Recently, the United States Court of Appeals for the Federal Circuit issued a decision in Nike, Inc. v. Adidas AG, relating to an appeal from the inter partes review (IPR) of U.S. Patent No. 7,347,011, owned by Nike.
The Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) granted the IPR petition filed by Adidas AG and instituted inter partes review of claims 1–46 of the ’011 patent. Nike then filed a motion to amend in which it requested cancellation of claims 1–46 and proposed substitute claims 47–50. The PTAB granted the motion to cancel claims 1-46, but denied the motion to substitute claims, as has become the norm in virtually all cases.
The PTAB explained that the burden is on the patent owner to demonstrate that substitute claims are patentable over the prior art of record and over prior art not of record but known by the patent owner. Because Nike’s motion only made conclusory statements that the proposed claims were patentable over prior art not of record but known to Nike, the Board denied Nike’s motion. The PTAB also alternatively denied the substitute claims because the Board felt Nike had failed to establish that the substitute claims were patentable over two references in particular, the Nishida and Schuessler references.
The most interesting part of this decision relates to the burden being placed on the patent owner relative to prior art not of record. In this case, the PTAB, at least in part, denied Nike’s motion to amend because Nike did not address any prior art references not raised in the Adidas petition for inter partes review.
The PTAB explained in Idle Free that, under 37 CFR 42.20(c), to be successful, a motion to amend must demonstrate that substitute claims are patentable over not only the prior art of record, but also over the prior art not of record but known to the patent owner. The USPTO argued that at the heart of this requirement is nothing more than a requirement that the patent owner submit information necessary to satisfy the duty of candor owed to the Office. On its face, that seems reasonable. The problem here, however, is that Nike did assert that the claims were patentable over prior art that they knew of that was not a part of the record. Thus, for the PTAB to use this as a basis to reject the motion to substitute Nike’s claims had to simply be disbelieved.
The Federal Circuit determined that the PTAB’s rationale for rejecting the motion to substitute was in error. There was no allegation that Nike had violated the duty of candor. Absent an allegation that there has been a violation of the duty of candor, the Federal Circuit said that it is improper to deny a motion to amend for failure to raise prior art not found in the granted petition. This ruling makes sense because otherwise there would be an affirmative duty placed on the patent owner to conduct a search and to distinguish prior art not believed to be material to patentability, which would go well beyond what is required by the duty of candor.
On obviousness, the Federal Circuit found that the Board improperly refused to consider the patentability of claims 48 and 49 separately, allowing claim 49 to rise or fall based on whether claim 48 was patentable, which is not consistent with the rule set out by the PTAB in Idle Free. Therefore, the Federal Circuit remanded for a proper determination of how these claims should be treated per the standard set forth in Idle Free, and, if necessary, a full consideration of the patentability of each.
Tags: CAFC, Federal Circuit, inter partes, Inter Partes Review, IPR, patent, patents, PTAB
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