Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-19-01262/USCOURTS-ca13-19-01262-0/pdf.json

Parties Involved:
Adidas AG
Appellee
Nike, Inc.
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________

NIKE, INC.,

Appellant

v.

ADIDAS AG,

Appellee

______________________

2019-1262

______________________

Appeal from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board in No. IPR2013-

00067.

______________________

Decided: April 9, 2020 

______________________

MICHAEL JOSEPH HARRIS, Banner & Witcoff, Ltd., Chicago, IL, argued for appellant. Also represented by 

CHRISTOPHER J. RENK, KEVIN DAM. 

 MITCHELL G. STOCKWELL, Kilpatrick Townsend & 

Stockton LLP, Atlanta, GA, argued for appellee. Also represented by VAIBHAV P. KADABA, MICHAEL T. MORLOCK,

TIFFANY L. WILLIAMS. 

 ______________________

Before LOURIE, CHEN, and STOLL, Circuit Judges.

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2 NIKE, INC. v. ADIDAS AG

STOLL, Circuit Judge.

This case requires this court to once again consider the 

notice provisions of the Administrative Procedure Act.

Nike, Inc. appeals the Patent Trial and Appeal Board’s decision on remand denying its request to enter substitute 

claims 47–50 of U.S. Patent No. 7,347,011 on the ground 

that those claims are unpatentable under 35 U.S.C. § 103. 

Specifically, Nike asserts that the Board violated the notice 

provisions of the APA by finding that a limitation of substitute claim 49 was well-known in the art based on a prior

art reference that, while in the record, was never cited by 

adidas AG (“Adidas”) for disclosing that limitation. Nike 

also challenges the Board’s finding that Nike’s evidence of 

long-felt but unmet need was insufficient to establish the

nonobviousness of substitute claims 47–50. We conclude 

that substantial evidence supports the Board’s finding that 

Nike failed to establish a long-felt need for substitute 

claims 47–50. Because no notice was provided for the 

Board’s theory of unpatentability for substitute claim 49, 

however, we vacate the Board’s decision as to substitute 

claim 49 and remand for the Board to determine whether 

that claim is unpatentable as obvious after providing the 

parties with an opportunity to respond. 

BACKGROUND

This inter partes review proceeding returns from a 

prior appeal in which we affirmed-in-part and vacated-inpart the Board’s decision denying Nike’s motion to amend, 

and remanded for the Board to address certain errors underlying its conclusion that Nike’s proposed substitute 

claims 47–50 were unpatentable for obviousness. See generally Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 

2016) (Nike I), overruled on other grounds by Aqua Prods., 

Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc). 

Nike now appeals the Board’s decision on remand, in which 

the Board once again denied Nike’s motion to enter substitute claims 47–50.

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NIKE, INC. v. ADIDAS AG 3

I

The ’011 patent discloses articles of footwear having a 

textile “upper,” which is made from a knitted textile using 

any number of warp knitting or weft knitting processes. 

’011 patent col. 3 ll. 20–32. Weft knitting includes “flat 

knitting,” where the textile is knit as a sheet or flat piece 

of textile. Id. at col. 7 ll. 5–8. 

Substitute claims 47–50 generally relate to a unitary 

flat-knitted textile element. They recite:

47. An article of footwear comprising 

an upper incorporating a flat knit textile element, 

the flat knit textile element 

(1) having flat knit edges free of surrounding textile structure such that the flat knit edges are not 

surrounded by textile structure from which the textile element must be removed, some of the flat knit 

edges joined together to form an ankle opening in 

the upper for receiving a foot, the ankle opening 

having an edge comprised of one of the flat knit 

edges; and 

(2) having a first area and a second area with a unitary construction, the first area being formed of a 

first stitch configuration, and the second area being 

formed of a second stitch configuration that is different from the first stitch configuration to impart 

varying properties to the textile element; and 

a sole structure secured to the upper.

48. The article of footwear recited in claim 47, 

wherein at least one of the first stitch configuration 

and the second stitch configuration forms an aperture in the flat knit textile element and the joined 

edges shape the flat knit textile element to form a 

lateral region, a medial region, an instep region 

and a heel region of the upper.

