IP Law Daily, PATENT—Fed. Cir.: Nike ‘upper’ shoe patent properly held invalid in light of prior art, (Sep 1, 2022)

By Robert Margolis, J.D.

Motivation to combine the prior art was found where there was a design need, and a finite number of solutions.

Substantial evidence supported the Patent Trial and Appeal Board’s conclusion that a substitute claim in a Nike, Inc. patent for creating apertures in the knitted portion of a shoe’s “upper” was unpatentable as obvious under 35 U.S.C. § 103 in light of prior art, the United States Court of Appeals for the Federal Circuit has held. This was the third time the Federal Circuit reviewed the Board’s findings in this case (Nike, Inc. v. Adidas AG, September 1, 2022, Chen, R.).

Prior proceedings. Nike owns U.S. Patent No. 7,347,011 (“the ’011 patent”), which discloses articles of footwear having a textile "upper." The upper is made from a knitted textile using any number of warp knitting or weft knitting processes. After the Federal Circuit’s prior two decisions—Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 2016) (Nike I), and Nike, Inc. v. Adidas AG, 955 F.3d 45 (Fed. Cir. 2020) (Nike II), the only remaining claim at issue is proposed substitute clam 49. That claim recites “a plurality of apertures in the flat knit textile element” that are “formed by omitting stitches in the flat knit textile element and positioned in the upper for receiving laces.” In Nike I, the Federal Circuit remanded to the Board to determine the patentability of substitute claim 49, though the court found that substantial evidence supported the Board’s finding that a skilled artisan would have been motivated to combine the prior art of Nishida and Schuessler. The court noted that the Board may have “intended to convey that claim 49 was obvious in light of [prior art] Nishida because skipping stitches to form apertures, even though not expressly disclosed in Nishida, was a well-known technique in the art and that understanding perhaps would be a basis to conclude that one of skill in the art would utilize this technique to create holes for accepting shoe laces.” 812 F.3d at 1344–45. But the Board “did not articulate these findings,” so the court remanded to the Board for further proceedings. Id.

The Nike I holding also was based on the premise that the patent owner bears the burden of persuasion as to the patentability of substitute claims, a point of law that the Federal Circuit subsequently overruled. Aqua Products, Inc. v. Matal, 872 F.3d 1290, 1296 n.1 (Fed. Cir. 2017). When the Board issued a second final written decision, again it found that substitute claim was unpatentable in light of another prior art (Spencer), leading to the Nike II appeal. In Nike II, the Federal Circuit reversed, holding that the Board violated the notice requirement in the Administrative Procedure Act (APA). In vacating the Board’s finding of invalidity of substitute claim 49, the Federal Circuit held that if the Board sua sponte identifies a patentability issue for a proposed substitute claim, the Board must provide notice of the issue and an opportunity for the parties to respond before issuing a final decision. The court again remanded to the Board.

On remand, the Board considered three issues: (1) who bears the burden of persuasion for a patentability issue that the Board had raised sua sponte; (2) whether Spencer teaches or suggests the disputed limitation of substitute claim 49; and (3) whether a skilled artisan would have a reason to combine the teachings of Nishida, Spencer, and Schuessler to achieve the article of footwear recited in substitute claim 49. The Board held first that the petitioner should not bear the burden of persuasion for a challenge it did not raise, and essentially assigned itself the burden of persuasion, holding that the Board must instead consider the record in its entirety. Second, the Board held that Spencer teaches the disputed limitation of substitute claim 49. Finally, it held that there was adequate reason to combine the teachings of the prior art. It thus held that substitute claim 49 was unpatentable as obvious, leading to Nike’s appeal.

Burden. Nike argued that in ostensibly placing the burden on itself, rather than the petitioner, for an unpatentability challenge that the Board raised sua sponte, the Board effectively placed the burden on Nike. Because the court agreed with Adidas that both the Board and Adidas met the burden of persuasion, it did not reach Nike’s argument as to who should have the burden of persuasion, though the court found that the Board did not place the burden on Nike.

The Board found that Spencer teaches creating apertures by omitting stitches, and that a skilled artisan would have been motivated to combine Spencer with Nishida and Schuessler. Adidas argued to the Board that a skilled artisan would have been motivated to combine Spencer with the others because there are a “finite number of predictable solutions for forming holes” and the technique taught in Spencer was well-known in the field of knitting to form apertures. The Board found that because Nishida discloses an article of footwear with several apertures formed in an indeterminate manner, but for the same purpose as substitute claim 49, and the omission of stitches taught in Spencer was a well-known technique, a skilled artisan would have been motivated to combine them to form the one or more apertures taught by substitute claim 49. Because the Board’s finding essentially mirrored Adidas’s argument, the court reasoned that the outcome would have been the same whether the Board assigned the burden to itself or Adidas.

Obviousness. Nike argued that the Board’s finding of obviousness was wrong for three reasons: (1) substantial evidence did not support the determination that Spencer teaches creating apertures by omitting stitches; (2) substantial evidence did not support the determination that a skilled artisan would be motivated to combine Spencer with the other prior art references based on minimizing waste; and (3) the Board’s motivation-to-combine analysis violated the APA. The court rejected each argument.

The Board found that Spencer teaches that apertures are formed in knitted materials by unbalanced tension causing wales “not as directly joined to each other by underlaps or sinker loops as they are to the wales on the other side” to move apart. It also teaches that apertures may be produced “by the introduction of empty needles” that result in loop displacement. The court found that the Board’s interpretation of Spencer, based on specific disclosures in Spencer, was reasonable such that it was supported by substantial evidence.

As to motivation, Adidas had argued to the Board that where there is a design need and a finite number of solutions, a skilled artisan has reason to pursue those solutions. Further arguing that omitting stitches is one of the finite solutions for forming apertures, and given that Spencer is well-known, and the existence of additional suggestions and motivations to omitting stitches, including minimizing waste and reducing cutting, Adidas satisfied the Board that substantial evidence supported a finding of motivation. The court affirmed the Board’s conclusion, finding again that it was supported by substantial evidence. Nike argued to the court that relying on nothing more than “common sense” can not support a finding of motivation. According to the court, however, while common sense alone can be problematic, where it is used to support a motivation to combine, such as here to reduce waste and improve efficiency, common sense can be an important reason and support a finding of motivation.

APA. Finally, the court held that the Board’s two “see also” citations to portions of Spencer that were not raised by the parties did not violate the APA, because neither citation was essential to the Board’s analysis of motivation to combine.

The case is No. 21-1903

Attorneys: Christopher J. Renk (Arnold & Porter Kaye Scholer LLP) for Nike, Inc. Mitchell G. Stockwell (Kilpatrick Townsend & Stockton LLP) for Adidas AG.

Companies: Nike, Inc.; Adidas AG

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