IP Law Daily, PATENT—Fed. Cir.: Adidas failed to prove Nike patents claiming a footwear manufacturing method were obvious, (Jun 25, 2020)

By Cheryl Beise, J.D.

A person of ordinary skill in the art would not have been motivated to combine the prior art references cited by Adidas.

Substantial evidence supported the Patent Trial and Appeal Board’s conclusion that Adidas failed to prove the challenged claims of two Nike patents directed to methods of manufacturing footwear with a textile upper, were invalid as obvious. The Board did not err in finding that Adidas failed to demonstrate that a person of ordinary skill in the art would have been motivated to combine the cited prior art references, which recited different seaming techniques. In addition, adidas had Article III standing to appeal the Board’s inter partes review decisions because Nike had asserted one of the patents against another footwear manufacturer and had refused to grant Adidas a covenant not to sue. Injury in fact does not require a specific threat of infringement litigation by the patentee (Adidas AG v. Nike, Inc., June 25, 2020, Moore, K.).

Nike, Inc. owns U.S. Patent Nos. 7,814,598 and 8,266,749, which share a specification and are directed to methods of manufacturing an article of footwear with a textile upper. Adidas AG petitioned for inter partesreview of claims 1–13 of the ’598 patent and claims 1–9, 11–19 and 21 of the ’749 patent. The Board instituted review but ultimately found that Adidas failed to prove that the challenged claims were obvious. Adidas appealed, and Nike challenged Adidas’ standing to bring the appeal.

Standing. Nike argued that Adidas lacked standing to bring the appeal because it could not establish an "injury in fact." Nike pointed out that it had not sued or threatened to sue Adidas for infringement of either patent. The Federal Circuit disagreed.

The court explained that an appellant need not face "a specific threat of infringement litigation by the patentee" to establish the requisite injury in an appeal from a final written decision in an inter partesreview. E.I. DuPont de Nemours & Co. v. Synvina C.V., 904 F.3d 996, 1004 (Fed. Cir. 2018). Instead, "it is generally sufficient for the appellant to show that it has engaged in, is engaging in, or will likely engage in that would give rise to a possible infringement suit." In DuPont, the Federal Circuit held that the appellant had standing because it had concrete plans to make a potentially infringing product. The court also determined that the patent owner’s refusal to grant appellant a covenant not to sue further confirmed that appellant’s risk of injury was not "conjectural" or "hypothetical."

As in DuPont, Adidas and Nike are direct competitors. Although Nike had not yet accused Adidas of infringing the ’598 or ’749 patents, Nike had asserted the ’749 patent against a third-party’s product similar to Adidas’ footwear. Nike also refused to grant Adidas a covenant not to sue, confirming that Adidas’ risk of infringement is concrete and substantial. Adidas had Article III standing to bring this appeal.

Obviousness. The challenged claims recite a method of "mechanically-manipulating a yarn with a circular knitting machine … to form a cylindrical textile structure." The claimed method involves removing a textile element from the textile structure and incorporating it into an upper of the article of footwear. Claims 4 and 11 of the ’598 patent and claims 11 and 21 of the ’749 patent (the Unitary Construction Claims) require that the textile element is a single material element wherein portions of the textile element have different textures and "are not joined together by seams or other connections." The other challenged claims (the Base Claims) are not so limited.

Adidas had challenged the claims as obvious on two grounds: (1) the combination of U.S. Patent Nos. 3,985,003 (Reed) and 5,345,638 (Nishida) and (2) the combination of Nishida and U.S. Patent Nos. 4,038,840 (Castello) and 6,330,814 (Fujiwara).

The Board rejected the unpatentability of the challenged claims under the first ground because Adidas failed to demonstrate that a person of ordinary skill in the art would have been motivated to combine Reed and Nishida. Reed teaches pre-seaming, whereas Nishida involves seaming the textile element after it has been cut from the textile structure. In view of the undisputed evidence of the pre-seaming differences between Reed and Nishida, the Federal Circuit found that substantial evidence supported the Board’s motivation to combine findings not only with respect to the Base Claims, but also with respect to the Unitary Construction Claims because they depended from the Base Claims.

With regard to the second ground, the Board determined that Adidas failed to establish unpatentability in part because Adidas failed to identify which reference or combination of references it was relying on to disclose each limitation of the challenged claims. The Board further found that Adidas failed to establish that a person of ordinary skill in the art would have been motivated to combine "the teachings of Nishida and Castello regarding unseamed garment portions with the teachings of Fujiwara regarding pre-seamed garments." In view of the different seaming techniques, the court agreed with the Board that modifying Castello in view of Fujiwara would "change the principles under which Castello operates." The Board did not err in considering the fundamental differences in seaming techniques as part of its motivation to combine inquiry.

The Federal Circuit concluded that the Board’s decisions were supported by substantial evidence.

This case is Nos. 19-1787 and 19-1788.

Attorneys: Mitchell G. Stockwell (Kilpatrick Townsend & Stockton LLP) for Adidas AG. Christopher J. Renk (Banner & Witcoff, Ltd.) for Nike, Inc.

Companies: Adidas AG; Nike, Inc.

Cases: Patent GCNNews FedCirNews