Appeal No. 2005-2642
Reexamination Control No. 90/005,841
The Post Office Bank usually tied its loans 25 per cent to the cost-
of-living index. All other banks operated on the principle of calculating an
index surcharge on all loans at rates just sufficient to cover indexed
payments to depositors. This meant, for example, that in a year when the
index rose by 10 per cent, a bank with one fifth of its deposits in fully
index-linked accounts would place an index surcharge of 2 per cent on all
its outstanding loans. This surcharge became payable immediately by
borrowers as additional interest; the outstanding debt was not, however,
written up.
Id. at 67-68. Appellant’s discussion of claim 36 (Brief at 16) fails to mention the Post
Office Bank approach, let alone explain why it fails to provide a continuous relationship
between the amount of the loan accrual component and the inflation rate. Instead,
appellant explains why the “directly responsive” requirement is not believed to be
satisfied by the above-quoted approach followed by the “[a]ll other banks,” a question
we need not decide.
Appellant argues that claim 36 “require[s] both a deposit account and a loan
account, and require[s] that both be adjusted in a manner responsive to the rate of
inflation—this is the fully-hedged program—where possible losses on the deposit side
are ‘fully hedged‘ by similar gains on the other side.” Brief at 17. Claim 36 does not
require such balancing, and even if did, such is suggested by Mukherjee at page 50,
last paragraph (“The initial idea had been to apply an extra charge to all loans equal to
half the rise in the index, and then to use the funds to compensate all depositors for half
their loss due to inflation.“) and at page 67, first full paragraph (“All other banks
operated on the principle of calculating an index surcharge on all loans at rates just
sufficient to cover indexed payments to depositors.”).
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