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49. The article of footwear recited in claim 47, 

wherein at least one of the first stitch configuration 

and the second stitch configuration forms a plurality of apertures in the flat knit textile element, the 

apertures formed by omitting stitches in the flat 

knit textile element and positioned in the upper for 

receiving laces.

50. The article of footwear recited in claim 47, 

wherein the flat knit textile element is one of an 

exterior layer, an intermediate layer, and an interior layer of the upper, and the joined edges shape 

the flat knit textile element to form a lateral region, 

a medial region, an instep region and a heel region 

of the upper.

Mot. to Amend at 1–2, Adidas AG v. Nike, Inc., 

No. IPR2013-00067, 2013 WL 5592521 (P.T.A.B. Aug. 19, 

2013) (alterations omitted) (emphases added). Relevant to 

this appeal, substitute claim 49 recites a knit textile upper 

containing “apertures” that can be used to receive laces and 

that are “formed by omitting stitches” in the knit textile.

II

In its petition, Adidas challenged the patentability of 

claims 1–46 of the ’011 patent. After the Board granted 

Adidas’s petition, Nike filed a motion to amend its patent 

pursuant to 35 U.S.C. § 316(d), requesting cancellation of

claims 1–46 and entry of substitute claims 47–50. In particular, Nike proposed to substitute claim 47 for original 

claim 16, substitute claims 48 and 49 for original claim 19, 

and substitute claim 50 for original claim 20. Adidas opposed Nike’s motion, arguing that substitute claims 47–50 

are unpatentable under 35 U.S.C. § 103 in view of the combination of three prior art references: U.S. Patent

No. 5,345,638 (Nishida); U.S. Patent No. 2,178,941 

(Schuessler I); and U.S. Patent No. 2,150,730 (Schuessler II). Adidas argued that Nishida disclosed substitute 

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NIKE, INC. v. ADIDAS AG 5

claim 49’s limitation that the apertures are “formed by 

omitting stitches.” 

In its final written decision, the Board granted Nike’s 

request to cancel claims 1–46, but denied Nike’s request for 

entry of substitute claims 47–50 on the ground that Nike 

failed to establish the patentability of those claims over the 

combined teachings of Nishida, Schuessler I, and Schuessler II. See Adidas AG v. Nike, Inc., No. IPR2013-00067, 

2014 WL 1713368, at *20–21 (P.T.A.B. Apr. 28, 2014). After finding that Nike failed to show that it proposed a “reasonable number” of substitute claims for original claim 19, 

the Board “group[ed] claim 49 with claim 48, for patentability purposes,” meaning that those claims would rise and 

fall together. Id. at *12. The Board did not address Nike’s 

long-felt need evidence or argument.

On appeal, we determined that substantial evidence 

supported the Board’s finding that a person of ordinary 

skill in the art would have been motivated to combine 

Nishida, Schuessler I, and Schuessler II with a reasonable 

expectation of success in arriving at the unitary, flat-knitted textile upper recited in substitute claims 47–50. See 

Nike I, 812 F.3d at 1335–38. We also affirmed the Board’s 

conclusion that Nike, the patent owner, bore the burden of 

proving the patentability of substitute claims 47–50 by a 

preponderance of the evidence. Id. at 1332–34. 

We identified two errors in the Board’s decision, however. First, the Board failed to determine how substitute 

claims 48 and 49 “should be treated per the standard set 

forth in” the Board’s then-informative decision Idle Free 

Systems, Inc. v. Bergstrom, No. IPR2012-00027, 2013 WL 

5947697 (P.T.A.B. June 11, 2013). Nike I, 812 F.3d 

at 1342. Second, the Board failed to examine Nike’s longfelt need evidence. Id. at 1339–40. 

