Patent Law School Exam: Essay No. 2

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.

33 thoughts on “Patent Law School Exam: Essay No. 2

  1. 33

    Regardign the mouse/trackball, I heard the first mouse was invented by flipping a trackball over and attaching a button to it. So a mouse inherently comprises a trackball. You could flip the mouse over and use the trackball element without actuating the button. Or you could actuate the button. It’s still a trackball on the other side.

  2. 32

    Nobody123 wrote: “As claimed, the pc has both a mouse and trackball.

    There is no way to use the spec to reject the claim under 102. Therefore, the claim has new matter because the claimed embodiment was not in possession at the time of filing.”

    I disagree, a mouse that is also a trackball is supported by the spec. In the English language the word “or” is not exclusive. Although the “single input” limitation may limit the number of inputs to one, the input can still be characterized as both a mouse and a trackball.

  3. 31

    Under current US practises, this claim definitely fails the “machine” prong of Bilski because there is no structure recited in any step.

    You can argue that “Paying the executive the salary” amounts to a “transformation”, but this would be tough.

    “Which problem would this patent be solving?

    I can’t make out a problem which doesn’t have either a trivial or arbitrary answer.

    Some patents are such that posing the problem they solve amounts to explaining the idea of the patent itself (those silly throw-dog-ball-sticks for example). This one doesn’t seem to be of that kind.”

    I’m not sure what you’re getting at. Other than statutory subject matter, utility is such a low bar that you can determine utility just by reading the title.

  4. 30

    David French,

    Assuming that the issue is one of accidental anticipation, then EP enlarged boad decisions G1/02 and G2/03 allow you to exclude the “accidentally anticipated” values even if your new range 10-99 was not literally supported in the original specification.

    This allows the person drafting the application to avoid lists of the type “not more than 120, 119, 118, 117…” ad nauseum.

    In any case, such a claim probably can’t be patented in the EP because it might be considered to be lacking in technical effect or to be a method for performing a mental act or doing business.

  5. 29

    Example I use for training:

    spec at filing: a computer with a single input, wherein the input may be a mouse or a trackball.

    pending claim: a computer with a mouse and a trackball.

    Using the spec as originally filed, there are 2 disclosed embodiments:

    1) pc w/ mouse
    2) pc w/ trackball

    As claimed, the pc has both a mouse and trackball.

    There is no way to use the spec to reject the claim under 102. Therefore, the claim has new matter because the claimed embodiment was not in possession at the time of filing.

    Even if it were obvious to combine mouse and trackball into a single pc, the spec would still need modification to arrive at the claimed invention, and therefore constitutes new matter.

    Even if the spec at filing enabled Mr POSITA to make a pc w/ both mouse and trackball, this also is not germane to the new matter because applicant was not in possession of the claimed embodiment at filing.

    Clear as mud?

  6. 28

    I see several issues in the comments.

    Do we know the difference between written description and enablement?

    Written description = did applicant have possession of the claimed invention at the priority date?

    Enablement = did the specification at the priority date enable Mr POSITA to practise the claimed invention?

    The originally filed claim recites 10-120. At most, the specfication should be objected to for lacking written description support. It is the rest of the spec, not the claim, that is deficient.

    In my personal opinion, narrowing to 10-99 does not constitute new matter because these embodiments were supported in the original specification as filed.

    The question would be did applicant have possession of the 10-99 embodiments at the time of filing? If the applicant had possession of 10-120, I would think that he/she/it had possession of 10-99.

    When I was trained for 112 1st, the test for new matter would be to use the spec available at the priority date to reject the claim. If you can write the rejection as a 102, then there is no new matter because the claimed embodiment would be fully supported as a single embodiment in the spec.

    If you cannot write the rejecition as a 102, then the claimed embodiment is not supported in a single embodiment in the spec. Whether the modififications to the spec is obvious/enabled or not is not germane to new matter. If you cannot do a 102, then there is new matter. Even if the new matter is obvious from the spec, it is still matter because applicant did not have possession of the claimed embodiment.

    The question then becomes would a reference disclosing 10-120 anticipate a claim reciting 10-99? If yes, then there is no new matter. If no, there is new matter.

    It’s pretty clear that 10-120 anticipates 10-99, right?

    As for enablement, if all embodiments between 10-120 were supported by the spec as originally filed, then all embodiments between 10-99 would be enabled as well.

    Anybody care to comment?

  7. 26

    The whole scenario just makes me weep inside.

    But anyway, claim invalid for non-statutory subject matter and/or lack of novelty/obviousness in light of the real world, and not infringed because amending to 10-99 to avoid 100 should also exclude 9.

  8. 25

    Just a comment about the patent.

    Which problem would this patent be solving?

    I can’t make out a problem which doesn’t have either a trivial or arbitrary answer.

