CAFC tackles IPR amendments in Nike v. Adidas
The outcome:
This appeal arises from the inter partes review (IPR) of U.S. Patent No. 7,347,011 (the ’011 patent) owned by Nike, Inc. (Nike). The United States Patent and Trademark Office, Patent Trial and Appeal Board (Board) granted the IPR petition filed by adidas AG (Adidas) 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 Board granted Nike’s motion to cancel claims 1–46, but denied the motion as to the substitute claims because Nike failed to meet its burden of establishing patentability of substitute claims 47–50. Nike now appeals the Board’s denial of its motion to amend, and the Director of the United States Patent and Trademark Office (Director) intervened to defend the Board’s decision. For the reasons stated below, we affirmin-part, vacate-in-part, and remand for further proceedings consistent with this opinion.
An issue here is amendments during an IPR:
Particularly relevant to this case is § 316(a)(9), in which Congress delegated authority to the PTO to prescribe regulations “setting forth standards and procedures for allowing the patent owner to move to amend the patent under [§ 316](d) to cancel a challenged claim or propose a reasonable number of substitute claims.” Id. § 316(a)(9); see also id. § 316(d)(1) (“During an inter partes review . . . , the patent owner may file 1 motion to amend the patent in 1 or more of the following ways: (A) Cancel any challenged patent claim. (B) For each challenged claim, propose a reasonable number of substitute claims.”). Consistent with § 316(a)(9), the PTO promulgated a regulation relating to motions practice, 37 C.F.R. § 42.20, which explains that “[r]elief, other than a petition requesting the institution of a trial, must be requested in the form of a motion” and that “[t]he moving party has the burden of proof to establish that it is entitled to the requested relief.” 37 C.F.R. § 42.20(a), (c). The Board addressed these regulations in its Idle Free “informative” decision in which it interpreted section 42.20(c) and explained that “[t]he burden is not on the petitioner to show unpatentability [of new, substitute claims], but on the patent owner to show patentable distinction over the prior art.” Idle Free Sys., Inc. v. Bergstrom, IPR 2012-00027, 2013 WL 5947697, at *4 (PTAB June 11, 2013);
But the CAFC was not swayed from its previous course:
For these reasons, Nike’s attempt to undo our conclusion in Proxyconn—that the PTO may impose the burden of establishing the patentability of proposed substitute claims on the patent owner—is not persuasive. (...)
Our precedent recognizes that § 316(a)(9) instructed the PTO to promulgate a regulation setting forth the standard for motions to amend a patent that might be filed as part of an IPR proceeding. The PTO did just that in 37 C.F.R. § 42.20(c) and, as we held in Proxyconn, the Board permissibly interpreted this regulation as imposing the burden of proving patentability of a proposed substitute claim on the movant: the patent owner. Section 316(e), on the other hand, speaks to a different context. Section 316(e) places the burden on the petitioner to prove unpatentability of any issued claim for which the Board has instituted review and requires that the petitioner carry this burden by a preponderance of the evidence. Thus, the Board did not err by placing the burden on Nike to establish patentability over the prior art of Nike’s proposed substitute claims.
Yes, KSR is cited in the obviousness analysis:
In KSR, the Supreme Court instructed that “any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.” 550 U.S. at 420
Footnote 2 shows that Nike is getting a remand relating to secondary considerations:
we must remand for reconsideration of obviousness in light of Nike’s evidence of secondary considerations. As such, it may be appropriate for the Board to consider the passage of time in connection with Nike’s secondary considerations evidence on remand.
In re Kao is cited: In fact, we have expressly stated that “when secondary considerations are present . . . it is error not to consider them.” In re Kao, 639 F.3d 1057, 1067 (Fed. Cir. 2011)
AND
our precedent dictates that the Board is bound to fully consider properly presented evidence on the long-felt need for a claimed invention. Recognizing that the Board operates under stringent time constraints, we do not hold that it is obliged to explicitly address conclusory and unsupported arguments raised by a litigant. Cf. Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1296 (Fed. Cir. 2009) (holding that a party cannot preserve an argument if it presents “only a skeletal or undeveloped argument to the trial court”). Under the particular circumstances presented here, however, we conclude that the Board should have explicitly acknowledged and evaluated Nike’s secondary considerations evidence.
