Court Opinion

ID: 4543981
Source: CourtListenerOpinion
Date Created: 2020-06-25 16:00:34.813815+00
Date Added: 2024-06-11T12:49:04.543765
License: Public Domain

Case: 19-1787   Document: 64     Page: 1   Filed: 06/25/2020

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                      ADIDAS AG,
                       Appellant

                            v.

                      NIKE, INC.,
                        Appellee
                 ______________________

                  2019-1787, 2019-1788
                 ______________________

     Appeals from the United States Patent and Trademark
 Office, Patent Trial and Appeal Board in Nos. IPR2016-
 00921, IPR2016-00922.
                  ______________________

                 Decided: June 25, 2020
                 ______________________

     MITCHELL G. STOCKWELL, Kilpatrick Townsend &
 Stockton LLP, Atlanta, GA, for appellant. Also repre-
 sented by VAIBHAV P. KADABA, MICHAEL T. MORLOCK,
 TIFFANY L. WILLIAMS.

     CHRISTOPHER J. RENK, Banner & Witcoff, Ltd., Chicago,
 IL, for appellee. Also represented by KEVIN DAM, MICHAEL
 JOSEPH HARRIS.
                   ______________________

    Before MOORE, TARANTO, and CHEN, Circuit Judges.
Case: 19-1787     Document: 64     Page: 2    Filed: 06/25/2020

 2                                      ADIDAS AG   v. NIKE, INC.

 MOORE, Circuit Judge.
      Nike, Inc. owns U.S. Patent Nos. 7,814,598 and
 8,266,749, which share a specification and are directed to
 methods of manufacturing an article of footwear with a tex-
 tile upper. See ’598 patent at 1:18–21. Adidas AG peti-
 tioned for inter partes review of claims 1–13 of the ’598
 patent and claims 1–9, 11–19 and 21 of the ’749 patent.
 The Board held that Adidas had not demonstrated that the
 challenged claims are unpatentable as obvious. Adidas ap-
 peals. Because the Board did not err in its obviousness
 analysis and substantial evidence supports its underlying
 factual findings, we affirm.
                          I. Standing
     “Although we have jurisdiction to review final decisions
 of the Board under 28 U.S.C. § 1295(a)(4)(A), an appellant
 must meet ‘the irreducible constitutional minimum of
 standing.’” Amerigen Pharm. Ltd. v. UCB Pharma GmBH,
 913 F.3d 1076, 1082 (Fed. Cir. 2019) (quoting Lujan v. De-
 fenders of Wildlife, 504 U.S. 555, 560 (1992)). As the party
 seeking judicial review, Adidas must show that it “(1) suf-
 fered an injury in fact, (2) that is fairly traceable to the
 challenged conduct [], and (3) that is likely to be redressed
 by a favorable judicial decision.” Spokeo, Inc. v. Robins,
 136 S. Ct. 1540, 1547 (2016). Nike contends that Adidas
 cannot establish an “injury in fact,” and therefore lacks
 standing to bring this appeal, because Nike “has not sued
 or threatened to sue Adidas for infringement of either the
 ’598 or the ’749 patent.” Appellant’s Br. 20. We do not
 agree.
     An appellant need not face “a specific threat of infringe-
 ment litigation by the patentee” to establish the requisite
 injury in an appeal from a final written decision in an inter
 partes review. E.I. DuPont de Nemours & Co. v. Synvina
 C.V., 904 F.3d 996, 1004 (Fed. Cir. 2018). Instead, “it is
 generally sufficient for the appellant to show that it has
 engaged in, is engaging in, or will likely engage in activity
Case: 19-1787       Document: 64   Page: 3    Filed: 06/25/2020

 ADIDAS AG   v. NIKE, INC.                                   3

 that would give rise to a possible infringement suit.” Grit
 Energy Sols., LLC v. Oren Techs., LLC, 957 F.3d 1309, 1319
 (Fed. Cir. 2020). In DuPont, we held that the appellant had
 standing because it had concrete plans to make a poten-
 tially infringing product, including actually completing the
 necessary production plant, and thus there was a substan-
 tial risk of future infringement. DuPont, 904 F.3d at 1005.
 We determined that the patent owner’s refusal to grant ap-
 pellant a covenant not to sue further confirmed that appel-
 lant’s risk of injury was not “conjectural” or “hypothetical.”
 Id.
     As in DuPont, Adidas and Nike are direct competitors.
 J.A. 2584. In 2012, Nike accused Adidas, based on Adidas’
 introduction of its “Primeknit” products, of infringing one
 of Nike’s “Flyknit” patents 1—specifically, a German pa-
 tent—and expressed its intent “to protect [Nike’s] rights
 globally in the future against further infringing acts” by
 Adidas. J.A. 2585–86; 2591–2613. Adidas markets shoes
 that contain Primeknit-based uppers in the United States.
 J.A. 2587. Although Nike has not yet accused Adidas of
 infringing the ’598 or ’749 patents, Nike has asserted the
 ’749 patent against a third-party product similar to Adidas’
 footwear. J.A. 2587–90, 2678–93. In 2019, Nike told this
 court that “five months after [it] announced FLYKNIT,
 [A]didas announced a similar product of its own that it
 called ‘Primeknit.’” J.A. 2587 (emphasis added). Moreover,
 Nike has refused to grant Adidas a covenant not to sue,
 confirming that Adidas’ risk of infringement is concrete
 and substantial. See DuPont, 904 F.3d at 1005. We there-
 fore conclude that Adidas has Article III standing to bring
 this appeal.