In light of these two errors, we remanded for the Board 

to determine how substitute claims 48 and 49 should be 

treated under Idle Free and, “if necessary, a full 

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6 NIKE, INC. v. ADIDAS AG

consideration of the patentability of each.” Id. at 1342. We 

rejected Adidas’s argument that we could affirm the 

Board’s conclusion that substitute claim 49 was unpatentable as obvious because the Board’s decision “lack[ed] critical fact-findings needed for any obviousness 

determination.” Id. at 1343–45. In doing so, we explained 

that “Nishida’s specification never specifically discusses 

the lacing holes of its upper; they are only shown in Figure 3,” and that the Board neither “point[ed] to any disclosure in Nishida that explains the manner in which” the 

holes in Figure 3 were created, nor “address[ed] the presence of the holes in either claim 49 or Nishida.” Id. at 1344. 

We then noted:

It may well be that the Board intended to convey 

that claim 49 was obvious in light of 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. But, the 

Board did not articulate these findings.

Id. at 1344–45 (footnote omitted) (emphasis added). We 

also remanded for the Board to examine Nike’s long-felt 

need evidence “and its impact, if any, on the Board’s analysis under the first three” factual considerations set forth 

in Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966). Id.

at 1340.

On remand, neither party asked to submit additional 

briefing or new evidence to the Board. This court subsequently issued its en banc decision in Aqua Products, overruling Nike I’s holding that the patent owner bears the 

burden of persuasion with respect to the patentability of 

substitute claims presented in a motion to amend. See 

Aqua Prods., 872 F.3d at 1296, 1324–25. The Board also 

de-designated Idle Free as “informative.” The parties 

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NIKE, INC. v. ADIDAS AG 7

thereafter submitted briefs to the Board addressing the impact of Aqua Products on the remand proceedings. Adidas 

did not assert any new prior art references to demonstrate 

the unpatentability of substitute claim 49 or otherwise revise its invalidity arguments on remand. 

In its decision on remand, the Board concluded that 

Adidas proved by a preponderance of the evidence that substitute claims 47–50 are unpatentable as obvious. Adidas 

AG v. Nike, Inc., No. IPR2013-00067, 2018 WL 4501969, 

at *2 (P.T.A.B. Sept. 18, 2018) (Remand Decision). The 

Board found that substitute claims 48 and 49 were proper 

substitutes for original claim 19 under Idle Free. Id. at *6.

The Board next determined that “the entirety of the 

record demonstrates the unpatentability of substitute 

claim 49 by a preponderance of the evidence.” Id. at *7. 

The Board found that “Nishida does not disclose apertures 

‘formed by omitting stitches,’ as recited in claim 49.” Id. 

But the Board found that “another prior art document of 

record in the proceeding,” a handbook by David J. Spencer, Knitting Technology: A Comprehensive Handbook and 

Practical Guide (3d ed. 2001) (Spencer), “demonstrates 

that skipping stitches to form apertures was a well-known 

technique.” Id. (citing Genzyme Therapeutic Prods. Ltd.

v. Biomarin Pharm. Inc., 825 F.3d 1360, 1369 (Fed. Cir. 

2016)); see also id. at *8 n.11 (identifying Spencer). The 

Board concluded that “[b]ecause the omission of stitches 

was a well-known technique in the field of knitting for 

forming . . . apertures,” a skilled artisan “would have had 

reason to use such a known technique . . . to form the plurality of apertures taught by Nishida, as recited by substitute claim 49.” Id. at *8 (first citing Spencer 57–58; then 

citing KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421

(2007); then citing J.A. 1248 ¶ 107). 

Finally, the Board considered Nike’s evidence and argument that the invention of substitute claims 47–50 

solved the long-felt need to reduce material waste in the 

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8 NIKE, INC. v. ADIDAS AG

manufacture of knit textile uppers, but determined that 

the prior art showed that the alleged need was already met 

by the date of the invention. Id. at *10–12.

Nike appeals. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(4)(A).

DISCUSSION

Obviousness is a question of law based on underlying 

facts. In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 

1373 (Fed. Cir. 2016) (citing In re Gartside, 203 F.3d 1305, 

1316 (Fed. Cir. 2000)). We review the Board’s legal conclusion of obviousness de novo, and underlying factual findings for substantial evidence. Id. (citing In re Cuozzo Speed 

Techs., LLC, 793 F.3d 1268, 1280 (Fed. Cir. 2015), aff’d, 

Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016)). 

