In February 11, 2016 the Federal Circuit has issued a precedential opinion in an appeal related to an inter partes review (IPR) dispute between Nike, Inc. and Adidas AG at the Patent Trial and Appeal Board (PTAB). The dispute involves U.S. Patent No. 7,347,011 (the ’011 patent) owned by Nike, Inc. (Nike) and covering a unitary shoe upper. Several lessons can be learned or refreshed upon by reviewing this opinion. Some are presented succinctly below.

1. While a Patentee Can Present Substitute Claims in an IPR Proceedings, the Patentee has the Burden of Proof to Establish that the Substitute Claims Are Patentable Over the Prior Art. Here, Nike canceled all of the 46 claims challenged by Addidas and requested the entry of four substitute claims 47-50. PTAB canceled the 46 claims but denied entry of Nike’s four substitute claims. “First, the Board acknowledged the requirement announced in the Board’s Idle Free decision that a patent owner “persuade the Board that the proposed substitute claim is patentable over the prior art of record, and over prior art not of record but known to the patent owner.” J.A. 34–36. Because Nike’s motion included only a conclusory statement that the proposed claims were patentable over prior art not of record but known to Nike, the Board denied Nike’s motion.” Alternatively, the Board denied entry of the substitute claims because Nike failed to establish that the substitute claims were patentable over the prior art of record. The Federal Circuit agreed with the Board holding that “the Board did not err by placing the burden on Nike to establish patentability over the prior art of Nike’s proposed substitute claims.”

2. Another Obviousness Analysis Refresher: The Failure of the Prior Art to Recognize the Problem Solved by Patentee May Support a Finding that the Claimed Invention is NOT Obvious. A claim is not patentable when “when “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.” 35 U.S.C. § 103. The court reminded us that “[t]he ultimate determination of obviousness under § 103 is a question of law based on underlying factual findings. In re Baxter Int’l, Inc., 678 F.3d 1357, 1361 (Fed. Cir. 2012) (citing Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966)). These underlying factual considerations consist of: (1) the “level of ordinary skill in the pertinent art,” (2) the “scope and content of the prior art,” (3) the “differences between the prior art and the claims at issue,” and (4) “secondary considerations” of non-obviousness such as “commercial success, long-felt but unsolved needs, failure of others, etc.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398,406 (2007) (quoting Graham, 383 U.S. at 17–18).” Once again, the court emphasized that an obviousness inquiry requires examination of all four Graham factors and that an obviousness determination can be made only after consideration of each factor. Finally, the court reminded us that “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.” The court agreed with the PTAB that, unlike in cases where the prior art has not appreciated the problem, here, because the two prior art references of record recognized the problem solved by Nike, combining the two references was obvious to one of ordinary skills in the art. However, the court agreed with Nike that the PTAB failed to consider Nike’s arguments and evidence related to secondary consideration, namely that “that reducing waste was a long-felt need in the shoe manufacturing industry” and that the prior art failed to resolve this need. The opinion further reminds us that “[e]vidence of secondary considerations plays a critical role in the obviousness analysis because it serves as objective indicia of nonobviousness and “may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not.” Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538–39 (Fed. Cir. 1983).”

3. Drawings Themselves May Play a Key Role in Showing That the Written Description Requirement is Met. Here, Adidas contended that Nike’s substitute claims were not properly supported by the ’011 patent’s written description. “To adequately support the claims, the written description “must clearly allow persons of ordinary skill in the art to recognize that the inventor invented what is claimed.” Ariad, 598 F.3d at 1351 (internal quotation marks omitted).” “Substantial evidence supports a finding that the specification satisfies the written description requirement when the essence of the original disclosure conveys the necessary information—regardless of how it conveys such information, and regardless of whether the disclosure’s words are open to different interpretations.” Inphi Corp. v. Netlist, Inc., 805 F.3d 1350, 1354 (Fed. Cir. 2015).” After thoroughly analyzing Figs. 8 - 11 and the related description in the ‘011 patent, the court held that “substantial evidence supports the Board’s decision that the proposed substitute claims are adequately supported by the written description of the ’011 patent.”

The entire Federal Circuit’s opinion may be accessed here: http://www.cafc.uscourts.gov/sites/default/files/s14-1719_Opinion_2-9-2016.pdf

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