     1  Nike has a portfolio of “more than 300 issued utility
 patents,” including the ’749 patent, directed to its Flyknit
 technology. J.A. 2652.
Case: 19-1787    Document: 64      Page: 4    Filed: 06/25/2020

 4                                       ADIDAS AG   v. NIKE, INC.

                       II. Obviousness
     The challenged claims recite a method of “mechani-
 cally-manipulating a yarn with a circular knitting ma-
 chine . . . to form a cylindrical textile structure.” ’598
 patent at 3:41–46. The claimed method involves removing
 a textile element from the textile structure and incorporat-
 ing it into an upper of the article of footwear. Id. at 3:41–
 46. Claims 4 and 11 of the ’598 patent and claims 11 and
 21 of the ’749 patent (collectively, the Unitary Construction
 Claims) require that the textile element is a single material
 element wherein portions of the textile element have dif-
 ferent textures and “are not joined together by seams or
 other connections.” Id. at 5:40–43, 6:41–50. The other
 challenged claims (collectively, the Base Claims) are not so
 limited.
     Claim 1 of the ’598 patent is illustrative of the Base
 Claims:
     1. A method of manufacturing an article of foot-
     wear, the method comprising steps of:
     mechanically-manipulating a yarn with a circular
     knitting machine to form a cylindrical textile struc-
     ture;
     removing at least one textile element from the tex-
     tile structure;
     incorporating the textile element into an upper of
     the article of footwear.
 ’598 patent at Claim 1. Claim 4 of the ’598 patent is illus-
 trative of the Unitary Construction Claims:
     4. The method recited in claim 1, wherein the step
     of mechanically manipulating includes forming the
     textile element to include a first area and a second
     area with a unitary construction, the first area be-
     ing formed of a first stitch configuration, and the
     second area being formed of a second stitch
Case: 19-1787       Document: 64    Page: 5   Filed: 06/25/2020

 ADIDAS AG   v. NIKE, INC.                                  5

    configuration that is different from the first stitch
    configuration to impart varying textures to a sur-
    face of the textile element.
 ’598 patent at Claim 4.
      Adidas challenged the claims as obvious in view of:
 (1) the combination of U.S. Patent Nos. 3,985,003 (Reed)
 and 5,345,638 (Nishida) (Ground 1) and (2) the combina-
 tion of Nishida and U.S. Patent Nos. 4,038,840 (Castello)
 and 6,330,814 (Fujiwara) (Ground 2). 2 The Board held that
 Adidas had not demonstrated that the challenged claims
 are unpatentable as obvious under either ground. We re-
 view the Board’s legal determinations de novo and its fac-
 tual findings for substantial evidence. In re Van Os, 844
 F.3d 1359, 1360 (Fed. Cir. 2017). “Obviousness is a ques-
 tion of law based on underlying facts.” Arctic Cat Inc. v.
 Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1358
 (Fed. Cir. 2017).
                             A. Ground 1
     The Board held that Adidas had not established the un-
 patentability of the challenged claims under Ground 1 be-
 cause Adidas had not demonstrated that a person of
 ordinary skill in the art would have been motivated to com-
 bine Reed and Nishida. See J.A. 91, 214. In particular, the
 Board noted that neither Adidas nor its declarant, Mr.
 Holden, “addresses the fact that each of the relied upon

    2    The Board initially declined to institute review on
 Ground 2 because it was insufficiently particular.
 J.A. 389–91, 414–16. The Board issued final written deci-
 sions on Ground 1 and Adidas appealed. We remanded in
 view of SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018),
 for the Board to “issue a decision as to all grounds raised
 in Adidas’ petitions.” See Adidas AG v. Nike, Inc., 894 F.3d
 1256, 1257 (Fed. Cir. 2018). This appeal concerns the
 Board’s final written decisions after remand.
Case: 19-1787    Document: 64     Page: 6    Filed: 06/25/2020