As to claim grouping:
We agree with Nike that, despite correctly reciting the Idle Free standard that multiple substitute claims are permissible if they are patentably distinct from each other, the Board nevertheless did not engage in any such analysis comparing proposed substitute claims 48 and 49. Thus, the Board’s decision to group substitute claims 48 and 49 together, meaning that claim 49 would stand and fall with claim 48, is not consistent with the rule set out by the Board in Idle Free. The Board has not provided a supported basis for grouping the two claims together in this manner. We must therefore remand 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.
An IPBiz favorite, Nelson v. Adams, is cited:
Adidas seems to imply that Nike insufficiently preserved the argument by raising it only in its motion to amend and not in its reply brief. An issue is preserved for appeal, however, so long as it can be said that the tribunal was “‘fairly put on notice as to the substance of the issue.’” Consolidation Coal Co. v. United States, 351 F.3d 1374, 1378 (Fed. Cir. 2003) (quoting Nelson v. Adams USA, Inc., 529 U.S. 460, 469 (2000)). Nike raised this argument in its motion to amend and supported the argument with its expert declaration. This was sufficient to put the Board on notice that Nike was asserting the “apertures formed by omitting stitches . . . and . . . for receiving laces” limitation as a patentable distinction. We therefore cannot agree with Adidas that Nike has waived its arguments relating to the patentability of claim 49.
Of negative claim limitations:
Even if we assume, as the Board did, that this claim limitation is a negative limitation, Adidas is incorrect that any sort of heightened standard applies. “Negative limitations are adequately supported when the specification describes a reason to exclude the relevant limitation.” Id. at 1351. We recently explained in Inphi that, contrary to Adidas’s argument, Santarus did not create a heightened standard for written description support of negative limitations. Inphi, 805 F.3d at 1356. We further explained that “[w]hen viewed in its proper context, Santarus simply reflects the fact that the specification need only satisfy the requirements of § 112, paragraph 1 as described in this court’s existing jurisprudence.” Id. (citing MPEP § 2173.05(i) (“If alternative elements are positively recited in the specification, they may be explicitly excluded in the claims.”)). Thus, we need only consider whether the disclosures of the ’011 patent, using the customary standard for the written description requirement, allow persons of ordinary skill in the art to recognize that the inventor invented a flat-knit textile with flat-knit edges that are knit to shape rather than being cut from a larger textile web.
Also
After the Board’s decision in this case, the Board issued MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, 2015 WL 4383224 (PTAB July 15, 2015), which has been designated by the PTO as a Representative Decision on Motions to Amend. See Standard Operating Procedure 2, at 3 (¶ IV.A–B) (explaining that Board decisions labeled “representative” are “not binding authority,” but provide “a representative sample of outcomes on a matter”). In MasterImage 3D, the Board “ma[d]e three points of clarification regarding” Idle Free’s requirement that the patent owner show that its proposed substitute claims are patentable over the prior art of record and also other prior art known to the patent owner. Importantly, the Board explained that “[t]he reference to ‘prior art known to the patent owner’ . . . in Idle Free, should be understood as no more than the material prior art that Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11, in light of the Motion to Amend.” MasterImage 3D, Slip. Op. at 3. At oral argument in the present case, the PTO confirmed this characterization of MasterImage 3D. See Oral Argument at 29:13–29:22 available at http://cafc.uscourts.gov/oral-argument-recordings/20141719/all (“[MasterImage] is not a change of Idle Free, it’s more of a clarification of Idle Free.”). The PTO further explained that, although the Board’s denial of Nike’s motion to amend was based on a reasonable reading of Idle Free, given the clarification in MasterImage 3D, the PTO acknowledged that the Board “read Idle Free too aggressively in this decision.” Id. at 29:23–30:01. We agree with the PTO. At the heart of Idle Free, as interpreted by MasterImage 3D, is the question of whether the patent owner has submitted the necessary information to comply with its duty of candor to the office. In this case, there is not, and there has never been, an allegation that Nike violated its duty of candor. Moreover, the PTO acknowledged that Nike’s statement about the substitute claims’ patentability over prior art not of record but known to Nike would satisfy the obligation as explained in MasterImage 3D. Id. at 35:50–36:06. After MasterImage’s explanation of Idle Free, we cannot see how the statement used by Nike would be inadequate, absent an allegation of conduct violating the duty of candor. We therefore conclude that this was an improper ground on which to deny Nike’s motion to amend.