    Some patents are such that posing the problem they solve amounts to explaining the idea of the patent itself (those silly throw-dog-ball-sticks for example). This one doesn’t seem to be of that kind.

    Stephan

  9. 24

    Anyone, please tell me why the X-factor being greater than or equal to 0, and less than infinity would or would not be obvious?

  10. 23

    You know what’s really sad? How is the US going to continue to lead the world in CEO pay if we can’t protect new and creative ways of paying CEOs? And if America can’t be competitive in paying CEOs, then those CEOs will just move to other countries and our businesses won’t be able to compete. Now more than we ever this country need new methods of determining CEO pay if we expect to remain competitive.

    /patent wanker off

  11. 22

    “Glad I’m not in law school anymore.”

    So are your professors. Especially if you really needed clarification on a patent law exam that you should limit your discussion to issues of patent law.

  12. 21

    Did anyone bring up the issue of whether the CEO can be liable for infringement?

    Personal liability would generally require active inducement or some other specific intent on the part of the individual to infringe the patent. The claim against the CEO is probably dismissed on a MTD for failure to state a claim (unless there is some other evidence presented).

  13. 20

    Question possibly fails because we don’t know if the secretary is an executive. If no executive, then no non-executive salary to compare. Cannot assume that secretary is not an executive.

    Where is betadog company? Is it in America? Is it on Earth? So what if pay is in US dollars.

    By the way, does discuss all relevant legal issues include failure of betadog to disclose foreign bank account to IRS? Not to mention possible criminal laws?

    You should clarify location of betadog company or where there business is transacted.

    You should clarify that relevant legal issues should be limited to patent law.

    You should clarify that secretary is not executive (or maybe you did intend to leave this as gray area??)

    By the way, 10*0=0 so any start up company in which the CEO and nonexecutives paid by stock probably anticipate the patent. Claim should say executive salary is greater than zero.

    Glad I’m not in law school anymore.

  14. 19

    You should prepare your students for dealing with the USPTO by requiring them to use 14pt font and have a page limit of 2 pages and then ignore all requests for reason. haha

  15. 17

    Here are the issues I see and how I might call them:

    Written Description or Alternately Enablement under 35 USC 112, paragraph 1. It’s unclear where the basis is for the upper end of 99 for the range. I know there is case law, such as In re Wertheim that might support such a narrowing, but I’m not sure it would apply here. My view is that Claim 1 goes down under 35 USC 112, paragraph 1.

    Inequitable Conduct. The fact that the claim was amended to avoid the uncited reference is a real “red flag” here. For sure, this uncited reference is “material.” “Intent to deceive” is a bit more problematical, but given how “material” the uncited reference is likely to be considered, there’s a good chance that “intent to deceive” will still be inferred. Likely to be held invalid/unenforceable for inequitable conduct.

    Patentability under 35 USC 103. Given that the difference here is 1 for the multiplier, hard to believe that Claim 1 would be considered unobvious, without some sort of “surprising” or “unexpected” result, which I don’t see here. Likely to be held unpatentable under 35 USC 103.

    Patentable Subject Matter under 35 USC 101. Claim 1 is too close in character to the one that went down in Bilski. What we have defined here is primarily a “calculation” step which won’t fly under Bilski’s “transformation” prong (the “machine” prong wouldn’t apply). Almost certainly invalid under 35 USC 101.

    Literal Infringement of Claim 1. Unlikely, especially as there is no “about” before the lower limit of 10.

    DOE Infringement of Claim 1. Possible, as the end of the end of the range in play (10) isn’t the one that was amended to get around the art. This is similar to the situation in Warner-Jenkinson.

    Infringement under 35 USC 271(a) et al. Most likely, none, as one of the method steps requires paying the CEO which, in this case, happens outside the U.S. In NTP v RIM the Federal Circuit made it clear that all steps of the method must occur in the U.S., or there can be no infringement of the method Claim under 35 USC 271(a).

  16. 16

    Just Visiting – that case involving pH ranges would be Hilton Davis. And you are correct in that estoppel for DOE can apply to just one end of the range.

  17. 15

    Just Visiting said:

    “I vaguely recall an older case involving pH ranges that would allow arguing that amending the upper limit to get around the art would not affect the lower limit.”

    That case was decided by the Supremes in 1997. See Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17. You remember correctly. The principal holdings were that DOE must be applied on a claim-by-claim basis, and that DOE should be applied within the context of file wrapper estoppel. In Warner-Jenkinson, the record wasn’t clear on the patentee’s reasons for adding the lower limit (only the upper was necessary to avoid the prior art), and so this issue was to be determined on remand.

