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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in<a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/19-1787.OPINION.6-25-2020_1609483.pdf" target="_blank" rel="noopener"> <em>Adidas, AG v. Nike, Inc.</em></a>, No. 19-1787 (June 25, 2020). The Court held the prior art cited by Adidas in two <em>inter partes</em> review (IPR) proceedings did not render any claims in Nike’s 7,814,598 and 8,266,749 patents obvious.

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Adidas initiated two IPRs to invalidate claims of the ʼ598 and ʼ749 patents. The Patent Trial and Appeal Board considered two grounds for obviousness involving combinations of the following prior art references: (1) Reed and Nishida; and (2) Nishida, Castello, and Fujiwara. The Board held, as to both grounds, that a person of ordinary skill would not be motivated to combine the references. Adidas appealed.&nbsp;

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On appeal, the Federal Circuit first considered whether Adidas had standing. Nike asserted Adidas lacked standing because Nike had not sued or threatened to sue Adidas for infringement and, therefore, Adidas had not suffered any injury. The Court disagreed. The Court explained that the requisite injury in fact could be shown by demonstrating that Adidas engaged in activity likely to give rise to an infringement suit. The Court concluded that sufficient injury was shown because Nike and Adidas are direct competitors, Nike already accused Adidas of infringing a similar patent, Nike asserted the ʼ749 patent against another entity selling a similar product, and Nike refused to grant Adidas a covenant not to sue.

Concerning obviousness, the Court rejected Adidas’s contention that the Board erred in determining that Reed and Nishida were incompatible. The Court emphasized that the obviousness inquiry does not ask whether a skilled artisan could possibly combine references, but whether they would have been motivated to combine them. Nike’s patents recite a process of forming a cylindrical textile structure of yarn with different textures that are not joined together by seams. The Court agreed with the Board that Reed’s teaching of pre-seaming is incompatible with Nike’s claims, and with the teachings of Nishida, thus eliminating any motivation to combine. The Court also rejected Adidas’s contention that the Board erred in determining that a person of ordinary skill would not have been motivated to combine Nishida, Castello, and Fujiwara. The Court explained the Board did not err in finding a person of ordinary skill would not have been motivated to combine the identified references in view of fundamental differences between and among them.

CAFC Upholds Nike’s Patents; No Motivation to Combine References

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