These determinations of fact 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.’” Nike I, 812 F.3d 

at 1334–35 (quoting KSR, 550 U.S. at 406). Whether the 

Board improperly relied on new arguments is reviewed de 

novo. In re IPR Licensing, Inc., 942 F.3d 1363, 1369 

(Fed. Cir. 2019) (citing In re NuVasive, Inc., 841 F.3d 966, 

970 (Fed. Cir. 2016)). 

I

Nike asserts that the Board erred by relying on Spencer to find substitute claim 49’s requirement of forming apertures “by omitting stitches” was a well-known technique. 

According to Nike, the Board violated the APA by failing to 

give notice that it would rely on Spencer to support its obviousness conclusion for substitute claim 49. We agree. 

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NIKE, INC. v. ADIDAS AG 9

A

We addressed the universe of prior art that the Board 

should consider when reviewing a motion to amend in Aqua

Products. There, we held that the Board may not “base its 

patentability determinations with respect to amended 

claims solely on the face of the motion to amend, without 

regard to the remainder of the IPR record.” 872 F.3d 

at 1325. Rather, the Board “must consider the entirety of 

the record before it when assessing the patentability of 

amended claims.” Id. at 1296 (emphasis added). We expressly declined to address, however, whether the Board 

“may sua sponte raise patentability challenges to a proposed amended claim” because the “record d[id] not present 

this precise question.” Id. at 1325; see also id. at 1350 n.7 

(Taranto, J., dissenting) (“It is at present unclear to what 

extent the Board may sua sponte introduce evidence or arguments into the record—and rely on them after giving notice and opportunity to be heard—even in adjudicating the 

patentability of issued claims, much less in assessing proposed substitute claims.”). 

This case presents part of the question posed but left 

undecided in Aqua Products. We hold today that the Board 

may sua sponte identify a patentability issue for a proposed 

substitute claim based on the prior art of record.1 If the 

Board sua sponte identifies a patentability issue for a proposed substitute claim, however, it must provide notice of 

the issue and an opportunity for the parties to respond before issuing a final decision under 35 U.S.C. § 318(a).

1 We do not decide today whether the Board may 

look outside of the IPR record in determining the patentability of proposed substitute claims. This case does not present that precise question. Therefore, we reserve it for 

another day.

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Because this case involves a motion to amend, we conclude that the Board should not be constrained to arguments and theories raised by the petitioner in its petition 

or opposition to the motion to amend. That principle—announced in SAS Institute, Inc. v. ComplementSoft, LLC, 

825 F.3d 1341 (Fed. Cir. 2016), Magnum Oil, and other 

cases—does not apply in the context of motions to amend 

where the patent owner has introduced new claims into the 

proceedings. Otherwise, were a petitioner not to oppose a 

motion to amend, the Patent Office would be left with no 

ability to examine the new claims. See Aqua Prods., 

872 F.3d at 1311 (“[W]here the challenger ceases to participate in the IPR and the Board proceeds to final judgment, 

it is the Board that must justify any finding of unpatentability by reference to the evidence of record in the IPR.” 

(discussing Cuozzo, 136 S. Ct. at 2144)). It makes little 

sense to limit the Board, in its role within the agency responsible for issuing patents, to the petitioner’s arguments 

in this context. Rather, based on consideration of the entire record, the Board must determine whether the patent 

owner’s newly-presented, narrower claims are “supported 

by the patent’s written description” and “unpatentable in 

the face of the prior art cited in the IPR.” Id. at 1314 (citing 

35 U.S.C. § 316(d)(3)). 

Here, Spencer was undisputedly part of the record in 

this IPR proceeding. As the Board correctly observed, 

Adidas included Spencer as an attachment to its petition

and both parties’ experts relied on Spencer’s teachings in 

their declarations. See Remand Decision, 2018 WL 

4501969, at *8 n.11.

