a listing of the year, make, model, and manufacturer
options for each vehicle.
Id. at 4:9–22.
Figure 1 of Reimel is reproduced below:

Figure 1, reproduced above, is a generalized diagram of the web-based
system for obtaining an appraisal, that is, a vehicle valuation, as taught by
Reimel. Id. at 7:8. Web server 10 serves web pages that are stored in
memory 20, which may be part of web server 10. Id. at 8:24–26. Vehicle
database 30 contains comprehensive information about vehicles of all
makes, models, years, and body styles, and may be accessed using a vehicle
identification number (“VIN”) or other vehicle characteristics. Id. at 8:25–
29. Vehicle value processor 40 calculates the value of the vehicle, and may
take into account repair values for multiple flaws and defects. Id. at 8:31–
9:2.
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Potential customers for the database may include insurance
companies. Id. at 8:20–25. As taught by Reimel, “[i]nsurance companies
may use the present invention to evaluate crashed vehicles as well as the
damage to stolen vehicles . . . provid[ing] a neutral objective standard for
assessment of such vehicles by insurance adjusters.” Id. at 10:13–15.
Figures 24 and 25 of Reimel show a valuation report. The report
takes into account mileage, year, region, and options. In addition, the report
separately lists adjustments based on exterior and interior damage.
2. Analysis
In order for a prior art reference to serve as an anticipatory reference,
it must disclose every limitation of the claimed invention, either explicitly or
inherently. In re Schreiber, 128 F.3d 1473, 1477 (Fed. Cir. 1997). We must
analyze prior art references as a skilled artisan would. See Scripps Clinic &
Res. Found. v. Genentech, Inc., 927 F.2d 1565, 1576 (Fed. Cir. 1991),
overruled on other grounds by Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282
(Fed. Cir. 2009) (stating that to anticipate, “[t]here must be no difference
between the claimed invention and the reference disclosure, as viewed by a
person of ordinary skill in the field of the invention”).
A claim is unpatentable under 35 U.S.C. § 103(a) if the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
factual determinations including: (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art;
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(3) the level of ordinary skill in the art; and (4) objective evidence of
nonobviousness. Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966).
The level of ordinary skill in the art usually is evidenced by the references
themselves. See Okajima v. Bourdeau, 261 F.3d 1350, 1355 (Fed. Cir.
2001); In re GPAC Inc., 57 F.3d 1573, 1579 (Fed. Cir. 1995); In re Oelrich,
579 F.2d 86, 91 (CCPA 1978).
Prior art references must be “considered together with the knowledge
of one of ordinary skill in the pertinent art.” In re Paulsen, 30 F.3d at 1480
(quoting In re Samour, 571 F.2d 559, 562 (CCPA 1978)). Moreover, “it is
proper to take into account not only specific teachings of the reference but
also the inferences which one skilled in the art would reasonably be
expected to draw therefrom.” In re Preda, 401 F.2d 825, 826 (CCPA 1968).
That is because an obviousness analysis “need not seek out precise teachings
directed to the specific subject matter of the challenged claim, for a court
can take account of the inferences and creative steps that a person of
ordinary skill in the art would employ.” KSR, 550 U.S. at 418; see In re
Translogic, 504 F.3d. at 1259.
Petitioner contends that Reimel evidences that the challenged claims
are not novel—that is, that there was nothing novel at the time of invention
about using a web-based database to generate a valuation report for a
damaged vehicle. Pet. 19. According to Petitioner, Reimel discloses a web-
based vehicle valuation site and associated business method, which allows
the user to obtain an on-line appraisal of a vehicle and assess a cash value.
Id. at 21.
In particular, Petitioner notes that Reimel teaches that the user may
enter data specifying accident damage. Id. at 23. Petitioner contends that a
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user could obtain both pre- and post-accident valuation of the vehicle by
simply omitting information about the damage sustained during the accident.
Id. at 24–25 n.10. Petitioner presents a claim chart demonstrating where
each limitation of the challenged claims is taught by Reimel. Id. at 26–73.
Petitioner contends further that to the extent that Reimel does not
anticipate the challenged claims, it would have been obvious to modify
Reimel to arrive at the challenged claims. Id. at 75.
We agree with Petitioner’s analysis, and determine that Petitioner has
established by a preponderance of the evidence that Reimel anticipates the
challenged claims, as well as renders obvious the challenged claims. We
have carefully considered Patent Owner’s arguments to the contrary, but
they do not convince us otherwise.
