“Usage Based Insurance” Bulletin March 2010

Dear Ladies and Gentleman,

I have recently filed a complaint against the company Mapfre because of infringement of the ES2108613 patent claims with its project Y-Car.

 

https://payasyoudrive.wordpress.com/2010/03/05/first-usage-based-insurance-patent-infringement-lawsuit/

 

This has created some confusion and incredulity in some insurance companies and advisors because they understand that they don’t manufacture anything and that their activities are not patentable.

 

This is usually true and is the reason why insurance companies are not familiar with patents, but I think it is appropriate to clarify some basic aspects about this topic:

 

A method of doing business could be protected by a patent if it is integrated into a system in which some element could be patented.

 

• discoveries, scientific theories and mathematical methods
• aesthetic creations
• schemes, rules and methods for performing mental acts, playing games or doing business
• programs for computers, and
• presentations of information

are not considered to be inventions if the European patent application only relates to such subject-matter or activities as such.

 

 http://www.epo.org/patents/Grant-procedure/About-patents.html

 

What it is protected by the patent depends on each country.

 

The European patent shall, in each of the Contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that State, unless this Convention provides otherwise.

 

 http://www.epo.org/patents/law/legal-texts/html/epc/2000/e/ar2.html

 

In the case of Spain.

 

The right granted by a Patent is not so much the right to manufacture, offer on the market or use the object of the Patent, rights that the title holder always has and can exercise, but especially and uniquely, “the right to exclude others” from manufacturing, using or introducing the patented product or procedure in the course of commercial activity

 

http://www.oepm.es/cs/Satellite?c=Page&cid=1147935978362&classIdioma=_en_us&idPage=1147935978362&pagename=OEPMSite%2FPage%2FtplContenidoInformacionGeneral&idInfo=1208064712876&idPagAnterior=1144260495181&canal=CAN2&volver=SI

 

It is protected what it’s specified in the claims of the patent.

 

1. The extent of protection conferred by a patent or patent application is determined by the content of the claims. The description and drawings can be used, however, to interpret the claims.

 

http://noticias.juridicas.com/base_datos/Admin/l11-1986.t6.html

 

And related the interpretation of the claims, you have to read them with the intention to understand what the author wanted to express, also covers the equivalent solutions, ie different solutions but that given the state of the art are obvious to an expert, including the elimination of minor elements.

 

Claims should be interpreted to give fair protection to the patentee while preserving reasonable certainty for third parties.

…

An element shall be regarded as equivalent to an element in a claim, if, in the context of

the claimed invention:

a) the element under consideration performs substantially the same function to produce

substantially the same result as the claimed element; and

b) the difference between the claimed element and the element under consideration

is not substantial according to the understanding of the claim by a person skilled

in the art at the time of the infringement.

 

https://www.aippi.org/download/comitees/175/RS175English.pdf

 

Investing in a project in which there is no certainty that does not infringe any patent is similar to constructing a building on land which you are not sure it’s yours.

 

The risk is not only the possibility of losing all the investment, but also to take charge of dismantling and severance costs that may apply.

  

If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE.”

As always, I have upgraded my “Pay As You Drive Directory ” and my News Bulletin.
 
Yours sincerely

 

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

First “Usage Based Insurance” patent infringement lawsuit

I have filed a patent infringement lawsuit against Mapfre in the mercantile court nº 2 of Zaragoza city (proc. 80/2010). Its insurance-telematics Y-Car would infringe several claims of the ES2108613 patent.

The technology of this project is supplied by Octotelematics.

This Spanish patent is the precursor one of the well-know European patent  EP0700009 and in Spain Norwich Union (Aviva) is the only one who has a license (non exclusive).

Relationship among Insurance and Telematics Companies

The point of view on “Pay As You Drive” or “Usage Based Insurance” of the insurance and telematics companies is very different.

 Some telematics companies approach the insurance companies like the hen that proposed the pig to open a restaurant together in order to offer bacon and eggs.

 It seems that Octotelematics has been the only one who has been able to identify that the insurance companies could be a springboard to increase its market vertiginously.

 Take a look at http://www.octotelematics.com/corporate-info/company-information

Who will lead the project “Pay As You Drive” in Europe?

The recent report of Frost and Sullivan “Strategic Analysis of the European Markets for Telematics Based Car Insurance Systems ” outlines a horizon in which the big insurance companies will be the ones that will lead the development and implementation in the market of the project “Pay As You Drive”. 

