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Sliced and Diced: PTAB Decision Remanded for Further Analysis

by Thomas DaMario | Oct 6, 2022 | Patents

In an appeal from a Patent Trial & Appeal Board final written decision, the US Court of Appeals for the Federal Circuit affirmed the Board’s decision to include certain evidence first presented in the petitioner’s Reply but vacated the Board’s obviousness decision for a failure to fully and particularly set out the bases for its decision. Provisur Technologies, Inc. v. Weber, Inc., Case Nos. 21-1942; -1975 (Fed. Cir. Sept. 27, 2022) (Prost, Reyna, Stark, JJ.)

Provisur Technologies owns a patent directed to classifying slices or portions cut from a food product according to an optical image of the slice. The patent explains that certain meat products, such as bacon or cold cuts, are sold in groups of slices according to particular weight requirements. The specification also teaches that the arrangement of the slices according to quality is desirable. The independent claims are directed to an image processing system arranged above a weigh conveyor that is capable of categorizing slices by determining the surface area and fat-to-lean ratios of the slices based on pixel-by-pixel image data.

Weber petitioned for inter partes review of the patent, alleging that the claims were obvious over various prior art references. Provisur, in its Patent Owner Response, disputed Weber’s assertion that the prior art references disclosed the claimed digital imaging receiving device capable of determining a surface area from pixel-by-pixel image data. During deposition of Weber’s expert, Provisur probed the expert’s knowledge of various camera models available as of the priority date. This prompted Weber to introduce a data sheet on redirect showing various models of cameras, including a comparison between those disclosed in the prior art references and those disclosed as exemplary in the patent. Provisur moved to exclude the datasheet, but the Board concluded that the evidence was highly probative and allowable because it was submitted in response to an argument that Provisur advanced in its Patent Owner Response. The Board also found that the independent claims and various dependent claims were invalid as obvious over the references cited by Weber.

Provisur appealed the admission of the datasheet and the Board’s determination on obviousness. Regarding the evidentiary issue, the Federal Circuit found that the Board did not abuse its discretion by considering the datasheet, noting that it was reply evidence responsive to Provisur’s arguments that the prior art did not disclose a digital camera: “Importantly, Weber’s invalidity theories did not change, nor did the reply fill any holes in Weber’s petition.” Furthermore, the Court observed that Provisur had an opportunity to respond both by cross-examining Weber’s expert and in a sur-reply to the Board.

Regarding the Board’s obviousness determination, Provisur argued that the Board erred by failing to explain its rationale for how the prior art combinations specifically taught the claim element of “determining a surface area of the top slice from the [pixel-by-pixel image] data [of a top slice of the stack].” Under the Administrative Procedure Act (APA), the Board must fully and particularly set out the basis upon which it reached its [...]

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And the Band Played On: Reviewing Rule 54(b) Partial Summary Judgment Based on Who Did What to Whom and When

by Paul Devinsky | Oct 6, 2022 | Trade Secrets

In a case where the cast of characters on both sides of the v. evolved during the lead-up to the litigation as the litigants negotiated third-party deals and formed new entities, the US Court of Appeals for the First Circuit (characterizing the matter as the “entrepreneurial equivalent of musical chairs”) affirmed a dismissal of a trade secret claim against a foreign defendant but not against the related US entity, and found that the case qualified under Rule 54(b) for the “narrow exception” to the finality rule. Amyndas Pharmaceutical, SA v. Zealand Pharma A/S, Case No. 21-1781 (1st Cir. Sept. 2, 2022) (Barron, Selya, Kayatta, JJ.)

Amyndas is a Greek company with a US affiliate. It is a biotechnology firm that researches and develops therapeutics targeting a part of the immune system known as the complement system. One area of Amyndas’s research deals with “complement inhibitors.”

Amyndas’s research yielded compstatin, a peptide that selectively inhibits the C3 protein (which plays a role in activating the complement system). Amyndas also developed a related peptide (AMY-101) that targets that protein. Amyndas owns trade secrets and confidential information related to this work.

Zealand Pharma, a Danish biotechnology firm, contacted Amyndas about a potential partnership for the development of complement-related therapeutics. The firms entered into a confidential disclosure agreement (CDA) regarding information-sharing “for the purposes of evaluating a possible business/services relationship between the parties and their respective Affiliates.” Amyndas started giving Zealand Pharma access to confidential information (including confidential information about AMY-101). The firms also entered into a second CDA—with added protections—for “the evaluation or formation of a possible business and/or services and/or collaborative relationship.”