As to the anticipation challenge, Patent Owner contends that, if the
claim term “valuation report for the damaged vehicle” is construed as “a
report that provides a value of the vehicle that was damaged, before the
vehicle was damaged, based on factors including mileage, condition, and
geographic location,” Reimel cannot anticipate the challenged claims. PO
Resp. 6. In particular, Patent Owner argues that “Reimel does not explicitly,
or inherently, disclose providing a market value for a damaged vehicle
before the vehicle was damaged.” Id. That argument is not convincing,
because as discussed above, we decline to construe the claim term
“valuation report for the damaged vehicle” as “a report that provides a value
of the vehicle that was damaged, before the vehicle was damaged, based on
factors including mileage, condition, and geographic location.” Thus,
Reimel anticipates the challenged claims to the extent they are construed as
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providing a valuation report for a damaged vehicle for the value of the
vehicle after the damage was sustained.
Patent Owner contends further that “Reimel does not disclose the
claim limitation ‘at least one web page that relates to an insurance claim’ as
properly construed to mean a ‘request to recover market value or repair cost
in association with an insurance policy.’” Id. at 6–7. According to Patent
Owner, the only portion of Reimel that relates to use by an insurance
company is the following:
Insurance companies may use the present invention to evaluate
crashed vehicles as well as the damage to stolen vehicles. The
present invention will provide a neutral objective standard for
assessment of such vehicles by insurance adjusters.
Id. (quoting Ex. 1010, 10:13–15). According to Patent Owner, that passage
“lacks any disclosure, explicit or inherent, regarding a web page that relates
to an insurance claim to request a recovery of market value or repair cost of
a damaged vehicle.” Id. (citing Ex. 2006 ¶ 32).
That argument by Patent Owner is again not convincing. Claim 1
requires the step of “receiving data relating to the insurance claim.”
Similarly, the system of claim 10, the server of claim 18, and the computer
program storage medium of claim 25 require “web pages [that] allow for
receipt of data relating to an insurance claim.” As construed above, data
relating to an insurance claim encompasses any data that would be used in
making an insurance claim, which encompasses the various characteristics
of the vehicle to be valued disclosed by Reimel. We reiterate that there is
nothing in the Specification of the ’513 patent that limits the claimed
method, system, server, or computer program storage medium to
determining a pre-damaged valuation of the vehicle. That is, determining
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the value of a damaged vehicle as required by the independent claims, as
construed above, encompasses determining the value of the vehicle in either
its pre- or post-damaged condition. As Reimel discloses a method and
system that could be used to provide a valuation report for a damaged
vehicle, that is, a vehicle after it has been damaged, it anticipates the claims.
To the extent that the claims are construed as being drawn to
obtaining a valuation report for the pre-damaged value of the damaged
vehicle, we agree with Petitioner (Pet. 24–25 n.10, 75) that Reimel renders
that limitation obvious.
In the Decision on Institution, we noted:
First, there is nothing in the claims that limits the user to an
insurance adjuster, and thus, could be used by other users, such
as bank or leasing agency. Second, as noted by Petitioner,
Reimel does specifically contemplate use of its method and
system by insurance companies. Third, as already noted, the
claims encompass obtaining a valuation report for either the pre-
or post-damaged vehicle. And finally, we agree with Petitioner
that, even if not explicitly stated by Reimel, the ordinary artisan
would have understood that one could leave out information
relating to the accident to obtain a valuation report for a vehicle
before it was damaged, such as in [an] accident.
Dec. 28.
Patent Owner responds that the “claims as properly construed relate to
an insurance adjustor,” and the “insurance claim is a request to recover the
market value or repair cost of the damage[d] vehicle.” PO Resp. 8. As
Reimel teaches use of its system by entities such as banks, leasing agencies,
and manufacturers, Patent Owner argues that there would be no reason to
create a web page for recovering repair costs or market value of a damaged
vehicle for those entities. Id.
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In addition, Patent Owner notes that while Reimel mentions the use of
its method and system by an insurance company, Reimel only discusses
determining a salvage value, and not a pre-damaged valuation of the vehicle.
Id. at 9. Patent Owner argues that Reimel only discusses the value of the
vehicle in its present condition, and thus, in fact, “teaches away from
generating a pre-damaged valuation.” Id. (citing Ex. 2006 ¶ 37).
Specifically, Patent Owner relies on the following passage of Reimel as
evidence that Reimel always subtracts the value of any defects:
Vehicle core values for each year, make, model, and body type
and adjustment value for each feature/defect/law are stored in
vehicle database 30 for access via the Internet by the customer
via web server 10. A vehicle value processor 40 calculates the
value of the vehicle by adding/subtracting values from the
vehicle's core value based on mileage and outer unique
characteristics of the vehicle elicited from the customer in
connection with the vehicle being appraised by the customer.
Id. at 9 (quoting Ex. 1010, 8:29–34).
Patent Owner’s arguments do not convince us that Petitioner has not
demonstrated by a preponderance of the evidence that the challenged claims
are rendered obvious by Reimel. As we noted in the Decision on Institution,
Reimel specifically teaches that “[i]nsurance companies may use the present
invention to evaluate crashed vehicles as well as the damage to stolen
vehicles . . . provid[ing] a neutral objective standard for assessment of such
vehicles by insurance adjusters.” Dec. 23 (quoting Ex. 1010, 10:13–15).
