[00:00:00] Speaker 00:
The next case for argument is 21-1903, 19 versus Adidas.

[00:00:03] Speaker 00:
Mr. Harris, whenever you're ready.

[00:00:10] Speaker 00:
I think you're ready to begin.

[00:00:20] Speaker 04:
Good morning.

[00:00:20] Speaker 04:
May it please the court.

[00:00:22] Speaker 04:
The board committed a number of errors that weren't reversal, including two legal errors that we plan to focus on this morning.

[00:00:32] Speaker 04:
First, the board legally erred when it relieved Adidas, an active petitioner of the burden of persuasion.

[00:00:43] Speaker 04:
Now, to frame this issue, we don't think there's any dispute that the law is settled, that a petitioner bears the burden of persuasion for patentability propositions that it itself raises.

[00:00:56] Speaker 04:
The question for today.

[00:00:57] Speaker 00:
And that is Bosch?

[00:00:59] Speaker 04:
That's Bosch.

[00:01:01] Speaker 04:
The question for today is if the board, sua sponte, raises a non-patentability proposition, which it's allowed to do.

[00:01:10] Speaker 04:
That's Nike 2.

[00:01:12] Speaker 04:
Does that remove the burden of persuasion from an active petitioner like it is?

[00:01:18] Speaker 00:
Well, let me ask you.

[00:01:19] Speaker 00:
OK, so we're putting things into buckets here.

[00:01:21] Speaker 00:
So let me look at it the other way.

[00:01:24] Speaker 00:
Would you agree there's no dispute that the petitioner has dropped out?

[00:01:29] Speaker 00:
There's no burden on the petitioner.

[00:01:30] Speaker 00:
The board does what it's good here.

[00:01:32] Speaker 04:
Yeah, Your Honor, certainly we acknowledge there are instances where the adversarial process that Congress envisioned for IPRs breaks down.

[00:01:45] Speaker 04:
And I think the Supreme Court has identified one of those instances.

[00:01:53] Speaker 00:
OK, so we agree with that.

[00:01:54] Speaker 04:
Yeah, that's not the issue.

[00:01:56] Speaker 00:
And what about if the petitioner kind of remains in the case, hasn't dropped out of the case,

[00:02:02] Speaker 00:
but they don't oppose the amendment at all.

[00:02:04] Speaker 00:
You would agree that's the same thing.

[00:02:07] Speaker 04:
Again, that's not the case before us today.

[00:02:10] Speaker 04:
That may be an instance where the adversarial process that Congress intended is no longer in place.

[00:02:18] Speaker 00:
So the slice we're looking at here is the circumstance in which there's still a petitioner in the case.

[00:02:24] Speaker 00:
The petitioner has opposed the motion to amend, and it's just a matter of

[00:02:31] Speaker 00:
this last round, you're suggesting that there's no dispute.

[00:02:34] Speaker 00:
You can ask the other side about the stuff that it put forward.

[00:02:38] Speaker 00:
It's got the burden of persuasion on that.

[00:02:40] Speaker 00:
It's just a matter of this other limited category, correct?

[00:02:44] Speaker 04:
We see that as the dispute, the question for today.

[00:02:47] Speaker 01:
Can I ask you a question?

[00:02:48] Speaker 01:
What if we think, no matter who has the burden here, well, let's say, think this way.

[00:02:54] Speaker 01:
What if you're right and Adidas had the burden here, but they satisfied it, like after the ward

[00:03:02] Speaker 01:
presented, here's a potential ground.

[00:03:04] Speaker 01:
And we said, hey, you've got to let the parties comment on that.

[00:03:07] Speaker 01:
And then Adidas went ahead and commented on it, presented evidence, presented argument.

[00:03:12] Speaker 01:
And that was enough to satisfy their burden of proof.

[00:03:15] Speaker 01:
Then why do we even need to address the question you're asking?

[00:03:18] Speaker 01:
You're asking us to make sure that they had the burden.

[00:03:22] Speaker 01:
And no matter what, they satisfied.

[00:03:24] Speaker 01:
So why wouldn't anything be harmless here?

[00:03:27] Speaker 04:
Your Honor, respectfully, because that's not what the board did.

[00:03:31] Speaker 04:
We don't know what that final written decision would have looked like if the board had conducted that analysis with the burden on Adidas.

[00:03:44] Speaker 05:
If the board did write a decision that, in fact, did summarize all of the petitioner's arguments and the patent owner's arguments, and then ultimately agreed with the petitioner's arguments and then rejected the patent owner's arguments and explained its reasons why, and then we were to look at such a board decision and conclude that the board was, in fact,

[00:04:16] Speaker 05:
matching up its findings with the very arguments that the petitioner itself raised, then the question still stands, would it make a difference?

[00:04:30] Speaker 05:
To follow up on Judge Stuhl's question, let's treat it as a hypothetical.

[00:04:35] Speaker 05:
What if that is the nature of the board's decision?

[00:04:38] Speaker 05:
Then would you agree that this whole burden assignment question is not relevant to resolving the case if that's the way the board decision could be read, i.e.

[00:04:51] Speaker 05:
it in fact followed and adopted the very arguments the petitioner made?

[00:04:56] Speaker 04:
So in this hypothetical, the board is determining that the petitioner came forward with evidence that would have satisfied a burden of persuasion if the burden was on that petitioner.

[00:05:08] Speaker 04:
That's obviously not the case before us.

[00:05:11] Speaker 04:
In that hypothetical, I don't know how that would come out.

[00:05:15] Speaker 04:
But I think that generally speaking, it still matters.

[00:05:19] Speaker 04:
where the burden lies for an adversarial proceeding like this one.

[00:05:25] Speaker 04:
And here's why, Your Honor.

[00:05:26] Speaker 04:
If the burden is on the petitioner, the active petitioner,

[00:05:32] Speaker 04:
which is where we think it should be, because that petitioner is best positioned and incentivized to come forward with evidence supporting an unpatentability proposition, even if it's one that the board raises, because the petitioner is ultimately going to be bearing the burden of estoppel if that proposition is unsuccessful.

[00:05:52] Speaker 04:
In this case, for instance, the proposition that the board, Sue Espante, raised in the previous Nike 2Ks was whether skipping stitches to form apertures was a well-known technique to a skilled artisan.

