Court Reaffirms Decision in Proxyconn  That Patent Owner Has Burden to Establish Patentability of Proposed Substitute Claims

Author: Shawn S. Chang
Editor: Jeff T. Watson

In Nike, Inc. v. Adidas AG, No. 14-1719 (Fed. Cir. Feb. 11, 2016), the Federal Circuit reaffirmed the Patent Trial and Appeal Board’s interpretation of 37 C.F.R. § 42.20(c), and the Court’s prior decision in Proxyconn, in placing the burden on the patent owner to establish patentability over the prior art of proposed substitute claims.

In reaching its decision, the Federal Circuit explained that the very nature of IPR is distinctly different from a typical PTO examination or reexamination, where a patent examiner conducts a patentability analysis of all claims—substitute claims proposed in IPR are not subject to further examination. The Court also explained that, under 35 U.S.C. § 316(a)(9), the patent owner has an obligation to provide “information…in support of any amendment.” According to the Court, this indicates that the patent owner carries an affirmative duty to justify why newly drafted claims should be entered into the proceeding. The Court rejected Nike’s argument that 35 U.S.C. § 316(e) places on the petitioner the burden of proving unpatentability of newly proposed substitute claims, noting that that provision relates to “those issued claims that were actually challenged in the petition for review and for which the Board instituted review.”

The Federal Circuit also held that, absent an allegation of conduct violating the duty of candor, a simple statement from the patent owner may be sufficient to meet the requirement that the patent owner persuade the Board that the proposed substitute claim is patentable over prior art not of record but known to the patent owner, thus rejecting the Board’s conclusion that Nike’s motion should have addressed specific prior art references not of record.

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