It is a vision that I also defended during a lot of time, but now some things have change. Or better we should say that TomTom has given us the possiblitity to see that the things can be otherwise.

   Now, several technology companies see in the telematics the possibility to integrate an enormous quantity of services, as the parking, tolls, congestion-charge or combustible payment, traffic and navigation information for the driver or for authorities, anti-theft, recovery stolen vehicles, fleet management, information about maintenance or use of the vehicle, roadside assistance, information or entertainment services, emergency call, etc. Some of these services are already in commercial phase with mobile terminals.

 A key element in this development is the application “Pay as you drive” that would be offered as a business solution for any insurance company that wants it. In this way, the small national insurance companies, with good knowledge of the market would be able to take more advantage of the segmentation capacities that offer the PAYD  systems than the big multinational companies.

 To my way of thinking, this is the great question that will be solved in the auction of the patent EP0700009 next day October 31 by IP-Auction. 

Possibly, what happens to this patent will have a great repercussion and will restructure the sector of the insurance of the automobile in next years. Supposing that this time the auction has a buyer, big strategic movements to be relocated in this project will take place. But if the winner of the auction is a technological company, this means that it will have a great revolution.  

“Pay As You Drive” versus “Road Charge”

—– Original Message —–

From: s.minguijon@salvador-minguijon.es

To: XXXXXXX

Sent: Tuesday, June 26, 2007 4:46 AM

Subject: Re: “Pay as you drive” Information

Dear XXXXXX,

What we have learned in England is that the population rejects an obligatory system implanted at national level and that processes and stores information that can be used against the citizen’s interests.

This impedes the development of a centralized project of Road-Charge in a short term.

The solution that would be adopted is to implant independent systems to solve concrete problems of specially congested areas or to finance new investments in road infrastructures.

It is supposed that these problems are more and more serious and more extended and will consequently also expand the control systems.

The governments have to be sufficiently skilled so to implant technologies that can be integrated at national level later on.

The system “Pay as you drive” has to be implanted at national level and to avoid a radical social rejection, it has to be voluntary. It also has to be very careful with the information that processes because any scandal in its custody would have disastrous consequences for the project.

It seems to be that the citizens trust the custody of the information more talking about serious companies (overalls big financial entities) that in the own state.

That is to say that no matter how much technological and conceptually the projects Road Charge and Pay As You Drive are basically the same thing, the citizens will have different requirements and expectations about the same ones and its adaptation to these requirements implies, at this time and in certain countries, a significant technological difference between both projects.

Regarding the state of the projects “Pay as you drive” the only one really significant at the moment is the one of Norwich Union, the other ones are simply acquiring Know-How.

I don’t think that in Europe it will be more than 2 or 3 technological platforms that offer the application. In one of them will have a predominant role IBM, to constitute the other ones there are many companies of several sectors that are trying to structure a viable project.

I hope this information is you useful.

Regards.

Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

New auction round of patent EP0700009

The patent auction celebrated on May 15 in Munich, with an initial
price of 1.500.000 Euro, was void, as many companies could not register
on time, resulting in no bids.

In theory there were companies with interest in acquiring the patent
to structure their future projects in Europe, and there are also some
that need it to be able to market projects in which they have already
made big investments.

It is necessary to keep in mind that practically all the projects,
certainly all the significant ones, that are developing at the moment
are very likely to be infringing some of the claims of the patent, no
matter if they use GPS, GSM or another system of transfer of data, etc.

However at this stage, there was not enough participation in the
auction to sell the patent above the reserve price, leaving perplexed
the specialists in patents.

An important factor is, that the insurance companies don’t have
experience in the area of intellectual property and therefore find it
very difficult to make a firm decision. The impacts of ownig the
patent and even more, the possible consequences of not owning the
patent are very complex to assess.

“From some important companies in the field we have been told that
more time for due diligence is needed. This gives us a very good
perspective to successfully offer the patent in another auction
round.” says Boris Peters from IP Auctions.

Especially technology companies have to deal with the fact, that the
PAYD-patent provides protection for an application rather than nuclear
technical knowledge.

“The future owner of the patent remains to be announced, but it will
be.” says Mr. Peters. Please send a brief message to the following
Email if you are interested in the further auction process and receive
updates on the following steps: peters@ip-auction.eu, subject: “PAYD”

Reason to bid in the auction of the patent EP0700009, if you want to participate in the project Pay_As_You_Drive.

 The project “Pay as you drive”, together with the navigation systems are going to constitute the hardware support on which an exciting range of telematic applications will developed which will completely change the world of transport.