This appeal arises from the inter partes review (IPR) of U.S. Patent No. 7,347,011 (the ’011 patent) owned by Nike, Inc. (Nike). The United States Patent and Trademark Office, Patent Trial and Appeal Board (Board) granted the IPR petition filed by adidas AG (Adidas) 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 Board granted Nike’s motion to cancel claims 1–46, but denied the motion as to the substitute claims because Nike failed to meet its burden of establishing patentability of substitute claims 47–50. Nike now appeals the Board’s denial of its motion to amend, and the Director of the United States Patent and Trademark Office (Director) intervened to defend the Board’s decision. For the reasons stated below, we affirmin-part, vacate-in-part, and remand for further proceedings consistent with this opinion.
An issue here is amendments during an IPR:
Particularly relevant to this case is § 316(a)(9), in which Congress delegated authority to the PTO to prescribe regulations “setting forth standards and procedures for allowing the patent owner to move to amend the patent under [§ 316](d) to cancel a challenged claim or propose a reasonable number of substitute claims.” Id. § 316(a)(9); see also id. § 316(d)(1) (“During an inter partes review . . . , the patent owner may file 1 motion to amend the patent in 1 or more of the following ways: (A) Cancel any challenged patent claim. (B) For each challenged claim, propose a reasonable number of substitute claims.”). Consistent with § 316(a)(9), the PTO promulgated a regulation relating to motions practice, 37 C.F.R. § 42.20, which explains that “[r]elief, other than a petition requesting the institution of a trial, must be requested in the form of a motion” and that “[t]he moving party has the burden of proof to establish that it is entitled to the requested relief.” 37 C.F.R. § 42.20(a), (c). The Board addressed these regulations in its Idle Free “informative” decision in which it interpreted section 42.20(c) and explained that “[t]he burden is not on the petitioner to show unpatentability [of new, substitute claims], but on the patent owner to show patentable distinction over the prior art.” Idle Free Sys., Inc. v. Bergstrom, IPR 2012-00027, 2013 WL 5947697, at *4 (PTAB June 11, 2013);
But the CAFC was not swayed from its previous course:
For these reasons, Nike’s attempt to undo our conclusion in Proxyconn—that the PTO may impose the burden of establishing the patentability of proposed substitute claims on the patent owner—is not persuasive. (...)
Our precedent recognizes that § 316(a)(9) instructed the PTO to promulgate a regulation setting forth the standard for motions to amend a patent that might be filed as part of an IPR proceeding. The PTO did just that in 37 C.F.R. § 42.20(c) and, as we held in Proxyconn, the Board permissibly interpreted this regulation as imposing the burden of proving patentability of a proposed substitute claim on the movant: the patent owner. Section 316(e), on the other hand, speaks to a different context. Section 316(e) places the burden on the petitioner to prove unpatentability of any issued claim for which the Board has instituted review and requires that the petitioner carry this burden by a preponderance of the evidence. Thus, the Board did not err by placing the burden on Nike to establish patentability over the prior art of Nike’s proposed substitute claims.
Yes, KSR is cited in the obviousness analysis:
In KSR, the Supreme Court instructed that “any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.” 550 U.S. at 420
Footnote 2 shows that Nike is getting a remand relating to secondary considerations:
we must remand for reconsideration of obviousness in light of Nike’s evidence of secondary considerations. As such, it may be appropriate for the Board to consider the passage of time in connection with Nike’s secondary considerations evidence on remand.
In re Kao is cited: In fact, we have expressly stated that “when secondary considerations are present . . . it is error not to consider them.” In re Kao, 639 F.3d 1057, 1067 (Fed. Cir. 2011)
AND
our precedent dictates that the Board is bound to fully consider properly presented evidence on the long-felt need for a claimed invention. Recognizing that the Board operates under stringent time constraints, we do not hold that it is obliged to explicitly address conclusory and unsupported arguments raised by a litigant. Cf. Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1296 (Fed. Cir. 2009) (holding that a party cannot preserve an argument if it presents “only a skeletal or undeveloped argument to the trial court”). Under the particular circumstances presented here, however, we conclude that the Board should have explicitly acknowledged and evaluated Nike’s secondary considerations evidence.
