A steady stream of insurance-related patents is currently coming out of the patent office. And, many more are on the way. What kinds of things are being patented? In a word, everything.
One common area for patenting is new insurance products or new variations on existing insurance products. For example, companies have been obtaining patents for product features such as the type of event that triggers a payout or how the payout is calculated.
Another common area is underwriting and other risk management techniques. For example, companies have been obtaining patents for new techniques that more accurately estimate the likelihood of certain events occurring (e.g., death, disability, property damage, etc.). Likewise, techniques for transferring risk, managing interest rate risk, and managing fluctuations in valuations, have also been patented.
As might be expected, insurance companies are also obtaining patents on new functionality that they are adding to their computer systems. For example, companies are obtaining patents on Web site features, services, and tools that are being made available to their customers or their business partners through the Internet. Insurance companies have also been obtaining patents on the way they run their businesses. For example, one company obtained a patent for its insurance sales system.
The range of things that can be patented ("patentable subject matter") is defined in 35 USC §101. According to this section, a patent may be obtained for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." This section was interpreted broadly by the U.S. Supreme Court in 1980 in Diamond v. Chakrabarty. In that case, the court found that Congress intended patentable subject matter to include "anything under the sun that is made by man." More recently, in 1998, the Federal Circuit decided State Street Bank v. Signature Financial Group, which is generally seen as triggering a rush of patent filings for what are now called business method patents. Business method patents are often considered patents where the inventive feature is more of a business innovation than a technical innovation. However, no bright-line distinction exists as to what constitutes a business method patent, and it is not a separate statutory class of patent.
A cutting-edge issue in patent law is whether an abstract legal relationship (e.g., as would be embodied in an insurance policy) is patentable subject matter. On some occasions, the patent office has taken the position that an invention must be concrete and tangible in order to be patentable, and that a legal relationship is not sufficiently concrete and tangible to be patentable.
While this issue may be interesting to a patent attorney, the reality for insurance companies is that, regardless of the outcome, effective patents can be obtained for insurance products. Because insurance policies are almost always administered using computer systems, telling an insurance company that it may introduce a new insurance product only if no computers are involved is essentially telling the company it may not introduce the product. Thus, a patent may be obtained for the computer system that administers the insurance policy as a way of obtaining a patent for the insurance policy itself.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.