 6                                     ADIDAS AG   v. NIKE, INC.

 embodiments of Reed teaches pre-seaming” whereas
 Nishida involves seaming the textile element after it has
 been cut from the textile structure. J.A. 89, 210. With re-
 spect to the Unitary Construction Claims, the Board fur-
 ther found that Adidas failed to show a motivation to
 combine Reed and Nishida because the “unitary construc-
 tion” limitation excludes seams of the type taught in Reed.
 J.A. 90, 211. The Board therefore determined that combin-
 ing Reed with Nishida would “require the alteration of the
 principles of operation of Reed or would render Reed inop-
 erable for its intended purpose.” J.A. 93–95.
     Adidas contends that substantial evidence does not
 support the Board’s motivation to combine findings. It ar-
 gues that Reed and Nishida are entirely compatible be-
 cause they both discuss knitting in multiple layers and that
 a skilled artisan would be motivated to combine the refer-
 ences to reduce waste. With respect to the Base Claims,
 Adidas argues that the pre-seaming differences between
 Reed and Nishida are irrelevant in view of the Board’s con-
 struction of the Base Claims as “encompass[ing] methods
 related to both pre-seamed and unseamed garments and
 garment sections.” See J.A. 88, 210. It argues that in view
 of the Board’s construction, all that was necessary was ev-
 idence of a suggestion to extend the teachings of Reed to
 produce a textile element for incorporation into a footwear
 upper. We do not agree.
     The obviousness inquiry does not merely ask whether
 a skilled artisan could combine the references, but instead
 asks whether “they would have been motivated to do so.”
 InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327,
 1352 (Fed. Cir. 2014). Fundamental differences between
 the references are central to this motivation to combine in-
 quiry. Thus, while the Board construed the Base Claims
 as encompassing pre-seamed and unseamed garments and
 garment sections, the Board properly considered the fun-
 damental differences in the seaming techniques of Reed
 and Nishida. Rather than address these differences,
Case: 19-1787       Document: 64    Page: 7   Filed: 06/25/2020

 ADIDAS AG   v. NIKE, INC.                                  7

 Adidas merely cites to “Reed’s other objects” concerning
 cost reduction and garment production, which the Board
 already considered and rejected. See, e.g., J.A. 87–88. In
 view of the undisputed evidence of the pre-seaming differ-
 ences between Reed and Nishida, we conclude that sub-
 stantial evidence supports the Board’s motivation to
 combine findings with respect to the Base Claims. Because
 the Unitary Construction Claims depend from the inde-
 pendent Base Claims, we conclude that substantial evi-
 dence supports its motivation to combine findings with
 respect to the Unitary Construction Claims.
                             B. Ground 2
     The Board determined that Adidas had also not estab-
 lished the unpatentability of the challenged claims under
 Ground 2 in part because Adidas failed to identify which
 reference or combination of references it was relying on to
 disclose each limitation of the challenged claims. J.A. 99,
 221. The Board further found that Adidas failed to estab-
 lish that a person of ordinary skill in the art would have
 been motivated to combine “the teachings of Nishida and
 Castello regarding unseamed garment portions with the
 teachings of Fujiwara regarding pre-seamed garments.”
 J.A. 112, 236. In view of the different seaming techniques,
 the Board found that modifying Castello in view of Fuji-
 wara would “change the principles under which Castello
 operates.” J.A. 113, 236.
     Adidas contends that substantial evidence does not
 support the Board’s motivation to combine findings. It ar-
 gues that a skilled artisan would have been motivated to
 “modify Castello’s method to include additional features
 described by Fujiwara and Nishida to reduce cost and
 waste and to extend well-known knitting techniques and
 machinery to produc[e] uppers.” J.A. 1299 ¶ 206. As with
 Ground 1, Adidas contends that “preseamed versus un-
 seamed garment portions have no bearing” on the proposed
Case: 19-1787    Document: 64      Page: 8    Filed: 06/25/2020

 8                                     ADIDAS AG   v. NIKE, INC.

 motivations to combine. Appellant’s Br. 60. Adidas’ con-
 tentions are unavailing.
     As the Board found, Adidas relies upon disclosures of
 Castello that do not teach pre-seaming. In contrast, “the
 intended purpose of Fujiwara’s methods is to produce pre-
 seamed, substantially finished garments.”         J.A. 112;
 J.A. 1370 at 1:53–55, 1371 at 3:14–18 (stating that the goal
 of Fujiwara’s invention is to reduce the need for stitching).
 As explained with respect to Ground 1, the Board properly
 considered these fundamental differences in seaming tech-
 niques as part of its motivation to combine inquiry. Be-
 cause Adidas failed to reconcile these differences, we
 conclude that the Board’s motivation to combine findings
 are supported by substantial evidence. 3
                        CONCLUSION
     We have considered the parties’ remaining arguments
 and do not find them persuasive. Because the Board did
 not err in its obviousness analysis and substantial evidence
 supports its underlying factual findings, we affirm.
                         AFFIRMED

     3  Because we conclude that the Board’s motivation to
 combine findings are supported by substantial evidence,
 we do not reach the Board’s alternative determination re-
 garding the particularity of Ground 2.