PATENT CASE OF THE WEEK

adidas AG v. Nike, Inc., Appeal Nos. 2019-1787, -1788 (Fed. Cir. June 25, 2020)

This week’s case of the week deals with issues relating to obviousness and standing in a consolidated appeal of two final written decisions issued in inter partes review (“IPR”) proceedings before the Patent Trial and Appeal Board (“PTAB”). The IPRs were brought by adidas, challenging two Nike patents directed to methods of manufacturing an article of footwear with a textile upper, both of which cover Nike’s Flyknit products. The PTAB held that adidas did not demonstrate the challenged claims were unpatentable as obvious, and adidas appealed. On appeal, the Federal Circuit found that adidas has standing and affirmed the PTAB’s decisions that adidas had failed to meet its burden of proof on obviousness.

First, as to standing, Nike argued that adidas lacked standing to appeal because adidas could not establish the requisite “injury in fact” since Nike had not threatened to sue adidas for infringement of the patents at issue. The Court disagreed, explaining that an appellant need not face a specific threat of infringement to establish the required injury. Rather, adidas’s risk of infringement is concrete and substantial, and thus injury was established, because (1) adidas and Nike are direct competitors, (2) Nike previously accused adidas of infringing a different Flyknit patent, (3) Nike asserted one of the two patents at issue against a third-party product similar to adidas’s product, and (4) Nike had refused to grant adidas a covenant not to sue. The Court therefore found that adidas had standing to appeal the PTAB’s final written decisions.

Next, as to obviousness, in the IPRs, adidas challenged the claims of Nike’s patents as obvious in view of two prior art combinations. The PTAB held that adidas had failed to demonstrate that a person of ordinary skill in the art would have been motivated to combine the references. Certain challenged claims, called the Base Claims, are directed to a method of “mechanically-manipulating a yarn with a circular knitting machine … to form a cylindrical textile structure.” The method claimed by the Base Claims involves removing a textile element from the textile structure and incorporating it into an upper of the article of footwear. The PTAB construed the Base Claims as “encompass[ing] methods related to both pre-seamed and unseamed garments and garment sections.” Certain other challenged claims, called the Unitary Construction Claims, limited the Base Claims by requiring the textile element to be a single material element wherein portions of it have different textures and are not joined together by seams or other connections.

As to the first prior art combination, the PTAB found that adidas failed to show a motivation to combine because the “unitary construction” limitation excluded the type of seams taught by the primary reference, known as “pre-seaming.” As such, combining the two references would require altering the principles of operation of the primary reference, or would render it inoperable for its intended purpose. On appeal, adidas argued that substantial evidence did not support the PTAB’s findings because both references discuss knitting in multiple layers and a skilled artisan would have been motivated to combine the references to reduce waste. adidas further argued that the pre-seaming differences between the two references are irrelevant in view of the PTAB’s construction of the Base Claims. That is, in view of the PTAB’s construction of the Base Claims as including both pre-seamed and unseamed garments, adidas argued that all that was necessary was evidence of a suggestion to extend the teachings of the primary reference. The Court disagreed, explaining that the obviousness inquiry asks more than whether a skilled artisan could combine references, but instead asks whether they would have been motivated to do so. Because of the fundamental differences between the two references, the Court concluded that substantial evidence supports the PTAB’s finding that a person skilled in the art would not have been motivated to combine them.

As to the second prior art combination, the PTAB again found that adidas failed to establish that a skilled artisan would have been motivated to combine the teachings of the primary reference regarding unseamed garment portions with the teachings of a secondary reference regarding pre-seamed garments. Therefore, as with the first proposed combination, the Court found that modifying the first reference in view of the second would “change the principles under which [the primary reference] operates.” On appeal, adidas contended that the prior art methods could be modified to extend well-known knitting techniques to reduce cost and waste. The Court disagreed, explaining that the intended purpose of the primary reference was to produce pre-seamed, substantially finished garments. Accordingly, the fundamental differences in seaming techniques taught by the two references could not be reconciled, and the PTAB’s finding of no motivation to combine was supported by substantial evidence.

The opinion can be found here.

ALSO THIS WEEK:

Shoes By Firebug LLC v. Stride Rite Children’s Group, LLC, Appeal Nos. 2019-1622, -1623 (Fed. Cir. June 25, 2020)

In an appeal from an inter partes review, the Court affirmed the PTAB’s decision that the challenged claims were unpatentable as obvious. Appellant Firebug argued the PTAB erred in finding that the preamble of claim 1 of each of the patents at issue did not limit the challenged claims. The Court agreed with Firebug on this point. However, the Court went on to find that the PTAB’s finding of obviousness was supported by substantial evidence because the prior art references, when combined, disclosed the challenged claims and such combination would have been obvious to a person of ordinary skill in the art. Accordingly, the Court held the PTAB’s error regarding the preamble was harmless because its “ultimate conclusion of obviousness [was] correct under the proper claim construction.”

The opinion can be found here.

B/E Aerospace, Inc. v. C&D Zodiac, Inc., Appeal Nos. 2019-1935, -1936 (Fed. Cir. June 26, 2020)

Patent owner B/E Aerospace appealed final written decisions of the Patent Trial & Appeal Board (“the Board”) in inter partes reviews in which the Board found invalid as obvious claims of two patents directed to space savings technologies for airplane lavatories. The Federal Circuit affirmed the Board’s obviousness ruling, finding the admitted prior art coupled with a common sense solution to a known problem sufficient to render the patent claims obvious. The Federal Circuit agreed with the Board that the technology at issue was “simple” and found the Board’s application of the common sense rationale adequately supported by reasoned analysis and evidence under its seminal KSR decision. The Federal Circuit found it unnecessary to reach the patent owner’s separate challenge that certain design drawings applied by the Board failed to qualify as prior art under 35 U.S.C. § 311(b).

The opinion can be found here.

Authors: Erin Forbes, and Bazsi Takacs

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