Both CDAs included an identical “Governing Law” provision stipulating that the CDAs would “be interpreted and governed by the laws of the country (applicable state) in which the defendant resides” and a forum-selection clause stipulating that “any dispute arising out of th[e CDA] shall be settled in the first instance by the venue of the defendant.”

Zealand Pharma also began its own research program focused on complement therapeutics. It did not inform Amyndas of this initiative. Although negotiations continued, the firms ultimately decided not to collaborate. Amyndas later terminated its information-sharing relationship with Zealand Pharma.

Zealand Pharma later formed Zealand US, a Delaware corporation. Without Amyndas’s knowledge or consent, Zealand Pharma also filed two European patent applications for compstatin analogues and later an international patent application designating the United States and claiming priority to the earlier EU applications.

After the international applications were published, Amyndas learned that they described “compstatin analogues that are capable of binding to C3 protein and inhibiting complement activation,” which had been the focus of Amyndas’s research and a subject of Amyndas’s confidential information-sharing with Zealand Pharma.

The other defendant, Alexion, is an established player in the complement therapeutics field and a proprietor of Soliris, a complement inhibitor that targets a protein in the complement system. Soliris is approved by the US Food and Drug Administration (FDA) and previously was the only FDA-approved and clinically available [...]

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Standard Computer Equipment Can Support Inventive Concept under Alice Step 2

by McDermott Will & Emery | Oct 6, 2022 | Patents

The US Court of Appeals for the Federal Circuit overturned a district court dismissal of a patent case for errors in analyzing the claims’ patent eligibility under Alice. The Court found that regardless of whether the claimed invention was abstract under step 1, the invention claimed specific improvements rendering it patent eligible under step 2. Cooperative Entertainment, Inc. v. Kollective Technology, Inc., Case No. 21-2167 (Fed. Cir. Sept. 28, 2022) (Moore, C.J.; Lourie, Stark, JJ.)

Cooperative Entertainment sued Kollective Technology for infringement of several claims of Cooperative’s patent directed to structuring a peer-to-peer (P2P) dynamic network for distributing large files. After Kollective filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) arguing that all of the patent claims were ineligible under 35 U.S.C. § 101, Cooperative filed an amended complaint. Kollective refiled its motion to dismiss, and the district court granted the motion, holding the challenged claims ineligible under § 101. Cooperative appealed.

The patent relates to systems and methods of structuring a P2P dynamic network for distributing large files, specifically videos and video games. The patent specification explains that in prior art systems, video streaming was controlled by content distribution networks (CDNs), with content “distributed directly from the CDN server originating the content.” In contrast, the challenged claims recite methods and systems for a network in which content distribution occurs “outside controlled networks and/or [CDNs]” (emphasis added), and therefore outside a “static network of controlled systems.” Dynamic P2P networks comprising “peer nodes,” which consume the same content contemporaneously, transmit content directly to each other instead of receiving content from the CDN. The claimed P2P networks use “content segmentation” to segment a video file into smaller clips and distribute it piecemeal. Viewers can obtain individual segments as needed, preferably from other viewers. The disclosed segmentation techniques include “CDN address resolution, trace route to CDN and the P2P server manager, dynamic feedback from peers reporting traffic rates between individual peer and its neighbors, round-robin, other server side scheduling/resource allocation techniques, and combinations thereof” (emphasis in original).

The Federal Circuit applied the two-step Alice framework: (1) determining whether the claim is “directed to” a “patent-ineligible concept,” such as an abstract idea, and if it is, (2) examining “the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Step 2 examines whether the claim elements, individually and as an ordered combination, contain an inventive concept that more than merely implements an abstract idea using “well-understood, routine, [and] conventional activities previously known to the industry.”

Under Alice step 1, the district court had held that the “focus of the [] patent” is the abstract idea of “the preparation and transmission of content to peers through a computer network.” The Federal Circuit disagreed, concluding that regardless of whether the invention could be reduced to an abstract concept, under step 2 the claims contained several alleged inventive concepts that the specification touted as specific improvements in the distribution of data [...]