[00:06:09] Speaker 04:
On remand, Adidas didn't come forward with any additional evidence, such as expert opinions, expert testimony on what a skilled artisan

[00:06:20] Speaker 04:
would think about skipping stitches or whether that would be, uh, well known to a skilled artist.

[00:06:26] Speaker 04:
And as a result, they were left with attorney argument.

[00:06:29] Speaker 05:
Well, what was wrong with just doing the quotes from the Spencer textbook itself, which is in fact what the board did when it initially did the analysis.

[00:06:39] Speaker 04:
Yeah.

[00:06:40] Speaker 04:
What's wrong with that is what the board in fact did was said, they looked at Adidas as attorney argument.

[00:06:45] Speaker 04:
no expert opinion, no other evidence.

[00:06:48] Speaker 04:
I looked at Adidas' attorney argument.

[00:06:50] Speaker 04:
Adidas' attorneys are not skilled lawyers.

[00:06:52] Speaker 05:
I just want to stop you for a second, because it feels like your response is sort of sliding into a different zone, which is trying to make the case for why the ground of rejection is flawed on an evidentiary.

[00:07:07] Speaker 05:
And really, the argument that I'm trying to understand is, why does the burden assignment question even matter if Adidas, in its remand response, said the identical thing that the board ultimately found, both in its second final written decision and then the third final written decision upon appeal?

[00:07:31] Speaker 05:
I don't understand why it makes any difference.

[00:07:34] Speaker 04:
And I agree with you.

[00:07:35] Speaker 04:
I was sliding into the substantial evidence.

[00:07:38] Speaker 05:
So let's stay with my question.

[00:07:40] Speaker 04:
But I think the answer to your question is by removing the burden from Adidas' active petitioner, the board converted or changed this proceeding from an adversarial proceeding to more of an examination proceeding.

[00:07:55] Speaker 04:
which resulted in the substantial burden error, which is a different burden.

[00:08:00] Speaker 01:
Well, where was the burden removed?

[00:08:01] Speaker 01:
Your view is, is it your view?

[00:08:03] Speaker 01:
I'm just trying to make sure I understand.

[00:08:05] Speaker 01:
I feel like maybe your view is that because the board is the one that initially identified these particular grounds, that means the petitioner automatically didn't satisfy their burden of proof.

[00:08:16] Speaker 04:
Well, the petitioner didn't raise that unpatentability proposition.

[00:08:20] Speaker 01:
So that's true.

[00:08:22] Speaker 01:
But that ship is sailed in 1992.

[00:08:25] Speaker 01:
This court held that the board could respond to erase those grounds, but had to give the parties notice and ability to comment, respond.

[00:08:32] Speaker 01:
So what if in response, then, on remand, then the petitioner presents what would otherwise be?

[00:08:42] Speaker 01:
Setting the procedural history aside, what would have otherwise been a case where they satisfied their burden of proof?

[00:08:49] Speaker 04:
Yes, and we agree with that.

[00:08:50] Speaker 04:
If the board sua sponte raises an unpatentability proposition, it must give the party's notice an opportunity to respond, including the active petitioner.

[00:09:03] Speaker 04:
And at that point, the petitioner can come forward with additional evidence.

[00:09:07] Speaker 01:
Why do they have to have additional evidence?

[00:09:09] Speaker 01:
What is your ground for that?

[00:09:10] Speaker 01:
Why do they have to have additional evidence?

[00:09:12] Speaker 01:
As Judge Chen said, why isn't it enough

[00:09:14] Speaker 01:
but they satisfy their burning of proof.

[00:09:16] Speaker 01:
It might be that they're parroting what the board said, but they're satisfying their burning of proof by citing the reference itself.

[00:09:23] Speaker 04:
Understood, Your Honor.

[00:09:23] Speaker 04:
And I'm not suggesting that they must absolutely come forward with new evidence.

[00:09:27] Speaker 04:
My point is that they have the opportunity to do that.

[00:09:30] Speaker 04:
And in this adversarial proceeding that Congress envisioned,

[00:09:34] Speaker 04:
they're best incentivized to come forward this with evidence.

[00:09:38] Speaker 04:
And they may not need to do that in all instances, but there may be instances where the board raises, sua sponte, a proposition of unpatentability.

[00:09:48] Speaker 04:
And it makes sense for the petitioner to come forward with additional evidence to support that proposition.

[00:09:53] Speaker 01:
Right, but they're not required.

[00:09:54] Speaker 01:
They're not required.

[00:09:55] Speaker 01:
It's the only question.

[00:09:57] Speaker 01:
So you agree that it doesn't matter that the board raised

[00:10:02] Speaker 01:
the issue, that's not going to impair, that itself is not going to impact the petitioners, whether they've satisfied the burden of the proof.

[00:10:10] Speaker 04:
That's correct, yeah.

[00:10:11] Speaker 04:
Our position is that regardless of whether the board raises, Sue Espante raises the proposition, the burden remains on an active petitioner.

[00:10:22] Speaker 00:
Don't you think I mean if you and I'm enlightened in this regard by the rulemaking Proceeding that they adopted which obviously doesn't apply to this case, but I think it's a very close cousin and I Assume that it may be that the board we didn't speak to this explicitly in Nike

[00:10:42] Speaker 00:
But once you allow, as we clearly, as Judge Stoll said, that ship has sailed, the board to sue responde come up with its own grounds that have not been put forward by the petitioner, even where he's opposing the motion to amend, that that takes this out of the sort of adversarial realm

[00:11:03] Speaker 00:
So maybe they thought it made more sense.

[00:11:06] Speaker 00:
I mean, are there any other areas of law where a third party comes up with the ground, and then the other side has the burden of persuasion for that ground?

[00:11:15] Speaker 00:
I mean, if the board is allowed to raise this, then presumably,

[00:11:21] Speaker 00:
It can go forward, and we said, even when the petitioner is gone.

[00:11:25] Speaker 00:
So I think logic, at least, and rules of law seem to, at least in my mind, further the board's realizing this has to be a different camp.

[00:11:37] Speaker 00:
And that's why it doesn't make sense to particularly ascribe a burden of persuasion here.