Thus, Reimel not only contemplates determining the cost of the vehicle after
it has been damaged, it contemplates evaluating the damage to a vehicle,
which would require knowing the value of the vehicle before it has been
damaged. Thus, we agree with Petitioner (Pet. 24–25 n.10) that the ordinary
artisan would have understood that information regarding damage that had
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been sustained could have been left out to obtain a pre-damaged value. See
KSR, 550 U.S. at 421 (“A person of ordinary skill is also a person of
ordinary creativity, not an automaton.”); In re Kuhle, 526 F.2d 553, 555
(CCPA 1975) (holding that removing a feature, and thus removing its
function, was an obvious expedient). That is, because the system of Remel
allows the user to enter the data, if the user declined to enter data of damage
that had been sustained by the vehicle, a pre-damaged valuation of the
vehicle would be obtained. See, e.g., Bell Com. Research Inc. v. Vitalink
Com. Corp., 55 F.3d 615, 622–23 (Fed. Cir. 1995) (noting that “an accused
product that sometimes, but not always, embodies a claimed method
nonetheless infringes”); accord Hilgraeve Corp. v. Symantec Corp., 265
F.3d 1336, 1343 (Fed. Cir. 2001) (“[S]o too the sale of a device may induce
infringement of a method claim even if the accused device is capable of non-
infringing modes of operation in unusual circumstances.”).
Moreover,
[u]nder the proper legal standard, a reference will teach away
when it suggests that the developments flowing from its
disclosures are unlikely to produce the objective of applicant’s
invention. A statement that a particular combination is not a
preferred embodiment does not teach away absent clear
discouragement of that combination.
Syntex (USA) LLC v. Apotex, Inc., 407 F.3d 1371, 1380 (Fed. Cir. 2005)
(internal citations omitted). Here, although Reimel might not explicitly
teach providing the value of a damaged vehicle before it was damaged, it
does not state that its system could not be used to provide such a report. In
addition, as noted above, Reimel does suggest evaluating the damage to a
vehicle, which would require knowing the value of the vehicle before it has
been damaged.
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We have considered paragraph 37 of the Declaration of Professor
Westland, which Patent Owner relies upon to argue that there would have
been no reason to modify Reimel to obtain the pre-damaged value of a
vehicle, but do not find it persuasive. Professor Westland states:
I understand the Board found that one skilled in the art could
obtain a pre-damaged vehicle valuation with the Reimel system
by leaving out data. I do not see any suggestion in Reimel to
obtain a value of a vehicle in some pre-existing condition, nor is
this discussed at all in Reimel. I found that every example of use
given in Reimel discusses the value of the vehicle in its present
condition. Ex. 1010 at 3:20-7:2. This is further evidence by a
processor engine in Reimel that subtracted an adjustment value
to account for defects and flaws in the vehicle. Reimel at 8:29-
34. Even if there is some rationale to leave out information to
obtain the pre-damaged value, Reimel does not provide a web
page that relates to an insurance claim for the damaged vehicle,
wherein the insurance claim is a request to recover market value
or repair cost in association with an insurance policy.
Ex. 2006 ¶ 37.
As we noted above, however, Reimel specifically contemplates
evaluating the damage to a vehicle, which would require knowing the value
of the vehicle before it has been damaged. Moreover, as to Patent Owner’s
argument that the challenged claims “relate to an insurance adjuster” (PO
Resp. 8), we decline to read the method and system as only being used by an
insurance adjuster, as there is nothing in the claims that limits use to only an
insurance adjuster.
Patent Owner does not separately address claims 2–31 of the ’513
patent. We find Petitioner’s evidence and arguments persuasive as to those
claims, and we adopt that analysis as our own. We determine, therefore, that
Petitioner has established by a preponderance of the evidence that those
claims are also anticipated and/or rendered obvious by Reimel, and.
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Accordingly, we determine that the Petition demonstrates that by a
preponderance of the evidence that claims 1–31 are anticipated by, or
rendered obvious by, Reimel.
D. Patent Owner’s Motion to Amend
Patent Owner’s Contingent Motion to Amend seeks to substitute new
claims 32–62 for original claims 1–31, respectively. PO Mot. Amend 4.
The ultimate burden of persuasion is with Patent Owner, the movant, to
demonstrate the patentability of the amended claims. 37 C.F.R § 42.20; see
Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1307 (Fed. Cir. 2015).
For the reasons discussed below, Patent Owner has not met that burden, and,
thus, the Motion to Amend is denied.
1. Proposed Substitute Claims
Patent Owner proposes substitute claims 32–62 for claims 1–31,
respectively. PO Mot. Amend 4. According to Patent Owner, claim 32,
reproduced below, and with the added language underlined, “reflects the
added claim language.” Id.