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The Board Is Back in Town: Arthrex Can’t Save Untimely Motions to Terminate

by Mike Baldwin | Sep 29, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) unpatentability finding and denial of a motion to terminate, finding that the Board had already issued final written decisions that were not vacated at the time the Board denied the parties’ motion to terminate. Polaris Innovations Ltd. v. Derrick Brent, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of The United States Patent and Trademark Office, Case No. 19-1483 (Fed. Cir. Sept. 15, 2022) (Prost, Chen, Stoll, JJ.)

Polaris owns two unrelated patents directed to computer memory. The first patent relates to improved control component configuration, and the second patent relates to a shared-resource system in which logical controls are used to manage resource requests. In 2016, Polaris filed a complaint accusing NVIDIA of infringing both patents. NVIDIA responded by filing petitions for inter partes review (IPR) against each patent. In 2017, the Board issued its final written decisions, finding the challenged claims of both patents unpatentable. Polaris appealed.

The Federal Circuit vacated the Board’s decision in view of Arthrex, Inc. v. Smith & Nephew, Inc. (Arthrex I). On remand, the Board administratively suspended the IPR proceedings pending potential Supreme Court review of Arthrex I. During the administrative suspension, Polaris and NVIDIA filed a joint motion to terminate the proceedings. While those motions were pending, the Supreme Court vacated Arthrex I, substituting an alternative remedy for violation of the Appointments Clause in United States v. Arthrex, Inc. (Arthrex II). In view of Arthrex II, the Supreme Court vacated the Federal Circuit’s vacatur of the Board’s final written decision, thus reinstating those decisions.

On remand to the Board, Polaris argued that the Board should grant Polaris’s then-pending motion to terminate. The Chief Administrative Law Judge responded that termination was not appropriate because the Supreme Court’s decision meant that the “final written decision in each of these cases is not vacated, and it is not necessary for the Board to issue a new final written decision in either of these cases.” Polaris filed a request for Director rehearing. The Director denied rehearing. Polaris appealed.

Polaris argued that the Board erred by failing to grant the joint motions to terminate filed in both proceedings before the Board on remand. Relying on 35 U.S.C. § 317, the Federal Circuit explained that motions to terminate should be granted “unless the Office has decided the merits of the proceeding before the request for termination is filed.” The Court found that the Board had already decided the merits of the cases in final written decisions that were not vacated at the time the Board made its decision denying Polaris’s motions to terminate. The Court therefore affirmed the Board’s decision that termination was inappropriate.

Polaris also raised two claim construction arguments. Polaris argued that the Board misconstrued the term “memory chip” in the IPR involving one of the challenged patents and misconstrued the term “resource tag buffer” in the IPR involving the [...]

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FDCA’s Exclusive Enforcement Provision Reigns Supreme over State Laws

by Cecilia Choy, Ph.D. | Sep 29, 2022 | Trademarks

In its first occasion to interpret § 353b of the Federal Food, Drug, and Cosmetic Act (FDCA), the US Court of Appeals for the Ninth Circuit relied on the “implied preemption doctrine” to affirm a district court’s case dismissal for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., Case No. 20-56227 (9th Cir. Sept. 13, 2022) (Kleinfeld, Nelson, VanDyke, JJ.)

Nexus developed and trademarked Emerphed, a US Food & Drug Administration (FDA) approved ready-to-use ephedrine sulfate in a vial. Central Admixture operates a network of compounding pharmacies and sells ephedrine sulfate in ready-to-use syringes without FDA approval, because compounding pharmacies do not need FDA approval. Compounding happens when ingredients in medicines are combined, mixed and altered for individual patients. Under 21 U.S.C. § 353b, drug compounding by “outsourcing facilities” is allowed without FDA approval, but the FDCA excludes compounded drugs that are “essentially a copy of one or more approved drugs.”

The FDCA contains an exclusive enforcement provision prohibiting private enforcement, stating that proceedings to enforce or restrain violations of the FDCA, which includes the compounding statute, must be by and in the name of the United States. To avoid the FDCA’s bar on private enforcement, Nexus alleged that Central Admixture violated the laws of several states in which it sells Emerphed, all of which prohibit the sale of drugs not approved by the FDA. Nexus argued that Central Admixture’s ephedrine sulfate was “essentially a copy” of Emerphed and therefore was excluded from the outsourcing facilities exception. The district court disagreed and dismissed the state law claims under the implied preemption doctrine. The district court explained that all of Nexus’s claims depended on the determination of whether Central Admixture’s ephedrine sulphate was “essentially a copy” of Emerphed, and that the “plain text of the [FDCA] left that determination in the first instance to the FDA and its enforcement process.” Nexus appealed.