[00:11:43] Speaker 04:
Your Honor, the Patent Office's subsequent rulemaking around this issue, what we think is really interesting, the rule that the office has since entered does not say that the burden of persuasion is no longer

[00:12:00] Speaker 04:
on the petitioner, an active petitioner, if the board sua sponte raises an unpatentability proposition.

[00:12:06] Speaker 04:
The authors could have done that.

[00:12:07] Speaker 04:
It was obviously an issue at the time.

[00:12:10] Speaker 04:
And they chose not to include that language.

[00:12:12] Speaker 00:
Well, I'm going to ask them about that, too, because I don't accept that necessarily as correct.

[00:12:18] Speaker 00:
But let's see what they say about that.

[00:12:20] Speaker 00:
I mean, they do have language there that says, irrespective of what the provisions are for the burden, the board can do this.

[00:12:27] Speaker 00:
So that suggests that those

[00:12:30] Speaker 00:
Burdens and A and B or whatever it is in the rule don't apply to the circumstance.

[00:12:35] Speaker 00:
But we'll ask them if they're wrong.

[00:12:36] Speaker 05:
Here's another hypothetical.

[00:12:38] Speaker 05:
What if the board here had decided that the burden of persuasion really should be on Adidas?

[00:12:48] Speaker 05:
How would this poor decision have looked different, substantively?

[00:12:52] Speaker 04:
I think it would have looked different because the decision would have been, Adidas has only provided attorney argument on what a skilled artisan would think or how a skilled artisan would interpret what the party's dispute was disclosed in Spencer.

[00:13:06] Speaker 04:
And that attorney argument alone isn't enough to overcome or to satisfy

[00:13:11] Speaker 04:
the burden of persuasion that should have properly been on Adidas.

[00:13:15] Speaker 00:
Isn't yesterday that informed by, I mean, you would acknowledge, would you not, that the patent owner has a burden of production, arguably, in these circumstances, right?

[00:13:24] Speaker 00:
I mean, the board has come up with something.

[00:13:28] Speaker 00:
Doesn't that, what the petitioner, what you think the petitioner has to come forward with, rely on how much the patent owner has to say?

[00:13:37] Speaker 00:
Will the patent owner comes forward with an amended or proposed substitute claims and has to satisfy certain came up here and identified for itself Spencer and gave some argument just so the rationale for why Spencer applies here and is very relevant and persuasive

[00:13:55] Speaker 00:
doesn't the patent owner, in order to ascertain how much more the petitioner needs to come forward with, isn't that, as a practical matter, contingent on what the patent owner has to say?

[00:14:06] Speaker 04:
Well, if the burden is on, respectfully, Your Honor, if the burden's on the petitioner and the petitioner hasn't come forward with any evidence, for instance in this case, to support or establish how a skilled artisan would understand Spencer.

[00:14:19] Speaker 00:
So your answer is the patent owner didn't have to say anything on remand and case over.

[00:14:25] Speaker 00:
Because the petitioner hasn't come up with any expert testimony.

[00:14:30] Speaker 04:
Well, or some type of evidence.

[00:14:31] Speaker 04:
It could have been expert testimony.

[00:14:33] Speaker 04:
Some type of evidence to show how a skilled arson would understand Spencer, and whether a skilled arson would understand Spencer, to establish that skipping stitches to form apertures was not only a well-known technique.

[00:14:45] Speaker 05:
I would acknowledge that petitioners aren't required to have expert testimony in an IPR.

[00:14:51] Speaker 05:
And that if the references are self-evident enough, then that's good enough for the board to make fact findings on what the reference teaches.

[00:15:00] Speaker 04:
We certainly agree that there's no obligation to have expert opinion, expert testimony.

[00:15:06] Speaker 04:
I'm just using that as an example.

[00:15:08] Speaker 04:
But quickly, I would like to just address the second legal issue, which is

[00:15:15] Speaker 04:
The same legal issue that this court found, the board committed in the first remand, and that is the APA violation.

[00:15:22] Speaker 04:
In the first remand, the court found that the board violated the APA's requirements of notice and opportunity to respond because, quote, the board did not provide Nikea of, quote, the specific portions of Spencer that the board might rely on in its decision.

[00:15:40] Speaker 04:
At that time, we were debating whether Spencer disclosed or taught skipping stitches to form apertures was a well-known technique.

[00:15:47] Speaker 04:
So we debated that.

[00:15:48] Speaker 04:
The parties debated that on remand.

[00:15:50] Speaker 04:
And that was the only portion of Spencer.

[00:15:53] Speaker 04:
The board identified a couple pages of Spencer for that proposition.

[00:15:56] Speaker 04:
That's the only thing we debated on remand.

[00:15:58] Speaker 04:
In the board's final written decision,

[00:16:01] Speaker 04:
The board relied on previously unidentified portions of Spencer, pages 113 and 194, for the proposition that a skilled artisan would have been motivated to combine Spencer with the other three references, Nishida, Schussler 1, and Schussler 2, because Spencer taught a desire to minimize waste.

[00:16:20] Speaker 04:
This was the first time that the board had raised that argument.

[00:16:23] Speaker 04:
Now, Adidas is going to say, oh, well, we raised that argument in our remand briefing.

[00:16:28] Speaker 04:
They didn't cite those pages of Spencer.

[00:16:30] Speaker 04:
The first time those pages in Spencer were cited for the board's support for the board's proposition, we're in the final written decision.

[00:16:38] Speaker 04:
And there's an inherent inconsistency in Adidas's argument.

[00:16:42] Speaker 04:
On one hand, they're saying, we didn't raise it so we don't bear the burden.

[00:16:45] Speaker 05:
And on the other hand, what if we were to look at that motivation basis now?

[00:16:51] Speaker 05:
as a backup basis because there was the primary basis for combining Spencer with the other references and that was that it was a known way of creating apertures and this kind of material

[00:17:06] Speaker 05:
And there was just a finite number of ways to create these kinds of apertures.

[00:17:11] Speaker 05:
So it'd be obvious to use any one of them, including the way that's taught by Spencer.

[00:17:16] Speaker 05:
That's the primary basis that the board relied upon.

