A 3-judge panel at the Federal Circuit Court of Appeals has overturned a lower court’s variable annuity administration method patent case decision.
Lincoln National Life Insurance Company and the defendants in the case, Transamerica Life Insurance Company and its affiliates, have been engaged in a dispute over whether the method Transamerica and sister companies use to administer deferred variable annuity conflicts that offer guaranteed minimum withdrawal benefits infringes on a patent held by Lincoln .
Lincoln is a unit of Lincoln National Corp., Radnor, Pa. (NYSE:LNC).
Transamerica and its affiliates are units of AEGON N.V., The Hague, Netherlands (NYSE:AEG).
Lincoln has a patent entitled “Method and Apparatus for Providing Retirement Income Benefits.”
One section of the patent states that Lincoln has patented:
A computerized method for administering a variable annuity plan having a guaranteed minimum payment feature associated with a systematic withdrawal program, and for periodically determining an amount of a scheduled payment to be made to the owner under the plan, comprising the steps of:
a) storing data relating to a variable annuity ac-count, including data relating to at least one of an account value, a withdrawal rate, a scheduled payment, a payout term and a period of benefit payments;
b) determining an initial scheduled payment;
c) periodically determining the account value associated with the plan and making the scheduled payment by withdrawing that amount from the account value;
d) monitoring for an unscheduled withdrawal made under the plan and adjusting the amount of the scheduled payment in response to said un-scheduled withdrawal; and
e) periodically paying the scheduled payment to the owner for the period of benefit payments, even if the account value is exhausted before all payments have been made.