The Ninth Circuit explained that the Supremacy Clause of the US Constitution is the “source of preemption doctrine, which invalidates state laws that are contrary to federal statutes,” but noted that there is no clear sorting of case law and no rigid formula to determine when state law runs contrary to federal law. Therefore, the Court relied on several controlling cases regarding the statute governing FDA approval of medical devices, not drugs. Medical device cases are distinguishable because the medical device statute includes an express preemption clause prohibiting states from imposing any safety or effectiveness requirement different from or in addition to those imposed by federal law. In explaining these cases, the Court noted that the claims that were allowed to go forward did not rely on noncompliance with FDA requirements (as Nexus did), but rather on traditional tort law duties. The purported violation of a state law that substantively says “comply with the FDCA” is not a traditional common law tort. The Court also explained that these cases taught that despite a presumption against implied preemption, [...]

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PTO Switches to New Public Search Tools, New PTAB Filing System

by Amol Parikh | Sep 29, 2022 | Patents

The US Patent & Trademark Office (PTO) will replace four legacy tools—Public-Examiner’s Automated Search Tool, Public-Web-Based Examiner’s Search Tool, Patent Full-Text and Image Database (PatFT) and Patent Application Full-Text and Image Database (AppFT)—with the new Patent Public Search Tool (PPUBS) on September 30, 2022. The PTO first announced the transition to the new tool in February 2022.

Existing links to US patents and US pre-grant publications in PatFT and AppFT will be terminated following the retirement of these services. US patents and US pre-grant publications can be directly accessed via PPUBS, and links for direct document access to US patents and US pre-grant publications can be set up on a webpage or document. According to the PTO, PPUBS provides more convenient, remote and robust full-text searching of all US patents and US pre-grant publications. PPUBS also streamlines the search process for users, provides alternatives for existing services and incorporates new features. Step-by-step instructions for performing these functions can be found here.

The PTO also announced that as of October 11, 2022, the Patent Trial & Appeal Board E2E system used for electronically filing all documents related to Inter Partes and Post Grant reviews, Transitional Program for Covered Business Mmethod Patents, and Derivation Proceedings will be replaced by the Patent Trial & Appeal Tracking System (P-TACTS) platform. The E2E system will be unavailable starting at 5:00 pm EDT on October 9, 2022, through 11:00 pm EDT on October 10, 2022 (which is a federal holiday). For more information about the platform migration and how to register to use P-TACTS, click here.

Ninth Circuit Provides Clarity on the Scope of Receiverships

by Jennifer Schein | Sep 22, 2022 | Copyrights

The US Court of Appeals for the Ninth Circuit affirmed an order denying the defendants’ motion to discharge a receiver who had been appointed to aid in the execution of a judgment for violations of the Copyright Act. WB Music Corp et al. v. Royce International Broadcasting Corp., Case No. 21-55264 (9th Cir. Aug. 31, 2022) (Tashima, Watford, Friedland, JJ.)

The receivership in this appeal arises from litigation that commenced in 2016 in the US District Court for the Central District of California by a cohort of music publishers for broadcasting the plaintiffs’ music on radio networks in violation of the Copyright Act. In 2017, the district court found the defendants jointly and severally liable for copyright infringement.

A jury awarded the plaintiffs statutory damages totaling $330,000 and the district court entered a judgment in that amount. The defendants continuously refused to satisfy the judgment, and after much litigation, the court entered an amended judgment for an additional $1.25 million and attorneys’ fees of more than $900,000.

The defendants’ only assets were their Federal Communications Commission (FCC) licenses. The district court ultimately appointed a receiver who was entrusted with “the power and authority to take charge of and manage [the defendants’] [r]adio stations’ assets, businesses, and affairs,” as well as the ability to solicit offers for the sale of the stations. The court’s order also provided that the receiver would incur a monthly fee and a commission on the sale of any of the radio stations.

The defendants moved ex parte for an order to compel the plaintiffs to accept payment of the amended judgment—asserting that they were prepared to wire funds in the amount sufficient to cover the amended judgment and post-judgment interest—but refused to agree to pay costs incurred by the plaintiffs’ post-judgment proceedings. Per the district court’s order, the defendants were to deposit with the court funds sufficient to satisfy the amended judgment. The order further provided that the receivership would not terminate unless the defendants paid all costs incurred post-judgment. The court entered a second amended judgment approximately four months later, which included additional unpaid sanctions and fees.