Although the Board was permitted to raise a patentability theory based on Spencer, the notice provisions of the 

APA and our case law require that the Board provide notice 

of its intent to rely on Spencer and an opportunity for the 

parties to respond before issuing a final decision relying on 

Spencer. Under the APA, “[p]ersons entitled to notice of an 

agency hearing shall be timely informed of . . . the matters 

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NIKE, INC. v. ADIDAS AG 11

of fact and law asserted,” 5 U.S.C. § 554(b)(3), and the 

agency “shall give all interested parties opportunity for . . . 

the submission and consideration of facts [and] arguments,” id. § 554(c)(1). In interpreting the APA’s notice 

provisions in the context of IPR proceedings, we have cautioned that “an agency may not change theories in midstream without giving respondents reasonable notice of the 

change and the opportunity to present argument under the 

new theory.” SAS, 825 F.3d at 1351 (citation and quotation 

marks omitted), rev’d on other grounds, 138 S. Ct. 1348 

(2018); see also Genzyme, 825 F.3d at 1366 (“The Patent 

and Trademark Office must provide the patent owner with 

timely notice of ‘the matters of fact and law asserted,’ and 

an opportunity to submit facts and argument.” (first quoting 5 U.S.C. §§ 554(b)–(c), 557(c); then quoting Dell Inc. 

v. Acceleron, LLC, 818 F.3d 1293, 1301 (Fed. Cir. 2016))).

Our decisions have also set forth notice requirements 

relating to the parties’ arguments. For instance, the Board 

“must base its decision on arguments that were advanced 

by a party, and to which the opposing party was given a 

chance to respond.” Magnum Oil, 829 F.3d at 1381 (citing 

SAS, 825 F.3d at 1351). In Magnum Oil, we reversed the 

Board’s decision holding all challenged claims unpatentable for obviousness. Id. The Board had concluded that the 

challenged claims would have been obvious in view of a 

prior art combination that was different from the combination asserted in the IPR petition. Id. at 1377. Since the 

petitioner provided only conclusory arguments as to a motivation to combine the references underlying the Board’s 

obviousness conclusion, we determined that the Board did 

not have sufficient evidence on which to base its conclusion. 

Id. at 1380. We rejected the argument that “the Board is 

free to adopt arguments on behalf of petitioners that could 

have been, but were not, raised by the petitioner during an 

IPR.” Id. at 1381.

Similarly, in SAS, we concluded that the Board erred 

by changing its construction of a disputed claim term in its 

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final written decision without affording the parties an opportunity to respond. 825 F.3d at 1350–52. We noted that 

it was “difficult to imagine either party anticipating that 

already-interpreted terms were actually moving targets, 

and it [wa]s thus unreasonable to expect that they would 

have briefed or argued, in the alternative, hypothetical constructions not asserted by their opponent.” Id. at 1351. We 

vacated the Board’s patentability determination of the disputed claim and remanded so that the parties could address the Board’s new construction. Id. at 1352. 

More recently, in IPR Licensing, we held that the 

Board violated the APA notice requirements by relying on

a prior art reference that was not asserted in the only instituted ground. 942 F.3d at 1368–70. Neither the petition 

nor the patent owner’s response mentioned the reference 

in discussing the only instituted ground, yet the Board 

cited the reference “several times on remand when analyzing why [the challenged claim] was unpatentable.” Id.

at 1369. In reversing the Board’s decision, we explained

that permitting the Board to “rely on evidence relating 

solely to grounds on which it never instituted” would “allow 

the Board’s final written decision to rest on arguments that 

a patent owner has no ability to rebut or anticipate.” Id.

(citing Magnum Oil, 829 F.3d at 1381).

While none of Magnum Oil, SAS, or IPR Licensing was

decided in the context of a motion to amend, we see no reason why their holdings and principles regarding fair notice

and an opportunity to respond would not apply to all aspects of an IPR proceeding. We therefore adopt these holdings and principles to apply in the context of a motion to 

amend. Accordingly, we hold that it is appropriate for the 

Board to sua sponte raise unpatentability grounds based 

on the IPR record and not be limited to the unpatentability 

grounds asserted by the petitioner in its petition or opposition to the motion to amend, provided that the Board gives 

the parties notice and an opportunity to respond. 