[00:17:19] Speaker 05:
And then there was a backup one, which was this idea of limiting the amount of waste.

[00:17:24] Speaker 05:
So even if you are right that there's some possible procedural defect in that articulation of the motivation, there's nevertheless the primary one that you've got to get over.

[00:17:36] Speaker 04:
So your honor, respectfully, this is that page, the last paragraph of the board's final written decision, appendix 36, spans over to appendix page 37.

[00:17:45] Speaker 04:
And we respectfully disagree with that interpretation of that paragraph.

[00:17:53] Speaker 04:
The board did not say, we have a primary motivation to combine all four references, and we have a secondary motivation to combine all four references.

[00:18:01] Speaker 04:
Instead, what the board said in the first portion of that paragraph is that,

[00:18:06] Speaker 04:
Because, in the board's opinion, skipping stitches to form apertures was a well-known technique, a skilled artist would have used that technique in Nishida.

[00:18:15] Speaker 04:
And then in the next sentence, which spans onto appendix page 37 of the decision, the board went on to say, and because all four of these references

[00:18:26] Speaker 04:
are motivated by or teach minimizing ways, the skilled artisan would have been motivated to combine all four references to get to the ultimate unpatentability proposition.

[00:18:38] Speaker 04:
Thank you, Your Honor.

[00:18:41] Speaker 00:
Will we start somewhere else?

[00:18:43] Speaker 04:
Oh, thank you very much.

[00:18:50] Speaker 05:
Thank you.

[00:18:52] Speaker 05:
Is time being split here?

[00:18:53] Speaker 00:
On the other side?

[00:18:54] Speaker 00:
On the other side, yes.

[00:19:00] Speaker 00:
Sorry.

[00:19:02] Speaker 00:
And oddly, the office has only reserved three minutes for itself and 12 minutes for the other side.

[00:19:21] Speaker 00:
And that may be a little skewed given the kind of questions we may have.

[00:19:25] Speaker 00:
So that may need to be adjusted.

[00:19:27] Speaker 03:
Certainly, Your Honor.

[00:19:33] Speaker 03:
May it please the court, Michael Moorlach for Appellee Adidas AG.

[00:19:38] Speaker 03:
And I will start right where Nike left off on the issue of notice, specifically.

[00:19:45] Speaker 01:
I actually want to ask you a question.

[00:19:47] Speaker 01:
I want to know if you know in an adversarial process where there's two parties that are actively participating, are you aware of any circumstances in which there's no burden of proof provided to either party or anybody?

[00:20:02] Speaker 03:
I am not aware of such a proceeding, Your Honor.

[00:20:06] Speaker 03:
But in this instance, I don't think the ultimate, in these specific facts, it makes a difference.

[00:20:14] Speaker 03:
Because regardless of where the burden would lie here, the board fully analyzed Adidas's arguments, fully analyzed Nike's arguments, and sided with Adidas.

[00:20:25] Speaker 03:
So regardless of where the burden would lie, the ultimate outcome would be the same.

[00:20:30] Speaker 03:
It would just be harmless error if the burden were to be placed somewhere else.

[00:20:35] Speaker 00:
Well, just following up on Judge Stoll's question, another way to look at it is, I guess, the extent to which we have proceedings where the third party gets to raise contentions not made by the person who ultimately may have the burden of persuasion, and how the burden allocation works in that circumstance.

[00:20:59] Speaker 00:
which is as I said something maybe the board is the PTO is prepared to answer.

[00:21:05] Speaker 00:
Do you have any information, do you have any knowledge of the regulations which don't apply to this case but obviously you're out there?

[00:21:13] Speaker 03:
I do not, Your Honor.

[00:21:15] Speaker 00:
And I guess the second part of that question is, do you happen to know in the last PTO, following up on Judge Chen's question on the earlier case, is this a one-off?

[00:21:27] Speaker 00:
In other words, we've got the regulations that went into effect sometime shortly after this.

[00:21:33] Speaker 00:
They didn't affect Huntington Titan.

[00:21:39] Speaker 00:
require the board to reliance on this board decision as opposed to the virtual Kramer.

[00:21:46] Speaker 03:
Your Honor, I am not aware of others.

[00:21:48] Speaker 03:
My suspicion is that this is a bit of a spotted cow and that we've got

[00:21:54] Speaker 03:
amended claims and a ground of rejection raised to espante so I think it's unlikely there are others but I don't know.

[00:22:03] Speaker 00:
I urge you to sort of make sure the board has enough time to answer the PTO has enough time to answer but let me ask you about the arguments your friend was making this goes to I guess you're saying harmless error this doesn't matter

[00:22:18] Speaker 00:
And so what do you say to your friend's argument about your not having put forth enough evidence so that you could even arguably say that you met the burden of persuasion?

[00:22:30] Speaker 03:
That's incorrect, Your Honor.

[00:22:32] Speaker 03:
Adidas presented detailed citations to record evidence, both from the Nishida prior art reference that had already been considered and had already

[00:22:44] Speaker 03:
been acknowledged to disclose every element of the claims, including apertures for receiving laces, just not disclosing specifically how those apertures were formed.

[00:22:55] Speaker 00:
So didn't you need expert testimony to put that all together in order to satisfy, arguably, a burden of persuasion?

[00:23:03] Speaker 03:
No, Your Honor, because it's clear from the references.

[00:23:05] Speaker 03:
It's just common sense looking at Spencer's specific disclosure of forming an aperture

[00:23:12] Speaker 03:
using an open work structure that's appendix site 799 and then the very next page on appendix site 800 Explaining that with the exact words were empty needles Could be used to form an open work structure an empty needle I mean that that's the same as omitting a stitch and That's common sense.

[00:23:35] Speaker 03:
That's not something that an expert has to articulate in order to carry the burden

[00:23:44] Speaker 05:
What does empty needle mean?

[00:23:46] Speaker 05:
Does empty needle mean that there's an attempt at a stitch being made, but there's no yarn attached to the needle?

[00:23:54] Speaker 05:
And so therefore, it's an attempt at making a stitch, but it's actually no stitches being made.

[00:24:04] Speaker 03:
Yes, and Your Honor, we're talking about knitting.

