Federal Circuit Interprets PTAB’s Requirements for Amending Patent Claims During IPR

In an opinion by Judge Chen in Nike, Inc. v. Adidas AG 14-1542 (Feb. 11, 2016), the Court of Appeals for the Federal Circuit (“Federal Circuit”) vacated the USPTO Patent Trial and Appeal Board’s (“the Board”) decision to deny Nike’s motion to add four substitute claims to U.S. Patent No. 7,347,011 during inter partes review, holding that Nike’s conclusory statement that the substitute claims were patentable over prior art not of record was sufficient unless Nike’s statement was a violation of its duty of candor.

At issue before the Federal Circuit was whether Nike’s conclusory statement that the proposed substitute claims are patentable over prior art not of record (but known to Nike) was sufficient. The Board denied Nike’s request to add the substitute claims, in part, because the Board did not consider Nike’s conclusory statement sufficient in view of the requirement set forth by the Board in its Idle Free decision that a patent owner must “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.” Idle Free Sys., Inc. v. Bergstrom, IPR 2012–00027, slip op. at 7 (PTAB June 11, 2013).

The Federal Circuit held that the Board did not err in requiring Nike to show that its substitute claims were patentable over the prior art of record. However, the Federal Circuit also held that unless Nike’s conclusory statement violated its duty of candor to the United States Patent Office, Nike’s statement was sufficient in view of the Board’s MasterImagedecision. The Federal Circuit pointed out that the Board clarified its Idle Free requirement by later stating in MasterImage that:

The 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 in the Office Action under 37 C.F.R. § 42.11....

MasterImage 3D, Inc. v. RealD Inc., IPR2015–00040, slip op. at 3 (PTAB July 15, 2015).

Lacking any evidence of Nike violating its duty of candor to the Patent Office, the Federal Circuit concluded that Nike’s statement was sufficient.

This holding, on its face, appears to ease the burden on the Patent Owner for amending claims during inter partes review as long as the Patent Owner complies with his ongoing duty of candor to the United States Patent Office. This may also be a sign that the Federal Circuit may play a bigger part going forward in enforcing a Patent Owner’s opportunity to provide substitute claims during inter partes review.

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