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In this IPR proceeding brought by Adidas, Nike filed a motion to amend by cancelling claims 1-46 and proposing substitute claims 47-50.  The PTAB granted Nike’s motion to cancel, but denied its motion to add the substitute claims. 

Nike appealed on the ground that the PTAB erroneously shifted to Nike the burden of proving that its substitute claims are patentable.  The court rejected Nike’s arguments.  It held that placing the burden on the patentee ensures that the proposed substitute claims are critically analyzed before they are entered as claims that are part of the issued patent.  The court further rejected Nike’s argument that 35 U.S.C. § 316(e), which places the burden of proving unpatentability in the IPR, requires that the same burden apply to proposed substitute claims.  Read in context, however, Section 316(e) does not apply to claims that were not in existence at the time that a petition is filed. 

Nike further appealed the PTAB’s finding that it had not met its burden of proving that the substitute claims are not obvious.  As to the evidence of a reason to combine, the court held that the fact that the references are in similar fields and address the same problem was sufficient.  Nike further argued that the PTAB failed to consider its evidence of secondary considerations of nonobviousness.  The court agreed that the PTAB erred by failing to address Nike’s evidence of nonobviousness and rejected Adidas’ argument that Nike failed to prove a sufficient nexus.  Because the court cannot find facts, it remanded the issue of obviousness to the PTAB for further findings regarding the secondary considerations. 

Nike further appealed on the ground that claim 49 is patentable because it includes a limitation not shown in the prior art.  As an initial matter, because Nike asserted that claims 48 and 49 were intended to substitute for claim 19, Nike had the additional burden of proving that claims 48 and 49 were patentably distinct from each other.  The PTAB treated these claims together for patentability purposes, which was not correct.  The court therefore remanded for a proper determination of how these claims should be treated and, if necessary, for a separate determination of the patentability of each.  As to Nike’s argument that claim 49 recited a feature not shown in the prior art, the court remanded for further fact finding.  As to claim 49, Adidas argued that it is invalid as lacking written description support.  Claim 49 has a negative limitation, “flat knit edge.”  Negative limitations are supported when the specification describes a reason to exclude the relevant limitation.  The court affirmed the PTABs finding that claim 49 was adequately supported by the specification.

Lastly, Nike appeals the PTABs finding that it failed to prove that the substituted claims were patentable over the prior art not of record but known to the patent owner.  Relying on the PTABs representative decision in MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, in which it held that the patent owner need only show patentability over the material prior art that the patent owner makes of record in the current proceeding pursuant to its duty of candor and good faith.  Thus, Nike’s statement that the substitute claims are patentable over prior art not of record but known to Nike would satisfy its obligation as explained in MasterImage 3D, absent an allegation of conduct violating the duty of candor.  

Nike, Inc. v. Adidas AG, Case No. 2014-1719 (February 11, 2016); Opinion by: Chen, joined by Mayer and Stoll; Appealed From: United States Patent Trial and Appeal Board.  Read the full opinion here.

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