Under some patent laws, patents may be obtained for insurance-related inventions. Historically, patents could only cover the technological aspects of a new insurance invention. This is still the case in most countries. In the United States, however, recent court decisions have encouraged more inventors to file patent applications on methods of doing business. These patents may be used to get more comprehensive coverage of improvements in basic insurance processes, such as the methods of calculating premiums, reserves, underwriting, etc. This is causing controversy in the insurance industry as some see it as a positive development and others see it as a negative development.
This changed dramatically, however, with the 1998 State Street Bank Decision. The State Street Bank Decision was a ruling by the Court of Appeals for the Federal Circuit that confirmed that there was no “business method exception” under United States patent law. The number of patent applications filed per year after this decision was handed down jumped to about 150. The number of patents issuing per year jumped to about 30
In June 2010, Progressive Auto Insurance filed a patent infringement lawsuit against Liberty Mutual over one of Progressive’s Pay As You Drive auto insurance patents
Some are concerned that the growth in patent claims will be negative. They are concerned that invalid patents will issue and that this will lead to patent trolls inhibiting new product introductions by demanding excessive license fees for these questionable patents.
Growth
Historically, only about one or two patents per year issued in the US on inventions specifically related to insurance policies.This changed dramatically, however, with the 1998 State Street Bank Decision. The State Street Bank Decision was a ruling by the Court of Appeals for the Federal Circuit that confirmed that there was no “business method exception” under United States patent law. The number of patent applications filed per year after this decision was handed down jumped to about 150. The number of patents issuing per year jumped to about 30
Litigation
In September 2006, Lincoln National Corporation filed a patent infringement lawsuit against Transamerica Life Insurance Company and other entities for allegedly infringing U.S. Patent 7,089,201, “Method and apparatus for providing retirement income benefits”. This patent covers methods for administering variable annuities. The jury found the patent valid and infringed. The court ordered Transamerica to pay Lincoln $13 million in damages. At a rate of 11 basis points of assets under management, this was considered a reasonable royalty. In June 2010, however, the verdict against Transamerica was overturned on appealIn June 2010, Progressive Auto Insurance filed a patent infringement lawsuit against Liberty Mutual over one of Progressive’s Pay As You Drive auto insurance patents
Controversy
Some in the insurance industry see the growth in insurance patents as a positive development. They cite that by being able to protect inventions, insurance companies will be more inclined to invest in new product development.Some are concerned that the growth in patent claims will be negative. They are concerned that invalid patents will issue and that this will lead to patent trolls inhibiting new product introductions by demanding excessive license fees for these questionable patents.
Notable patents
- EP 0700009 “Individual evaluation system for motorcar risk”. First patent on telematic automobile insurance. Commercialized as PAYD auto insurance in the UK.
- US 6235176 “Computer apparatus and method for defined contribution and profit sharing pension and disability plan”. Patented disability insurance for a defined contribution pension plans. Adopted by IBM for their employees.
http://en.wikipedia.org/wiki/Insurance_patent
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