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NIKE, INC. v. ADIDAS AG 13

B

With these principles in mind, we conclude that the 

Board violated the APA’s requirements of notice and an opportunity to respond when it relied on Spencer to find that 

the formation of apertures by skipping stitches was a wellknown technique in the art.

Throughout the IPR proceeding, Adidas never argued 

that skipping stitches to form apertures was a well-known 

technique, let alone that Spencer taught this claim limitation. Although it is undisputed that Spencer is part of the 

IPR record, Adidas did not rely on Spencer in its asserted 

ground for unpatentability of substitute claim 49 in either 

its opposition to Nike’s motion to amend or its briefing on 

remand. And although the parties’ experts and Nike’s 

counsel cited certain disclosures in Spencer for other reasons, those disclosures were entirely different from the disclosures on which the Board relied in finding that the 

formation of apertures by skipping stitches was wellknown. Compare Remand Decision, 2018 WL 4501969, 

at *8–9 (citing Spencer 57–58, 91–92, 95), with J.A. 156–57

¶ 7; J.A. 176 ¶ 39; J.A. 182 ¶ 56; J.A. 1218–19 ¶ 51; 

J.A. 1246–47 ¶ 105; J.A. 1609. By including this new theory for the first time in its decision on remand, the Board

denied Nike notice of the issues that the Board would consider and an opportunity to address the factual and legal 

arguments on which the Board’s patentability determination would rest. See 35 U.S.C. § 554(b)–(c).

Contrary to the Board’s suggestion, our decision in 

Genzyme does not suggest a different outcome. In that 

case, we held that the Board did not violate the APA even 

though its final written decisions cited two references “that 

were not specifically included in the combinations of prior 

art on which the Board instituted review.” 825 F.3d 

at 1366. The Board had relied on the prior art to show the 

state of the art at the time of the invention; it did not rely 

on the prior art to disclose a particular claim limitation for 

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14 NIKE, INC. v. ADIDAS AG

purposes of anticipation or obviousness. Id. at 1365–66.

We explained that the “introduction of new evidence in the 

course of the trial is to be expected in inter partes review 

trial proceedings,” and that the Board at the institution 

phase “cannot predict all the legal or factual questions that 

the parties may raise during the litigation.” Id. at 1366–

67. With these considerations in mind, we concluded that 

the “Board may consider a prior art reference to show the 

state of the art at the time of the invention, regardless of 

whether that reference was cited in the Board’s institution 

decision.” Id. at 1369. But that does not relieve the Board 

of its notice obligations. 

Indeed, in Genzyme we emphasized that the “critical 

question for compliance with the APA and due process” was 

whether the patent owner received “adequate notice of the 

issues that would be considered, and ultimately resolved, 

at the hearing.” Id. at 1367 (citation omitted). Both parties 

in Genzyme “address[ed] the relevance of the [two] references” to the state of the art in their briefing and, thus, the 

patent owner “had ample notice that the references were in 

play as potentially relevant evidence and that the Board 

might well address the parties’ arguments regarding those 

references in its final written decisions.” Id. The patent 

owner had—and took advantage of—an opportunity to respond to the disputed references. 

Here, by contrast, Nike had no notice that the Board 

might rely on Spencer to teach the limitations of substitute 

claim 49. Nor did it have notice of the specific portions of 

Spencer that the Board might rely on in its decision. The 

parties did not discuss or debate the relevant portions of 

Spencer during the IPR proceeding. The facts of Genzyme 

are further distinguishable on the ground that unlike 

Spencer, the two disputed references in Genzyme “were not 

among the prior art references that the Board relied upon 

to establish any claim limitations.” Id. at 1369. Thus, the 

Board’s decision here rests exclusively on an argument that 

the Board itself raised, addressed, and decided in its 

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NIKE, INC. v. ADIDAS AG 15

decision on remand, thereby depriving Nike of “notice or an 

opportunity to be heard at a meaningful point in the proceedings.” Id. at 1367. 

