2. (25 POINTS) AlphaDog’s US patent has one claim:
1. A method of paying a company executive comprising:
Calculating a salary, wherein the salary is calculated by multiplying the average non-executive company employee income by an X-factor, wherein the X-factor is between 10 and 99; and
Paying the executive the salary.
During examination, the claim was amended. As originally filed, the claimed X-factor range was "between 10 and 120." AlphaDog had amended the claim to avoid a prior art reference that discussed paying executives over 100-times the average employee salary. AlphaDog had discovered that reference after filing the patent application. The company amended the claims, but did not tell the patent office of the reference (believing that it was no longer relevant to the claimed invention).
BetaDog has two employees – the CEO and her secretary. BetaDog’s CEO is paid 9-times the salary of the secretary. Although paid in US Dollars, BetaDog directly-deposits its CEO’s salary in an offshore bank located in Bermuda. AlphaDog sues BetaDog and its CEO for patent infringement. Explain the relevant legal issues, and figure out who wins and loses.