[00:24:07] Speaker 03:
And with knitting, if there is an empty needle, there is no thread.

[00:24:12] Speaker 03:
There is no stitch being made.

[00:24:14] Speaker 03:
So it's exactly omitting stitches just without using the Ipsis-Verbus test for omitting stitches.

[00:24:24] Speaker 01:
I don't recall there being any dispute about that factually.

[00:24:27] Speaker 01:
Am I correct?

[00:24:29] Speaker 01:
That there was agreement that an empty needle means omitting a stitch.

[00:24:34] Speaker 03:
I think that's correct, Your Honor.

[00:24:36] Speaker 03:
I think that's exactly what is expressly described in the reference and not disputed.

[00:24:40] Speaker 05:
I'm going to guess Nike is going to come up and say otherwise.

[00:24:44] Speaker 03:
Possibly, yes, Your Honor.

[00:24:48] Speaker 03:
With respect to the notice issue, I just wanted to quickly highlight there are two specific grounds for motivations to combine identified in Adidas's briefing and also relied upon by the board

[00:25:03] Speaker 03:
The first, this is Adidas' brief below in Appendix 2619 through 2620, Adidas described that omitting stitches was a well-known technique and that it was simple substitution of one well-known technique for

[00:25:20] Speaker 03:
what a Nike's expert had testified occurred in Nishida, which was cutting a hole.

[00:25:27] Speaker 03:
That's something Nike can't argue that it didn't have notice of because it was addressed in detail in the prior remand proceeding.

[00:25:35] Speaker 03:
That's exactly what the board found.

[00:25:37] Speaker 03:
Adidas then raised what it described as an additional motivation to combine, and that was minimizing waste.

[00:25:44] Speaker 03:
And as Nike's counsel acknowledged, they had full notice of that through Adidas's briefing.

[00:25:50] Speaker 03:
Now, Nike's argument seems to be what I heard when the counsel was here speaking before, is the two CEG sites.

[00:25:58] Speaker 03:
And those were cited for the first time in the board's final written decision.

[00:26:03] Speaker 03:
But Nike's complaint with that is based on a misreading of what this court's decision in Nike 2 said.

[00:26:10] Speaker 03:
There, the direct quote is that,

[00:26:15] Speaker 03:
The party, the board had to give notice of the issue, an opportunity for the parties to respond before issuing a final written decision.

[00:26:22] Speaker 03:
That's at page 51 of Nike 2.

[00:26:27] Speaker 03:
And the board identified, or this court identified specific examples of what would meet that notice.

[00:26:34] Speaker 03:
It wasn't requiring the board to identify

[00:26:36] Speaker 03:
every pen site on which it might rely, it was simply inform the parties that the board intended to rely on Spencer for disclosing disputed limitation of substitute claim 49 and request supplemental briefing from the parties regarding its proposed ground for unpatentability.

[00:26:55] Speaker 03:
That's page 54 of Nike 2.

[00:26:57] Speaker 03:
That's exactly what the board did here.

[00:27:02] Speaker 00:
I want to turn to the Patent Office.

[00:27:04] Speaker 00:
I mean, maybe we should turn to talking to the representative of the PTO simply because it seems like one of the big issues here is the burden of persuasion.

[00:27:15] Speaker 00:
Certainly, Your Honor.

[00:27:16] Speaker 00:
Thank you.

[00:27:17] Speaker 00:
Thank you.

[00:27:41] Speaker 02:
Morning, Your Honors.

[00:27:41] Speaker 02:
May it please the Court?

[00:27:48] Speaker 00:
Can I, since we've already had a lot of chatter about this burden of persuasion, let me start off by asking you what I think is a pretty compelling question in terms of the import of this case.

[00:28:00] Speaker 00:
Let's turn to the regulations.

[00:28:02] Speaker 00:
Is it clear to you?

[00:28:04] Speaker 00:
Do you have a view?

[00:28:06] Speaker 00:
Is the PTO's analysis saying irrespective of the burden of persuasion being on the petitioner, the board can raise this?

[00:28:16] Speaker 00:
Does that answer the question of whether or not the burden of persuasion would apply in this circumstance or not?

[00:28:23] Speaker 02:
The regulation does not speak to that question.

[00:28:25] Speaker 02:
Does not?

[00:28:27] Speaker 02:
I'm sorry, Your Honor.

[00:28:28] Speaker 00:
Did you say the, I just, I didn't hear you.

[00:28:31] Speaker 02:
Yes, the regulation does not speak to that precise question.

[00:28:34] Speaker 02:
This case, of course, as we all know, preceded the promulgation of that regulation.

[00:28:41] Speaker 05:
So why are you saying there's this gap in your new regulation as to the burden assignment question for when the board, Sue Espante, raises an unpackability issue itself recognizes?

[00:28:57] Speaker 02:
Um, personally, I do not know why, why that gap was left.

[00:29:01] Speaker 02:
Um, the, the agency was, um, I mean, you're familiar with aqua products and bank decision.

[00:29:09] Speaker 05:
Sure.

[00:29:09] Speaker 05:
Where I believe a majority of the court there said that even though the three 16 E statutory provision is ambiguous, uh, what happened here in putting the burden on the patent owner.

[00:29:26] Speaker 05:
for that motion to amend was procedurally improper because there was no regulation that actually was put in place and a board decision was not going to do it.

[00:29:39] Speaker 05:
So now here we are again with the motion to amend and we have a particular situation where you have written a brand new regulation but the regulation doesn't speak to the burden assigned to question.

[00:29:54] Speaker 02:
A couple of observations.

[00:29:56] Speaker 02:
First, it seems to me that when the agency promulgated the regulation, it was concerned with the issue of sua sponte, the board's ability to raise sua sponte, grounds of unpatentability, and situations in which that would be proper.

[00:30:16] Speaker 02:
And so for one thing, it may just be that that was more the focus of that regulation

[00:30:24] Speaker 02:
about burdens.

[00:30:27] Speaker 05:
OK, well, how can you defend this burden assignment matter under the rationale that collectively are aqua products opinions stated?

[00:30:42] Speaker 02:
Two things.

[00:30:42] Speaker 02:
Number one, aqua products itself acknowledged that there are situations in which a petitioner may drop out of the case.