The defendants ultimately deposited the required funds with the district court; however, the funds were never released to the plaintiffs. The defendants then filed a motion to terminate the receivership and enjoin the sale of their radio stations on three grounds: (1) the receiver did not take an oath as required under California law; (2) the court lacked the discretion to refuse to terminate the receivership and (3) the court abused its discretion in denying the motion. The motion was opposed by the plaintiffs, who argued that the receivership should not be terminated without ensuring that the receiver was compensated for his services. The receiver opposed the motion, arguing that terminating the position would enable the defendants to “evade a range of liabilities” as there were still large creditors with outstanding judgment liens. The district court denied the defendants’ motion and the defendants appealed.

Agreeing with First Circuit [...]

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Nothing Private about Relator’s Qui Tam Action Info

by Paul Devinsky | Sep 22, 2022 | Patents

The US Court of Appeals for the Ninth Circuit reversed a district court’s order denying the defendants’ motion to dismiss a qui tam action under the False Claims Act (FCA) and remanded for further proceedings. U.S. ex rel Silbersher v. Allergan, Inc., Case No. 21-15420 (9th Cir. Aug. 25, 2022) (Gould, Bennett, Nelson, JJ)

Relator Silbersher, a patent lawyer, brought his action against the defendants under the FCA. (31 U.S.C. § 3730(b)). Silbersher alleged that the defendants unlawfully obtained several patents related to two drugs used to treat Alzheimer’s disease. He asserted that by fraudulently obtaining these patents, the defendants prevented generic drug competitors from entering the market. As a result, Medicare paid inflated prices for the two drugs in violation of the FCA.

The US Department of Justice, all of the states that have analogues to the federal qui tam provision and the District of Columbia declined to intervene in Silbersher’s action. Additionally, the key factual information in Silbersher’s complaint was all disclosed publicly and much of it could be found on the US Patent & Trademark Office’s (PTO) website as well as on other government websites. The district court denied the defendants’ motion to dismiss, holding that the public disclosure bar did not apply to Silbersher’s claims. The defendants appealed.

The Ninth Circuit reversed and remanded, noting that the “FCA creates civil liability for ‘any person who (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; [or] (B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.’ 31 U.S.C. § 3729(a)(1).” The FCA limits who can bring a qui tam action and the sources of information upon which they can base their suit. The public disclosure bar seeks to strike a balance between encouraging suits by whistleblowers with genuinely valuable information and discouraging plaintiffs who have no significant information of their own to contribute. The Court, citing its 2018 case United States ex rel. Solis v. Millennium Pharms., reaffirmed the elements of the test for triggering the bar:

“(1) the disclosure at issue occurred through one of the channels specified in the statute;

(2) the disclosure was public; and

(3) the relator’s action is substantially the same as the allegation or transaction publicly disclosed.”

The Ninth Circuit determined that only the first element was at issue in this case and that “[i]t is salient and potentially controlling that the key factual information underlying Silbersher’s complaint was all publicly disclosed, and much could be found in websites maintained by the PTO and other government agencies.” Under the public disclosure bar, a court shall dismiss an action or claim if substantially the same allegations or transactions as alleged were publicly disclosed (1) in a federal criminal, civil or administrative hearing in which the government was a party; (2) in a congressional, Government Accountability Office, or other federal report, hearing, audit or investigation or (3) from the news [...]

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Claim at Issue Must Be Substantively Allowable to Qualify for PTA

by Samoneh (Sammy) Schickel | Sep 22, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed two district court decisions, finding that a patent owner who only partially prevailed in one of two appeals was not entitled to any additional patent term adjustments (PTAs) from the US Patent & Trademark Office (PTO) under 35 U.S.C. § 154(b)(1)(C) during the pendency of their district court appeals. SawStop Holding LLC v. Vidal, Case No. 2021-1537 (Fed. Cir. Sept. 14, 2022) (Newman, Linn, and Chen, JJ.)

SawStop owns two patents directed to saws with a safety feature that stops a power-saw blade upon contact with flesh. During prosecution of the application for one of the patents, SawStop appealed an obviousness rejection to the Patent Trial & Appeal Board (Board). The Board affirmed the obviousness rejection but on new grounds. The patent ultimately issued after SawStop amended the claim at issue to overcome the obviousness rejection.