 The navigation systems have been winning market and the projects “Pay as you drive” are overcoming the first commercial tests. Both products are complementary and very attractive by themselves for a significant segment of the population.

 Its success will be catapulted by the urgent necessity to solve two enormous problems: the congestion of road infrastructures and the climatic change. Both problems demand unpopular sacrifices, but their short term consequences don’t leave our political powers another alternative than to face them in an urgent way.

Obviously this will mean an important increment in the telematics market but also a restructuring of the same one, as it will change from being a professional market to a great public’s market.

Consequently, not all companies will be able to handle this change. There are many companies that will have their place in the market because of their own merits, such as IBM, CERT, Siemens, Progressive, Norwich Union, etc. but the rest and majority of the companies will have to establish alliances, collaborations and will bet firmly for the development of these projects.

 One of the key dates is May 15, day in which the patent EP0700009 will be auctioned by IP Auctions GmbH in Munich.

This event will define the companies that will develop the project in the most important countries in Central Europe and this will also give them the possibility to participate at world level.

If the project is successful, many companies will try to avoid the rights corresponding to this patent and the owner company will have to defend them. The more success is predicted to the project, the more aggressive will be the attitude of the competitors.

If the patent is acquired in alliance with other partners, this defence will constitute a nexus of union of the organizations. Without any doubt, this defence will be coordinated and shared with Norwich Union, company with which the new owner will share the property of the patent in some countries.

 The competitors that don’t respect the rights of the patent will have two problems:

The insurance companies could not participate in a great project of this type without infringing rights of the patent and facing the possible consequences of litigation.

It is very difficult to avoid the derived rights of the patent EP0700009 as neither the elimination of some of their characteristics (especially those of more social character) neither an amplification of the same ones avoids the rights of the patent.

If your company wants to participate in some issue of the development of the system “Pay as you drive”, you will have to dedicate many efforts to it. These efforts can be based on your own intellectual property if you become the owner of the patent on May 15.

 If somebody else becomes the owner, you will have to depend on him as it will be the patent owner’s decision under which conditions you may enter the train of “Pay As You Drive”.

Now it is the moment to catch this train or to wait for the following. However the following train might not have seats, if there will be another train at all.

The endless crisis in the automobile insurance.

My experience in Spain, which I suppose is applicable to the rest of the countries of Europe and USA, is that the sector of the automobile insurance suffers a problem of uncertainty for about 15 years.    The repairs of the vehicles are more and more expensive because the technology is more and more complex, the manpower get more expensive too and the constant renovation of models influences very negatively on the cost of the spare parts. On the other hand, the amount of the compensations presents an unstoppable growth.    The consequence of all this is that the insurance policies are more and more expensive.    In a beginnig this is very positive thing for the sector, because it allows a bigger business volume and consequently the possibility of obtaining more benefits. The problem is that the permanent ascent in the costs implies a continuous adaptation of taxes that are not acceptable in the market.  On the other hand the guarantees of these policies are closely regulated, watched over and guaranteed by the own State. For this, it is very difficult to compete being based on the credibility and the trust, factors that traditionally were the key element of differentiation in the insurance marketing.    The traditional channels of sale, based on the personal relationships, have been obsolete; it is a too expensive product to sell it in this way.    The transparency of the market has increased, due to the existent easiness to obtain different offers and to be able to compare them using quick communication systems as the telephone or internet. This implies that the price is now unquestionably the main sale factor.      If we apply to this situation the pattern that Mcgahan proposes in its “Four Trajectories of Industry Change” we would see that our core assets are in danger and that therefore the sector is in a phase of “Creative” adaptation.    Until some years ago, it was assumed that the insurance companies could not influence in the risk of their clients, they limited to try to be guided to some markets with some certain characteristics and to defend their market by reducing their commercial or administration expenses or to fight to maintain an image of extraordinary service.    Those that opted for the first option are the “direct” insurance companies (Directline), creating a managerial concept that has spread in other sectors with the name of low cost activities.  But at the end there have been very few the companies able to stay in this market with a stable and reasonable margin of benefits. They have become a sector of specialized companies that have been able to adapt to work in a changing environment, at least for what is normal in the sector of the insurance in general.      But now the thing complicates much more, we have tools that allow us to influence in the risk of our clients and the handling of these tools have never been the nucleus of the activities of insurance companies. We would have entered in a phase of “Radical” change since as much our core assets as our core activities would have been obsolete.    In these cases Mcgahan recommends us to have a short term strategy, with an extreme supervision of the activities in the market, identifying it is the sector of the market that we can defend more easily.    My opinion is that in the market a system “Pay as you drive” will be imposed, just because it doesn’t seem that there is another alternative option that presents a similar compatibility with other big social problems that are demanding solutions in an urgent way. And although we will really have to wait to see how, when and who participates in this reorganization of the market, the truth is that nowadays we have tools that allow to make us an idea of how the events will evolve, a good reflection base is the studies of Christensen on the “Disruptive Innovation” and those of Rogers, about on the “Innovation Adoption Curve”.