[00:30:52] Speaker 02:
So in that situation, the board would be free to raise grounds of unpatentability and to explore those.

[00:31:02] Speaker 02:
And in a situation like this, that's more or less what we have.

[00:31:06] Speaker 02:
Adidas, at least with respect to this particular suespante ground, did not present that to the board.

[00:31:13] Speaker 02:
And so we're left.

[00:31:15] Speaker 05:
But Adidas wasn't just sitting on its hands and keeping its mouth shut.

[00:31:21] Speaker 05:
and actively got involved in embracing what the board said sui sponte.

[00:31:28] Speaker 05:
So we do have an officially formally opposed motion to amend, which is very unlike the peculiar circumstance we identified not with products.

[00:31:40] Speaker 02:
I would suggest that it's not

[00:31:42] Speaker 02:
so different, because at the end of the day, it is the board and not the private parties who are responsible for getting the question of patentability correct.

[00:31:53] Speaker 02:
And so even if you have a petitioner who is still present, if the petitioner doesn't present a ground that the board finds salient, the board still has an obligation to pursue it.

[00:32:09] Speaker 05:
But then the petitioner piggybacks on it.

[00:32:11] Speaker 05:
and then actually engages completely.

[00:32:16] Speaker 02:
Practically speaking, I think it would be difficult if we think about how that would play out.

[00:32:21] Speaker 02:
And so let's say, for instance, the board says, OK, we've come up with a potential ground of unpatentability and of sort of the skeleton theory based on several references.

[00:32:32] Speaker 02:
And so now we're going to kind of push it back to the petitioner to tell us what the petitioner thinks.

[00:32:40] Speaker 01:
sort of an odd way to assign burdens for the... Your view is that once the board raises the ground, it can't put the burden of proof on the petitioner?

[00:32:51] Speaker 02:
That's impracticable?

[00:32:55] Speaker 02:
I'm not saying that there can never be a situation in which that might happen, but I can see how it would be.

[00:33:01] Speaker 01:
The board said, well, we look at this reference.

[00:33:05] Speaker 01:
It's of record.

[00:33:06] Speaker 01:
And it looks like when you combine it with the other prior, it makes a pretty good obviousness case.

[00:33:11] Speaker 01:
And then the petitioner ran with that.

[00:33:14] Speaker 01:
And the patent owner responded to it.

[00:33:17] Speaker 01:
Why is it impractical or couldn't work where the petitioner is actually actively participating?

[00:33:27] Speaker 02:
Even though the parties, including the petitioner, did brief it, at the end of the day it was still the board's job to decide.

[00:33:37] Speaker 00:
The confusion here is we're talking about slicing and dicing pretty thinly and different hypotheticals.

[00:33:46] Speaker 00:
I agree

[00:33:48] Speaker 00:
hypothetical in that circumstance, which is counting on the petitioner to piggyback and say, aha, we're going to follow up with the board, and we're going to have an opportunity to put on more evidence.

[00:33:59] Speaker 00:
One, I'm not sure in every circumstance they would have that opportunity necessarily.

[00:34:04] Speaker 00:
Here it came up on a remand.

[00:34:06] Speaker 00:
Secondly,

[00:34:07] Speaker 00:
What if the petitioner just goes to sleep at the switch?

[00:34:09] Speaker 00:
I mean, what if in the interim they've reached a settlement?

[00:34:12] Speaker 00:
What if their client has said, I'm so sick of this case, I'm not spending one more dime on it?

[00:34:17] Speaker 00:
I mean, there can be hypothetical circumstances in which the board comes up with stuff that it finds, by definition, are readily identifiable and persuasive.

[00:34:29] Speaker 00:
And if the burden of persuasion

[00:34:32] Speaker 00:
under the rules, you say it's not clear.

[00:34:34] Speaker 00:
So automatically, whatever the board says, does it matter?

[00:34:40] Speaker 00:
Because if the petitioner doesn't raise it in a persuasive way, it's done, right?

[00:34:47] Speaker 02:
Well, even if the petitioner doesn't raise it in a persuasive way, the board still could.

[00:34:52] Speaker 00:
Well, not if the petitioner has the burden of persuasion.

[00:34:56] Speaker 00:
And you're saying that the rule doesn't

[00:35:00] Speaker 00:
answer that question.

[00:35:01] Speaker 00:
We have this board opinion here that seems to answer the question, but I'm just puzzled why the rule didn't.

[00:35:07] Speaker 00:
I think my reading of the rule, speaking only for myself, does suggest that that's what's going on here, because they're taking it out of the adversarial process.

[00:35:17] Speaker 00:
But your view is that it's not really answered by this rule.

[00:35:22] Speaker 00:
I'm not sure what to do in the absence of relying on the rule.

[00:35:25] Speaker 02:
I see the red light is on.

[00:35:27] Speaker 01:
I'm going to ask you another question, too.

[00:35:29] Speaker 01:
You answer your question, and I have a question for you.

[00:35:34] Speaker 02:
Sure.

[00:35:34] Speaker 02:
So I think one way the court can handle this is that if the court believes that on the merits, it wouldn't make a difference.

[00:35:41] Speaker 02:
If claim 49 is unpatentable, regardless of who

[00:35:45] Speaker 02:
or the burden, if anybody in this case, then this issue doesn't even need to be decided to begin with.

[00:35:52] Speaker 02:
And perhaps it's better to wait to cross the bridge with a case that came after the regulation was promulgated.

[00:36:02] Speaker 00:
But you told us the regulation doesn't answer the question.

[00:36:07] Speaker 00:
So then we're left in our situation where the PTO is going to come in and say, well, this is our interpretation of the regulation.

[00:36:17] Speaker 00:
I'm just wondering what you're hypothesizing here as being the future that we're going to meet.

[00:36:22] Speaker 02:
I don't know.

[00:36:24] Speaker 02:
What I do know is that this case came well before the regulation, and this does appear to be a one-off, a pretty unique case.

[00:36:34] Speaker 05:
Just getting back to what Judge Prost said, this relevant provision in this new reg leads off with irrespective of paragraphs D1 and D2 of this section.