As discussed above, the Board may rely on prior art of 

record in considering the patentability of amended 

claims. But in doing so, it must give the parties notice and 

an opportunity to respond. For example, prior to issuing 

its decision on remand, the Board in this case could have 

informed the parties that it intended to rely on Spencer for 

disclosing the disputed limitation of substitute claim 49,

and requested supplemental briefing from the parties regarding its proposed ground for unpatentability. Alternatively, had the Board held an oral hearing on remand, it 

could have requested that the parties be prepared to discuss Spencer in connection with substitute claim 49 at the 

hearing. Either of these actions would satisfy the APA’s 

notice requirements, but neither occurred in this case.

Accordingly, we vacate the Board’s decision as to substitute claim 49 and remand for the Board to determine 

whether substitute claim 49 is unpatentable as obvious after providing the parties with an opportunity to respond.

II

Nike also challenges the Board’s determination that its 

evidence of long-felt need was insufficient to establish the 

nonobviousness of substitute claims 47–50. After reviewing the record, we conclude that substantial evidence supports the Board’s finding that Nike failed to establish a 

long-felt need.

In addressing the issue of motivation to combine the 

prior art references, we previously noted in Nike I that

“there is no question that skilled artisans knew of the desire to reduce waste when producing wearable, knitted 

shoe uppers because that problem is expressly recognized 

in Nishida.” 812 F.3d at 1338. We agreed with the Board 

that Nishida, Schuessler I, and Schuessler II “‘serve the 

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16 NIKE, INC. v. ADIDAS AG

same purpose’ of efficiently creating knitted articles.” Id. 

at 1337 (citation omitted). We also explained that

a skilled artisan interested in Nishida’s preference 

to minimize waste in the production process would 

have logically consulted the well-known practice of 

flat-knitting, which eliminates the cutting process 

altogether. In other words, a person of skill in the 

art would have been motivated to address the problem identified in Nishida by applying the teachings 

of the Schuessler References to arrive at the invention in Nike’s proposed substitute claims.

Id. (emphasis added). Thus, this court has already determined that a skilled artisan would have adopted the flatknitting techniques taught in the Schuessler references for 

the production of knitted shoe uppers in order to minimize 

waste.

Substantial evidence supports the Board’s finding that 

other methods of minimizing waste—a problem undisputedly recognized by Nishida—had existed before the date of 

the invention. The Board found that Nishida “clearly 

teaches the benefits of reducing material waste, making 

the cutting waste a ‘simple, lightweight and inexpensive 

material.’” Remand Decision, 2018 WL 4501969, at *10 

(quoting Nishida col. 2 ll. 20–22). The Board noted that 

Nike’s arguments and evidence on long-felt need focused 

solely on Nishida and its response to the problem in the art

of making cutting waste less expensive, but ignored the 

teachings of other asserted prior art references. In particular, the Board cited Schuessler I’s disclosure of a method 

of producing a knitted helmet on a flat knitting machine

“in accordance with the disclosure in [Schuessler II].” Id. 

at *11 (quoting J.A. 997); see also Schuessler I col. 1 l. 48–

col. 2 l. 2. The helmets of Schuessler I are “completed from 

the swatches as knitted without requiring cutting, and requiring the joining of only a few edges.” Schuessler I col. 1 

ll. 22–27 (emphasis added). Thus, the Board found that 

Case: 19-1262 Document: 49 Page: 16 Filed: 04/09/2020
NIKE, INC. v. ADIDAS AG 17

“any alleged, long-felt need was met by the teachings of at 

least Schuessler I, namely, knitting textile elements ‘without requiring cutting.’” Remand Decision, 2018 WL 

4501969, at *12. This finding is supported by substantial 

evidence in the record. 

Accordingly, we affirm the Board’s determination that 

Nike’s arguments and evidence failed to demonstrate a 

long-felt but unmet need for substitute claims 47–50.

CONCLUSION

For the foregoing reasons, we vacate the Board’s determination that substitute claim 49 is unpatentable for obviousness and remand for further proceedings. We affirm 

the Board’s decision in all other respects.

AFFIRMED-IN-PART, VACATED-IN-PART, AND 

REMANDED

COSTS

No costs.

Case: 19-1262 Document: 49 Page: 17 Filed: 04/09/2020