Auction of the patent EP0700009, well-known as “Pay As You Drive” or PAYD.

I have dedicated 15 years to the “Pay As You Drive” project conception and I would have prefer to have the possibility to participate in the election of the companies that had to execute it in
Europe. 

Although I must also recognize that indeed I had this opportunity. I had the absolute trust in the team formed by Norwich Union, IBM and Progressive. It was the best in options not to develop the project at European level but at world level.    Due to different reasons, possibly worthy of a deeper study, this project was not developed as it was foreseen and Norwich Union had to restrict the aspirations to a local market.   

I would have liked to have a second opportunity to participate in the formation of another team, but the project had already created too many expectations, several companies had dedicated too many efforts in this market. In general, an enormous tension was found in all the involved companies, a tension motivated by the development of the technology companies and the lack of decision of the insurance companies that saw in the project too many uncertainties.    This evolution had the danger that at the end several projects were developed almost simultaneously and that the defence of the rights of the patent would be very complicated, practically impossible for a private person.   

This is the reason for which I have decided to offer it in an auction.    I would like this patent to complete the objective for which it was requested, that is to protect the efforts that the company acquirer will have to carry out for its commercial development.    I would also like the protection of this patent to give to this company the enough security to use in a shortly term the possibilities that offers this system to influence in the conduction habits and to reduce the risk of the users.    This is a not very commercial aspect of the project, but for social responsibility and for the own concept of what a patent is, it is a social debt that should not be omitted. It is comprehensible that at this time no company dares to outline this very openly, but it is quite shocking that some companies use the lack of this function to try to avoid the rights of the patent.  

The respect to the privacy in the projects “Pay As You Drive”

By the middle of the last year I maintained an exchange of opinions about how to guarantee that the information obtained with the project PAYD cannot be use for activities that can be prejudicial for the right of the privacy of the users. I am not allowed to publish our partner’s opinions. But I believe that my answer can be useful. It was with respect to the comment that I had published:

 “There has not been any project that has opted to process part of the information in the vehicle and to transmit only summary information. It is curious because this was the solution thought in the original project” 

 From: “Salvador Minguijon” <s.minguijon@teleline.es>To: “XXXXX” <XX>Sent: Sunday, July 30, 2006 12:25 PMSubject: Re: “Pay as you drive” Information  Thank you XXX: Do you allow me to publish your mail in my Blog?. Of course, hiding the mail address.  The insurance and technology companies consider that the information on the project “Pay as you drive” is strategic. Since then, they read and they follow the information but they don’t participate in discussion forums, unless they are promotional acts. Certainly never to talk about the problems that is what I try to foment, because I’m convinced that this helps to find solutions. Indeed your proposal seems reasonable, logic and simple.

 There are two special cases in where it is convenient to have detailed information: 

1º In case of an incident or accident, working as black box.  It is convenient for the insurance company to avoid frauds. It is an information which only has value until the user’s information is received and it is contrasted that both coincide. In that moment it could be eliminated. If in the incident personal damages have taken place. It is an important information to clarify responsibilities, but their storage would have to pass to police files or similar. Certainly they could not be in hand of the insurance companies. It is a very important information for traffic security investigation purposes. In this case it is only significant the information of the facts, the infomation about persons can be deleted.

2º During random periods of time, we must obtain detail information of the vehicle, because the following reasons:  The insurance companies can contrast this information with the one received from the client and to detect manipulation on the equipment. It is a temporary value information that, except for detection of a fraud, it can be erased immediately. The analysis of this information tell us of the conditions in those that we usually drive and with the one obtained in the accidents, should inform us about the exact risks that presents the specific behaviors. It’s not necessary a link with the user. One of the things that has surprised me a lot in this project is the ignorance that we have about the incidence of such simple things as the excess of speed or last of the trip on the risk. We know that it is present frequenly in the accidents, about we have many data, but we have very little information on the conditions in those that people usually drive.

 Regards                                                                                                           Salvador Minguijon