On August 1, 2022, a Federal Circuit (CAFC) panel heard arguments in a twice-remanded final decision by the PTAB holding a Nike footwear stitching patent invalid where the Board raised, sua sponte, the basis for its invalidity ruling.
The hearing was on Nike’s third appeal of an inter partes review of its patent, which is directed towards and claims knitting techniques for upper shoe portions. The IPR was initiated in 2012 by Adidas AG and challenges the validity of Nike’s patent. Yet, in the most recent chapter of this ongoing battle, the PTAB panel raised the legal basis of its invalidity holding sua sponte after Nike filed a motion seeking to amend the claims of its patent. During the hearing before the Federal Circuit panel, Nike argued that the PTAB failed to follow federal law – including CAFC precedent – by relieving Adidas of its burden of persuasion that an amended claim in the patent was invalid, since it remained a party to the case and opposed the motion to amend.
During an IPR proceeding, a patent owner may seek to amend the claims of the challenged patent as a defense to the claim of invalidity, overcome prior art rejections, and ultimately prevail with a valid and enforceable patent. Any proposed amendments to the claims must be supported by the initial specification (disclosure) and drawings, however.
Fig. 12 of U.S. Patent No. 7,347,011 to Nike Inc.
The PTAB’s second written decision from March 2021 came after the Board had previously found sua sponte in a September 2018 decision that the 2001 edition of a knitting textbook rendered the amended claim invalid, thereby letting Adidas off the hook of carrying its legal burden. Nike argued that by doing so, the Board failed to follow precedent.
Yet, it was the USPTO attorney who fielded demanding questions during the hearing before the Federal Circuit panel. Counsel argued that it was appropriate for the PTAB to have found in light of the circumstances in the case that when it raises its own unpatentability grounds based on the whole case record, neither side has the burden of persuasion.
There is no guiding rules or precedent covering such circumstances. Indeed, USPTO regulations do not specify whether the burden of persuasion remains with an active petitioner when the board raises its own invalidity argument. The CAFC panel must therefore determine whether, as a matter of law, the burden of persuasion should have remained with Adidas in this case, as Nike argued it should.
In July 2020, in Hunting Titan, Inc. v. Dynaenergetics Europe GmbH, IPR2018-00600, the PTAB’s precedent-setting panel held that the board should only raise invalidity sua sponte in “rare circumstances,” such as when a petitioner has dropped out of a case. That is not the case here, however, as Adidas is an active, participating petitioner that officially and formally opposed Nike’s motion to amend.
Whether the case will be remanded yet again remains to be seen. A precedent setting opinion, however, seems all but certain as the Federal Circuit irons out the issue.
The patent-in-suit is U.S. Patent No. 7,347,011.
The case is Nike Inc. v. Adidas AG, case number 21-1903, at the U.S. Court of Appeals for the Federal Circuit.
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Richard A. Catalina, Jr. is a senior partner and Chair of the Intellectual Property and Complex Litigation Department of Jardim, Meisner and Susser, P.C. Mr. Catalina specializes in litigating patent, trademark, trade secret and related Lanham Act disputes, and inter partes proceedings before the Patent Trial and Appeal Board. Mr. Catalina has been practicing law for more than 33 years and has litigated more than one hundred matters in federal and state courts across the U.S, as well as inter and ex partes matters before the Trademark Trial and Appeal Board and the Patent Trial and Appeal Board.
