Transamerica Life Ins. v. Lincoln Nat. Life Ins.

550 F.Supp.2d 865

TRANSAMERICA LIFE INSURANCE COMPANY, Western Reserve Life Assurance Co. of Ohio, and Transamerica Financial Life Insurance Company, Plaintiffs, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant.

No. C 06-110-MWB.

United States District Court, N.D. Iowa, Cedar Rapids Division.

March 10, 2008.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Glenn L. Johnson, Kevin H. Collins, Sarah J. Gayer, Shuttleworth & Ingersoll, Cedar Rapids, IA, for Plaintiffs.

Carrie Marie Raver, Dale Randall Brown, Gary C. Frust, Barnes and Thomburg LLP, Fort Wayne, IN, Denny M. Dennis, Todd A. Strother, Bradshaw Fowler Proctor Fairgrave, Des Moines, IA, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING CONSTRUCTION OF DISPUTED PATENT CLAIM TERMS

MARK W. BENNETT, District Judge.

TABLE OF CONTENTS
I.  INTRODUCTION .................................................................871
      A.  Procedural Background ....................................................871
      B.  Factual Background .......................................................873
          1.  The parties ..........................................................873
          2.  The patent-in-suit ...................................................873
              a.  The inventors and dates of filing and issuance ...................873
              b.  The Abstract and Field Of The Invention ..........................873
              c.  The Background Of The Invention ..................................874
              d.  The Brief Summary Of The Invention ...............................875
              e.  The Detailed Description .........................................880
                    i.  The description of a first method ..........................880
                   ii.  The description of a second method .........................884
                  iii.  Is a third method described? ...............................886
              f.  The Flow Charts ..................................................891
              g.  Pertinent claims of the patent ...................................891
      C.  Agreed Constructions .....................................................892
      D.  Disputed Constructions ...................................................893

II.  LEGAL ANALYSIS ...............................................................898
      A.  Principles Of Patent Claim Construction ..................................898
          1.  The Phillips methodology .............................................898
              a.  The starting point ...............................................898
              b.  Hierarchy of evidence ............................................898
          2.  Other canons of claim construction ...................................901
          3.  The court's independent obligation to construe terms .................902
          4. The court's supposed duty to determine overall scope of exclusive
               claim coverage ......................................................903
      B.  Agreed Constructions Of Terms Of The '201 Patent .........................905
      C.  Disputed Constructions Of Terms Of The '201 Patent .......................905
          1.  Claim 35: Preamble ...................................................905
              a.  "Annuity" ........................................................905
              b.  "Variable annuity" ...............................................906
                    i.  Proffered constructions ....................................906
                   ii.  Initial arguments of the parties ...........................907
                  iii.  Tentative analysis .........................................907
                   iv.  Oral and post-hearing arguments ............................909
                    v.  Post-hearing analysis ......................................910
              c.  "Systematic withdrawal program" ..................................912
                    i.  Proffered constructions ....................................912
                   ii.  Initial arguments of the parties ...........................912
                  iii.  Tentative analysis .........................................913
                   iv.  Post-hearing arguments .....................................916
                    v.  Post-hearing analysis ......................................917
              d.  "Guaranteed minimum payment feature associated with a
                    systematic withdrawal program" .................................918
                    i.  Proffered constructions ....................................918
                   ii.  Initial arguments of the parties ...........................919
                  iii.  Tentative analysis .........................................920
                   iv.  Oral and post-hearing arguments ............................922
                    v.  Post-hearing analysis ......................................923
              e.  "Scheduled payment" ..............................................925
                    i.  Proffered constructions ....................................925
                   ii.  Initial arguments of the parties ...........................925
                  iii.  Tentative analysis .........................................925
                   iv.  Oral and post-hearing arguments ............................927
                    v.  Post-hearing analysis ......................................929
              f.  "Periodically determining an amount [of a scheduled
                    payment]" ......................................................929
                    i.  Proffered constructions ....................................929
                   ii.  Initial arguments of the parties ...........................930
                  iii.  Tentative analysis .........................................931
                   iv.  Oral and post-hearing arguments ............................933
                    v.  Post-hearing analysis ......................................934
          2.  Claim 35: Step a .....................................................935
              a.  "Account value" ..................................................935
                    i.  Proffered constructions ....................................935
                   ii.  Initial arguments of the parties ...........................935
                  iii.  Tentative analysis .........................................936
                   iv.  Oral and post-hearing arguments ............................936
                    v.  Post-hearing analysis ......................................937
              b.  "Withdrawal rate" ................................................938
                    i.  Proffered constructions ....................................938
                   ii.  Initial arguments of the parties ...........................938
                  iii.  Tentative analysis .........................................939
                   iv.  Oral and post-hearing arguments ............................940
                    v.  Post-hearing analysis ......................................941

c.  "Payout term" ....................................................942
                    i.  Proffered constructions ....................................942
                   ii.  Initial arguments of the parties ...........................942
                  iii.  Tentative analysis .........................................943
                   iv.  Oral arguments .............................................944
                    v.  Post-hearing analysis ......................................944
              d.  "Benefit payments" ...............................................945
                    i.  Proffered constructions ....................................945
                   ii.  Arguments of the parties ...................................945
                  iii.  Analysis ...................................................945
              e.  "Period of benefit payments" .....................................946
                    i.  Proffered constructions ....................................946
                   ii.  Arguments of the parties ...................................947
                  iii.  Analysis ...................................................947
          3.  Claim 35: Step b: "Determining an initial scheduled
                payment" ...........................................................949
              a.  The proffered constructions ......................................949
              b.  Initial arguments of the parties .................................950
              c.  Tentative analysis ...............................................950
              d.  Oral and post-hearing arguments ..................................951
              e.  Post-hearing analysis ............................................951
          4.  Claim 35: Step c .....................................................952
              a.  "Periodically determining account value" .........................952
                    i.  Proffered constructions ....................................952
                   ii.  Initial arguments of the parties ...........................952
                  iii.  Tentative analysis .........................................953
                   iv.  Oral arguments ......................:......................954
                    v.  Post-hearing analysis ......................................954
              b.  "Making the scheduled payment [by withdrawing that
                    amount from the account value]" ................................955
                    i.  Proffered

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