As to claim grouping:
We agree with Nike that, despite correctly reciting the Idle Free standard that multiple substitute claims are permissible if they are patentably distinct from each other, the Board nevertheless did not engage in any such analysis comparing proposed substitute claims 48 and 49. Thus, the Board’s decision to group substitute claims 48 and 49 together, meaning that claim 49 would stand and fall with claim 48, is not consistent with the rule set out by the Board in Idle Free. The Board has not provided a supported basis for grouping the two claims together in this manner. We must therefore remand 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.
An IPBiz favorite, Nelson v. Adams, is cited:
Adidas seems to imply that Nike insufficiently preserved the argument by raising it only in its motion to amend and not in its reply brief. An issue is preserved for appeal, however, so long as it can be said that the tribunal was “‘fairly put on notice as to the substance of the issue.’” Consolidation Coal Co. v. United States, 351 F.3d 1374, 1378 (Fed. Cir. 2003) (quoting Nelson v. Adams USA, Inc., 529 U.S. 460, 469 (2000)). Nike raised this argument in its motion to amend and supported the argument with its expert declaration. This was sufficient to put the Board on notice that Nike was asserting the “apertures formed by omitting stitches . . . and . . . for receiving laces” limitation as a patentable distinction. We therefore cannot agree with Adidas that Nike has waived its arguments relating to the patentability of claim 49.
Of negative claim limitations:
Even if we assume, as the Board did, that this claim limitation is a negative limitation, Adidas is incorrect that any sort of heightened standard applies. “Negative limitations are adequately supported when the specification describes a reason to exclude the relevant limitation.” Id. at 1351. We recently explained in Inphi that, contrary to Adidas’s argument, Santarus did not create a heightened standard for written description support of negative limitations. Inphi, 805 F.3d at 1356. We further explained that “[w]hen viewed in its proper context, Santarus simply reflects the fact that the specification need only satisfy the requirements of § 112, paragraph 1 as described in this court’s existing jurisprudence.” Id. (citing MPEP § 2173.05(i) (“If alternative elements are positively recited in the specification, they may be explicitly excluded in the claims.”)). Thus, we need only consider whether the disclosures of the ’011 patent, using the customary standard for the written description requirement, allow persons of ordinary skill in the art to recognize that the inventor invented a flat-knit textile with flat-knit edges that are knit to shape rather than being cut from a larger textile web.
Also
After the Board’s decision in this case, the Board issued MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, 2015 WL 4383224 (PTAB July 15, 2015), which has been designated by the PTO as a Representative Decision on Motions to Amend. See Standard Operating Procedure 2, at 3 (¶ IV.A–B) (explaining that Board decisions labeled “representative” are “not binding authority,” but provide “a representative sample of outcomes on a matter”). In MasterImage 3D, the Board “ma[d]e three points of clarification regarding” Idle Free’s requirement that the patent owner show that its proposed substitute claims are patentable over the prior art of record and also other prior art known to the patent owner. Importantly, the Board explained that “[t]he reference to ‘prior art known to the patent owner’ . . . in Idle Free, should be understood as no more than the material prior art that Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11, in light of the Motion to Amend.” MasterImage 3D, Slip. Op. at 3. At oral argument in the present case, the PTO confirmed this characterization of MasterImage 3D. See Oral Argument at 29:13–29:22 available at http://cafc.uscourts.gov/oral-argument-recordings/20141719/all (“[MasterImage] is not a change of Idle Free, it’s more of a clarification of Idle Free.”). The PTO further explained that, although the Board’s denial of Nike’s motion to amend was based on a reasonable reading of Idle Free, given the clarification in MasterImage 3D, the PTO acknowledged that the Board “read Idle Free too aggressively in this decision.” Id. at 29:23–30:01. We agree with the PTO. At the heart of Idle Free, as interpreted by MasterImage 3D, is the question of whether the patent owner has submitted the necessary information to comply with its duty of candor to the office. In this case, there is not, and there has never been, an allegation that Nike violated its duty of candor. Moreover, the PTO acknowledged that Nike’s statement about the substitute claims’ patentability over prior art not of record but known to Nike would satisfy the obligation as explained in MasterImage 3D. Id. at 35:50–36:06. After MasterImage’s explanation of Idle Free, we cannot see how the statement used by Nike would be inadequate, absent an allegation of conduct violating the duty of candor. We therefore conclude that this was an improper ground on which to deny Nike’s motion to amend.
posted by Lawrence B. Ebert at 12:12 PM
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