32. A method for obtaining an automobile insurance claim
valuation report of a damaged vehicle, comprising:
receiving a uniform resource locator over an electronic
communication network from a client computer;
providing a web site that corresponds to the uniform resource
locator, the web site provides at least one web page that relates to an
insurance claim for the damaged vehicle, the insurance claim being a
request to recover market value or repair cost in association with an
insurance policy;
receiving data relating to the insurance claim;
processing at the server the received data to automatically
generate a valuation report for the damaged vehicle, the valuation report
being a report that provides a value of the damaged vehicle, before the
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damaged vehicle was damaged, based on factors including mileage,
condition, and geographic location; and,
transmitting the valuation report to the client computer over the
electronic communication network through the web site
Id. at 4–5.
2. Analysis
Even if we were to assume, arguendo, that Patent Owner has shown
written description support for the claims in the published patent application
(Ex. 2007), Patent Owner has not demonstrated that the claims are
patentable.
First, Patent Owner has not established that the claims are patentable
under 35 U.S.C. § 101 within the framework set forth in Alice. In particular,
Patent Owner, has failed to establish how limitations added by the proposed
amendment make the claims no longer drawn to the patent-ineligible
abstract idea of providing a vehicle valuation report. Moreover, Patent
Owner does not establish how the added claim limitations provide an
element or combination of elements sufficient to ensure that the patent in
practice amounts to significantly more than a patent on the abstract idea
itself.
Patent Owner contends that “the substitute claims do not preempt the
concept of obtaining a valuation report.” PO Mot. Amend 13. For example,
Patent Owner asserts, that a valuation report can be obtained by fax or
through the mail, without utilizing the claimed website. Id. But, as we
noted above in our analysis of the patent eligibility of the original claims,
simply utilizing a generic computer system to generate a vehicle valuation
report faster and more efficiently is not enough to transform a patent-
ineligible claim into a patent-eligible invention.
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Second, Patent Owner has not established that the claims are
patentable over the prior art. Patent Owner argues that the claims as
amended are limited to an insurance adjuster, and as banks and leasing
agencies do not generate requests to obtain a pre-damaged market value of a
vehicle, there would be no reason to create a web page that relates to
recovering the pre-damaged market value of a vehicle. Id. at 10 (citing Ex.
2006 ¶ 33). Patent Owner argues further that “surmising that one skilled in
the art could adjust the data to get a pre-damaged valuation to create the
recited claims is classic hindsight reconstruction.” Id. Patent Owner
contends that Reimel does not suggest obtaining a pre-damaged market
value, and in fact, teaches away from generating a pre-damaged valuation.
Id. at 11 (citing Ex. 1010, 8:29–34). Thus, According to Patent Owner,
“[e]ven if there is some rationale to leave out information to obtain the pre-
damaged value, Reimel does not provide a web page that relates to an
insurance claim for the damaged vehicle, wherein the insurance claim is a
request to recover market value or repair cost in association with an
insurance policy as required by the claims. Id. at 11–12.
As noted by Petitioner (Pet. Opp. Mot. Amend 14), there is nothing in
the claim that limits its use to an insurance adjuster, and we decline to read
the claim as being so limited. Moreover, in the section discussing the
obviousness of the original claims over Reimel, we rejected Patent Owner’s
arguments that Reimel does not suggest obtaining a pre-damaged market
value. And finally, as we noted also in the section discussing the
obviousness of the original claims over Reimel, Reimel specifically teaches
the use of its system by insurance companies, and Patent Owner has not
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established that the proposed amendments to the claims add anything to the
system suggested by Reimel.
Thus, we conclude that Patent Owner has not met its burden of
demonstrating the patentability of the proposed substitute claims, and thus
Patent Owner’s Motion to Amend is denied.
III. CONCLUSION
For the foregoing reasons, we determine that Petitioner has
demonstrated that claims 1–31 of the ’513 patent are unpatentable by a
preponderance of the evidence.
Moreover, we determine also that Patent Owner has not demonstrated
by a preponderance of the evidence the patentability of proposed substitute
claims 32–62.
IV. ORDER
Accordingly, it is:
ORDERED that claims 1–31 of the ’513 patent are held unpatentable;
FURTHER ORDERED that Patent Owner’s Motion to Amend is
denied; and
FURTHER ORDERED that because this is a Final Written Decision,
parties to the proceeding seeking judicial review of the decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

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PETITIONER:

Dion Bregman
Ahren Hsu-Hoffman
MORGAN, LEWIS & BOCKIUS LLP
dbregman@morganlewis.com
ahsu-hoffman@morganlewis.com

PATENT OWNER:

Ben J. Yorks
IRELL & MANELLA LLP
byorks@irell.com