[00:36:46] Speaker 05:
And so one could possibly infer that,

[00:36:52] Speaker 05:
What this provision is trying to say is, forget about all these burden assignment things we just said in D1, D2.

[00:37:00] Speaker 05:
There are going to be instances where the board can, in the interest of justice, swoop in and do its own thing if it sees a problem with the proposed substitute claim and give each side an opportunity to respond.

[00:37:13] Speaker 05:
But that seems to just wipe away any matters

[00:37:19] Speaker 05:
assigning burdens of proof to either the petitioner or the patent holder.

[00:37:26] Speaker 05:
But you're saying that's not how I should read this provision?

[00:37:29] Speaker 05:
I should instead read this provision as just saying it's completely silent on the question of who's got the burden.

[00:37:38] Speaker 02:
Well, clearly it doesn't verbatim talk about burdens, but I

[00:37:42] Speaker 02:
believe that the way that you read that, Judge Chen, would certainly be a plausible way to read it.

[00:37:47] Speaker 00:
I'm sorry, I didn't know.

[00:37:48] Speaker 02:
It would be a plausible way to read it, yes.

[00:37:50] Speaker 00:
You mean, so you're amending your answer to my first question?

[00:37:56] Speaker 00:
Yes, I think the, I think- Your brief doesn't say anything about it other than a footnote saying it didn't apply here because it's not time.

[00:38:04] Speaker 00:
So I guess I want to, what you're saying here is pretty significant to me.

[00:38:08] Speaker 00:
So I'd just like to be clear on what it is you're saying.

[00:38:12] Speaker 02:
In the situation where the board has sui sponte raised a patentability ground, this really seems like, really logically, the only way it could come out.

[00:38:32] Speaker 02:
And I think the way that Judge Chen read that regulation very well comports with logically

[00:38:39] Speaker 02:
what the answer should be.

[00:38:40] Speaker 01:
So just to be clear, you're saying that the PTO's position is that the regulation addresses the issue we have before us today, and it says that nobody has the burden of proof.

[00:38:52] Speaker 01:
Just to be clear.

[00:38:54] Speaker 02:
I think it can reasonably be read to say that, yes.

[00:38:58] Speaker 01:
My question to you is, are you aware of any circumstance in which

[00:39:03] Speaker 01:
There are two adversaries taking contrary positions on an issue, and there's a decision maker, and nobody has the burden of proof.

[00:39:15] Speaker 02:
I'm not aware of any other agency adjudication in which I can think of.

[00:39:22] Speaker 02:
Agency or court or anything.

[00:39:25] Speaker 02:
I certainly can go look, and if I find anything relevant, I'd be happy to file something.

[00:39:29] Speaker 05:
In an inter partes re-examination, can the board, on an appeal from, say, an examiner rejection, issue a new ground of rejection?

[00:39:42] Speaker 02:
I'm sorry, an ex parte re-examination?

[00:39:44] Speaker 05:
No, inter partes re-examination.

[00:39:46] Speaker 02:
In inter partes re-examination, the board can issue a new ground of rejection.

[00:39:54] Speaker 02:
I believe so.

[00:39:58] Speaker 05:
Is that a reg or somewhere in the MPEP, or is it just practice?

[00:40:04] Speaker 02:
There is a regulation that covers that about what the board must do to give proper notice to the parties and an opportunity to respond.

[00:40:15] Speaker 02:
And that would either be through reopening prosecution or requesting re-hearing.

[00:40:21] Speaker 05:
Do you think that's analogous to these IPR situations where?

[00:40:29] Speaker 02:
It's not completely analogous because in an inter-partis re-examination you still have the examiner involved who may be doing searches, may be gathering evidence before the board becomes involved in the case.

[00:40:45] Speaker 02:
And in an IPR, you have the board sitting there in the first

[00:40:50] Speaker 02:
really in the only instance assessing the record, what's in the record.

[00:40:56] Speaker 05:
But I guess in an inter-party's re-exam, we have the board issuing this rejection based on its own analysis of the record.

[00:41:06] Speaker 05:
And of course, it has to establish its findings by preponderance of the evidence.

[00:41:11] Speaker 05:
But it's not relying on any party to meet a particular burden before it comes out of the box and issues a new ground of rejection.

[00:41:20] Speaker 05:
Is that right?

[00:41:22] Speaker 02:
I think that's fair to say.

[00:41:27] Speaker 00:
Are you aware, I don't know exactly, when did the regulation go into effect?

[00:41:32] Speaker 02:
It was January of 2021, I believe.

[00:41:35] Speaker 00:
So we're a year and a half out.

[00:41:37] Speaker 00:
Are you aware of any instances, any cases in which this regulation has been relied on by the Patent Office?

[00:41:45] Speaker 00:
And are you aware whether any of those cases involve the allocation of the burden?

[00:41:52] Speaker 02:
I am not aware of any at this point.

[00:41:55] Speaker 02:
If the court would like me to follow up with that,

[00:41:57] Speaker 02:
Just to make sure any question answers any of these questions, I'm happy to double check.

[00:42:02] Speaker 02:
But I'm pretty confident that just would.

[00:42:06] Speaker 05:
OK, thank you.

[00:42:06] Speaker 05:
But just so I understand, are you saying that in the past year, you're unaware of the board in an IPR doing this to respond to a thing where it identified a new possible ground of unpatentability?

[00:42:22] Speaker 02:
I cannot think of any.

[00:42:23] Speaker 02:
There are obviously many IPRs percolating in the agency, but I don't think we've seen any so far.

[00:42:30] Speaker 05:
Do you have any idea when the board does Sue Espante identify and raise a new unpatentability issue?

[00:42:41] Speaker 05:
Does it always do like a full dress analysis like it did here, which is essentially a new ground of rejection?

[00:42:49] Speaker 05:
Or could it be something much more limited, like if we were to take the facts of this case, the board doing nothing more than saying,

[00:42:57] Speaker 05:
Oh, I see there's a textbook called Spencer in this record, and it looks like there's something interesting in there about open work structures.

[00:43:08] Speaker 05:
Maybe the parties could do a briefing on that and the relevance to the patentability claim, period.

[00:43:14] Speaker 05:
Do you know if the board ever does something in that kind of a limited form, or is it always the full dress rejection?