Similarly, during prosecution of the application for the second patent, independent claim 1 was rejected as being anticipated and for obviousness-type double patenting while dependent claim 2 was rejected as anticipated. SawStop appealed the rejections. The Board affirmed both rejections of claim 1 but reversed the rejection of claim 2. SawStop subsequently challenged the Board’s anticipation rejection of claim 1 before the US District Court for the District of Columbia, which reversed the anticipation rejection. SawStop did not challenge the obviousness-type double patenting rejection. On remand to the Board, SawStop cancelled claim 1 and rewrote claim 2 as an independent claim. A patent subsequently issued.

Since issuance of both patents was delayed by appeals before allowance, SawStop requested PTAs under Section 154(b)(1)(C):

Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to … (iii) appellate review by the Patent Trial and Appeal Board or by a Federal Court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability, the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

The Board granted PTA “for the delay incurred in the successful reversal of the rejection of claim 2” of the second patent but denied additional PTA for both patents resulting from the appeals. SawStop filed suits in the US District Court for the Eastern District of Virginia, challenging the Board’s decision. The court granted summary judgment in favor of the PTO in both suits. SawStop then appealed to the Federal Circuit.

The Federal Circuit affirmed, finding that SawStop was interpreting Section 154(b)(1)(C) too broadly. SawStop argued in part that any examiner rejection overturned on appeal qualified as “a reversal of a determination of patentability.” The Court rejected this argument, explaining that the Board’s adverse determination of unpatentability remained before and after the appeal to the Board. That is, “the reversal of a ‘determination of patentability’ requires a determination that the claim in question is substantively allowable, not just free of [...]

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CAFC Pulls Final Loose Thread in Nike-Adidas Patent Row

by Paul Devinsky | Sep 22, 2022 | Patents

Issuing a third and final decision, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision invalidating the last remaining claim of a Nike footwear textile patent. Nike, Inc. v. Adidas AG, Case No. 21-1903 (Fed. Cir. Sept. 1, 2022) (Prost, Chen, Stoll, JJ.) (non-precedential)

Adidas filed for inter partes review of a patent owned by Nike relating to a knitted shoe upper. After lengthy litigation, including two prior appeals to the Federal Circuit, all claims of the Nike patent were invalidated except for one substitute claim. In its second appeal, Nike successfully argued that the Board did not provide Nike an opportunity to respond to a patentability issue raised sua sponte by the Board, which included reference to a knitting textbook. On remand from the second appeal, the parties were given the opportunity to brief the Board on this new reference and argue which party bears the burden of persuasion for the patentability issue raised sua sponte by the Board.

On the merits, the Board determined that the knitting textbook did teach the disputed limitation, agreeing with adidas that a skilled artisan would have understood the textbook to teach the contested limitation, and that there was adequate reason to combine the textbook’s teachings with those of the other prior art references. The Board also concluded that the burden of persuasion must fall on the Board itself when it raised the patentability issue sua sponte. Nike appealed, arguing that the Board effectively placed the burden of persuasion on Nike.

The Federal Circuit first addressed the burden of persuasion as it relates to the grounds first raised by the Board. The Court found that the Board juxtaposed its arguments with adidas’s and that they both relied on the same disclosures and arguments. Because the Board and adidas’s arguments mirrored each other, the Court found it unnecessary to determine whether the petitioner or the Board bears the burden of persuasion. The Court also rejected Nike’s argument that the Board effectively shifted the burden to Nike by stating in its opinion that Nike’s arguments were “unpersuasive” and “inadequate.” The Court cited to its 2016 holding in In re Magnum Oil Tools International, in which it explained that the Board’s language is not the concern but rather the actual placement of the burden of persuasion. The Court found that both the Board and adidas met the burden, and that the burden was not shifted to Nike.

Turning to the Board’s obviousness determinations, the Federal Circuit rejected all of Nike’s arguments. First, Nike argued that the knitting textbook did not teach the claimed method of creating apertures in the fabric by omitting stitches. The Court found that the Board relied on specific disclosures in the reference describing the use of empty needles to product “loop displacement.” Nike also argued that there was no motivation to combine the textbook reference with the other two references and that the Board could not rely on “common sense” [...]

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