  18. 14

    Good points Just. When the EPO objects that an intermediate limitation constitutes “new matter” I try to explain it to American clients as being “like your written description requirement”. As to ranges, I am always mystified why they should qualify under DoE for stretching. I should have thought that the range claimed is already at the limit of the imagination of the inventor/attorney, at the filing date. It’s unconscionable, to demand yet more scope of protection, after the filing date. But, litigators, they have no shame, right?

  19. 13

    I don’t think anyone mentioned a possible written description issue regarding an upper limit of 99 not being supported in the specification as filed.

    Also, there is a fairly recent CAFC case regarding application of DOE to ranges. 9 is possibly equivalent to 10-100. Perhaps “10 or more” would be interpreted differently.

    I vaguely recall an older case involving pH ranges that would allow arguing that amending the upper limit to get around the art would not affect the lower limit.

  20. 12

    Humorless, your name is truly ironic. I laughed a lot, on reading your above contribution. Compliments of the season to you, Sir or Madam.

  21. 10

    Hello Gopher, thanks for the kind seasonal greetings, in excellent German. In return, I would wish you a Happy Chr–tmas, except that it isn’t PC, right? Instead, Happy “holiday season” and a good “slide” into 2009. Anyway, I don’t know any US patent attorneys I would classify as “pesky”, only diligent ones, trying with all their honest their professional skills to advance the interests of their clients as best they can, in the difficult conditions that currently prevail in their jurisdiction. Or is “pesky” a designation of full measure of professional competence attained, amongst your brother and sister attorneys at law (I’m here to learn).

  22. 9

    No doubt this “hypothetical” was taken from a real case, in which plaintiff’s counsel’s last name is a homonym for a certain Roman Emperor…

  23. 8

    -5 for Dennis for naming this thread with the same starting letters past the abbreviation point on “Recent Comments”.

    Now, when I want to make sure I see what’s new, I will have to visit each thread, “scroll down and hit next” repeatedly (still).

  24. 7

    … 1. Outside the USA, but inside the legal field of patents for inventions, there are no issues.2. Who loses? The USA (but your readers don’t want to know that).Posted by: MaxDrei

    On behalf of all us pesky u.s. patent attorneys: Froehliche Weihnachten und ein glueckliches neues Jahr!

  25. 6

    On the IC issue, the test for IC is intent and materiality. Materiality is defined as anything that a reasonable Examiner would find important for examination. I think materiality is certainly present for the 100X reference. You can make an argument that intent is not given that the patentee may have thought they had a good basis for not submitting the reference, but given the way that the CAFC hammers patentees and the current case law, this one would be absolutely dead at the CAFC.

    Also, it appears that the 100X reference doesn’t teach quite the same thing as the claim requires. The 100X reference teaches 100-times the average employee salary whereas the claim recites the “average non-executive company employee income.”

    You have Festo estoppel for any range above 100.

    Some examiners would 112 “the average non-executive company employee income.”

    I won’t touch the rest of the issues.

  26. 5

    Festo kills DOE. The narrowing amendment was made for a reason of patentability.

    Possibly invalid for inequitable conduct for not pointing out the reference to the examiner. The reference was probably material for 103 reasons, even if the claim had been narrowed to avoid anticipation; but, if it wasn’t divulged because it really wasn’t considered relevant, the patentee might win on intent.

  27. 4

    “(believing that it was no longer relevant to the claimed invention). ”

    I SMELL IC!

    Woodruff that range right out of town!

    And of course Bilski.

    Looks like the first poster beat me to em all anyway. But yes he touched most all I see. I disagree with the DOE one though. 9 is not equivalent to 10 or more.

    Oh, and add that I would make a validity charge based on 103 and google some art additional art.

    Also, 684 is right, there should be a page limit.

  28. 3

    Will keep my contributions short, Dennis, because:

    1. Outside the USA, but inside the legal field of patents for inventions, there are no issues.

    2. Who loses? The USA (but your readers don’t want to know that).

  29. 1

    invalid (101-Bilski)

    maybe invalid (103-the 100x reference)

    unenforceable (inequitable conduct)

    noninfringement (no evidence that Beta’s CEO pay is calculated, it could be negotiated to a value that happens to be 9x sec’s pay; no evidence that even if calculated, was calculated based on X factor, could be calculated based on current year times 1,000 which happens to be 9x sec. salary, etc.)

    infringement maybe under DOE (assuming salary is calc as 9x X factor, then need to argue that 9 is equivalent to 10 or more. Didn’t give up that equiv when amended claims b/c only modifed the 120, not the 10)

    geographical issues: method must be performed in US. location of method = where all the steps are performed. Whether all steps are performed in the US is key question –NTP–. Assume calculating was performed in US office. Where did paying occur? I’d argue it occured at site where order to DD the salary occured (i.e., from Beta’s US bank).

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