Case: 19-1787 Document: 64 Page: 1 Filed: 06/25/2020
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`United States Court of Appeals
`for the Federal Circuit
`______________________
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`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.
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`Case: 19-1787 Document: 64 Page: 2 Filed: 06/25/2020
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`ADIDAS AG v. NIKE, INC.
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`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
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`ADIDAS AG v. NIKE, INC.
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`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” patents1—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.
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`ADIDAS AG v. NIKE, INC.
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`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
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`ADIDAS AG v. NIKE, INC.
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`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.
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`ADIDAS AG v. NIKE, INC.
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`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,
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`ADIDAS AG v. NIKE, INC.
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`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
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`ADIDAS AG v. NIKE, INC.
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`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.
`
`