Nike, Inc. v. Adidas AG  (Fed. Cir., Feb. 11, 2016)

In Nike, Inc. v. Adidas AG, 2014-1719 (Fed. Cir., Feb. 11, 2016), Nike appealed the PTAB’s decision in IPR2013-00067 to deny their Motion to Amend the claims of U.S. Patent No. 7,347,011 directed to methods for knitting and forming an “upper” portion of an athletic shoe.  Nike had not argued the patentability of the unamended claims of the ‘011 patent.  Thus, the PTAB found in their Final Written Decision that the originally issued claims should be cancelled.  Regarding the Motion to Amend, the Board first denied the Motion to Amend by stating that Nike’s blanket statement that the proposed claims were patentable over prior art known to Nike was insufficient to meet its obligation under the Board’s MasterImage 3D decision.  As a backup, the Board addressed the merits of Nike’s proposed amendments finding a combination of references that they felt taught all of the limitations of the amended claims and rendered those claims obvious.

Nike appealed and the Patent Office intervened to defend its procedures.  The Federal Circuit affirmed-in-part and reversed-in-part and remanded.  The Federal Circuit panel generally approved of the procedures being applied by the PTAB in analyzing Motions to Amend.  For example, the Court confirmed its decision in the Microsoft Corp. v. Proxyconn, Inc. regarding the Board’s placing the burden of showing that proposed claim amendments were patentable on the patent owner.  The panel also took no issue with the PTAB’s policy recited in the Idle Free Final Written Decision regarding substitute claims, where a patent owner must show cause for presenting more than one substitute claim for an individual claim in a patent and must further show why the second substitute claim recites a patentable distinction over the first presented substitute claim.

While the Federal Circuit agreed that the PTAB’s procedures were acceptable, the Court found that the Board’s application of those procedures to be lacking in certain ways.  First, the Federal Circuit found that it must remand the Final Written Decision because the Decision did not evidence consideration of the objective indicia of non-obviousness presented by Nike.  Further, the Court determined that the PTAB had incorrectly analyzed the multiple substitute claim issue by comparing the multiple presented substitute claims to the prior art instead of each other.  Finally, the Federal Circuit deemed the PTAB’s dismissal of the Motion to Amend for insufficiently addressing prior art known to Nike to be improper.  There, the Court stated that a general statement regarding prior art known to the patent owner may be sufficient, where the patent owner is subject to the duty of candor in making that statement under 37 C.F.R. §42.11.

The Nike decision largely ratifies current Board procedures regarding Motions to Amend and again recognizes the PTAB’s ability to design its procedures through rule-making and Board case law.  Interestingly, the opinion makes evident that the Federal Circuit is willing to take a very close look at how the PTAB applies its procedures and will not give the Board a pass when it applies its procedures incorrectly.  Thus, while the PTAB is at a high-level doing things properly, any mistakes made on procedure application in an individual case will potentially create an appealable issue.

Federal Circuit Decision: Nike v Adidas