Adidas successfully petitioned the Patent Trial and Appeal Board in 2012 to review a Nike shoe patent. During that review, Nike filed a motion to amend the patent by canceling all claims and substituting four new claims. The Board canceled the patent claims and found the new claims unpatentable. Among other things, the Board said that Nike—the patent owner—did not establish the new claims were patentable over the prior art. Nike unsuccessfully complained on appeal that the Board should not have placed this burden on Nike, rather it should have imposed on Adidas a burden of proving unpatentability. Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 2016) (discussed here).
The Federal Circuit overruled the “burden” aspect of its Nike decision in 2017, and said that petitioners, not patent owners, must bear the relevant burden. Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc) (discussed here). Fortunately for Nike, its case was still alive at the Board. You see, in its appeal, Nike successfully complained that the Board failed to consider its alleged secondary indicia of nonobviousness that the invention its substitute claims recite satisfied a long-felt need. But instead of reversing the Board’s decision based on the fulsome record below, the court remanded so the Board could determine the allegation’s relevance to obviousness.
The remand concluded in 2018. But because of the snail’s pace at which it proceeded, the Board had to consider not only the secondary indicia issue but also its original obviousness conclusion. So, it invited the parties to brief the significance of Aqua Products to the patentability of Nike’s substitute claims. Now running with a burden to satisfy, Adidas maintained that Nike’s substitute claims were not patentable but did not revise its arguments. Adidas said that it previously met the burden Aqua Products now imposed, while Nike unsurprisingly disagreed. The Board found that record prior art satisfied the long-felt need Nike alleged its invention met, and ultimately concluded, again, that Nike’s substitute claims are not patentable, albeit this time over a new combination of record prior art—a combination that Adidas never even presented.
On Nike’s subsequent appeal, the Federal Circuit recently concluded that the Board violated the Administrative Procedure Act (APA) by not notifying Nike it would rely on a new combination of prior art to assess obviousness. Nike, Inc. v. Adidas AG, Appeal 19-1262, Slip Op. at 8 (Fed. Cir. Apr. 9, 2020). The court held “that the Board may sua sponte identify a patentability issue for a proposed substitute claim based on the prior art of record,” but “it must provide notice of the issue and an opportunity for the parties to respond before issuing a final decision.” By denying Nike’s motion to amend on this new combination of record prior art, without entertaining supplemental briefing and without holding a new oral hearing, the court said the Board violated the APA. The court’s remedy? Another remand, of course.
The court footnoted that it wasn’t deciding “whether the Board may look outside of the IPR record in determining the patentability of proposed claims,” reserving that decision for “another day,” and thus ensuring perhaps years of continued uncertainty. With two time-consuming Board decisions, each successively vacated and remanded by the Federal Circuit, and yet another remand pending, the shoemakers’ dispute continues a long run.