[00:43:23] Speaker 02:
I think that

[00:43:26] Speaker 02:
I don't know off the top of my head.

[00:43:28] Speaker 02:
My sense is that the board, at the end of the day, is going, it typically likes to get a full briefing from the parties.

[00:43:37] Speaker 02:
And so the board might spell something out fully in the first instance.

[00:43:42] Speaker 05:
Well, it certainly did that here.

[00:43:45] Speaker 05:
I'm just trying to figure out if that's the way it's going to go about it, just to give everybody full awareness of what the board is thinking about how the claim might be unpatentable, so that both parties will know going in on further briefing exactly what it is they need to be directed to.

[00:44:04] Speaker 02:
Well, certainly from a notice and opportunity to respond perspective, it would agree that the board would be good to give parties as much

[00:44:15] Speaker 02:
detail to go on as possible.

[00:44:17] Speaker 00:
Can I just follow up?

[00:44:18] Speaker 00:
I think this is maybe a variation or a flip side of what Judge Stowe was asking about, which is the board and its regulation goes to some length, presumably because this is not normal.

[00:44:30] Speaker 00:
This is not part of the adversarial process of explaining why, in its view, the board has the right to come up with its own references.

[00:44:41] Speaker 00:
So are you aware of a circumstance in which some third party has done this or some adjudicatory party has done this and has placed the burden on the moving party?

[00:44:58] Speaker 00:
When they're it's not the moving party who's come up with this argument.

[00:45:02] Speaker 00:
It's the board I mean, this isn't normal, right?

[00:45:04] Speaker 00:
I mean, that's why the board in its regulation goes to lengths to say this is in the interest in justice to protect the integrity of the patent system.

[00:45:12] Speaker 00:
Are you aware of a circumstances circumstance in which

[00:45:17] Speaker 00:
the neutral, the third party comes up with something, and the moving party therefore has the petition nonetheless to come up with, have some burden of persuasion, notwithstanding that it was not raised by that party?

[00:45:30] Speaker 02:
I'm not.

[00:45:42] Speaker 00:
to try to even the time we've spent a lot of time so we'll give you five minutes of rebuttal if you need it or differ the questions.

[00:45:49] Speaker 00:
Thank you.

[00:45:51] Speaker 00:
Let's see how it goes.

[00:45:52] Speaker 04:
Okay thanks and I just have a couple points.

[00:45:55] Speaker 04:
So first there's been a lot of talk today about a lot of different hypotheticals and

[00:46:01] Speaker 04:
We now know the USPTO's position that the facts of our case, the current regulations do not cover that, the dispute that's before us today.

[00:46:12] Speaker 04:
In our case, we have an active petitioner.

[00:46:17] Speaker 04:
that was opposing the amended claims every step of the way, the best way to protect the integrity of the patent system in an adversarial process like this is to keep the burden on the petitioner.

[00:46:30] Speaker 04:
If the board raises to Espante something, some unpatentability proposition that the petitioner missed, the petitioner gets a second bite at the apple.

[00:46:39] Speaker 04:
They might have multiple bites at the apple.

[00:46:42] Speaker 04:
And at the end of that, if the petitioner, who's best incentivized,

[00:46:46] Speaker 04:
to come forward with the best evidence and arguments.

[00:46:49] Speaker 04:
Still can't meet that burden of persuasion.

[00:46:51] Speaker 04:
It can't be said that the patent system, the integrity of the patent system, wasn't protected.

[00:46:59] Speaker 04:
And Your Honors, we would submit that this case shows exactly why the burden should be on the petitioner.

[00:47:06] Speaker 04:
Our friends at Adidas stood up here and said, not once, but twice.

[00:47:11] Speaker 04:
It's common sense.

[00:47:13] Speaker 04:
It's common sense.

[00:47:15] Speaker 04:
Read the board's opinion.

[00:47:16] Speaker 04:
Nowhere in that opinion does the board say, it's just common sense.

[00:47:21] Speaker 04:
But now Adidas's argument is, it's common sense.

[00:47:23] Speaker 04:
Everybody knew.

[00:47:24] Speaker 04:
It's common sense.

[00:47:24] Speaker 04:
Everybody knew.

[00:47:25] Speaker 04:
Skipping stitches, deform apertures, well-known technique, common sense.

[00:47:29] Speaker 04:
The board doesn't say it.

[00:47:30] Speaker 04:
Nowhere in the record.

[00:47:31] Speaker 04:
Is there any evidence to support that it's common sense?

[00:47:35] Speaker 04:
Judge Chin, you're asking our friends at Adidas, what does empty needle mean?

[00:47:40] Speaker 04:
Well, our friends at Adidas, they're not skilled artisans.

[00:47:43] Speaker 04:
I'm not a skilled artisan.

[00:47:45] Speaker 04:
The board that we had in this case, the panel, they weren't skilled artisans.

[00:47:50] Speaker 04:
Nowhere in that record evidence is there any explanation of what empty, quote, empty needle means.

[00:47:57] Speaker 04:
Spencer doesn't describe what an empty needle is.

[00:47:59] Speaker 04:
Spencer says you can use empty needles.

[00:48:02] Speaker 05:
Don't we have to give substantial evidence review to that fact finding by the board in interpreting the meaning of empty needles in Spencer?

[00:48:09] Speaker 04:
That is a substantial evidence review, but Henry Zirco says that the board can't rely merely on common sense.

[00:48:15] Speaker 04:
There has to be some record evidence to support that.

[00:48:20] Speaker 04:
And I would submit that's not here.

[00:48:21] Speaker 04:
The board didn't even attempt to make that argument.

[00:48:23] Speaker 04:
It's nowhere in the decision.

[00:48:26] Speaker 04:
And that's why the board should have left, should have put the burden on petitioner.

[00:48:31] Speaker 04:
And if the board had done that, I submit, we submit that this decision would have been much better.

[00:48:42] Speaker 05:
It's like the night of the living dead.

[00:48:45] Speaker 05:
This pen does expire in a few years.

[00:48:47] Speaker 05:
It does?

[00:48:47] Speaker 04:
Yes.

[00:48:50] Speaker 04:
Thank you.

[00:48:51] Speaker 00:
Thank you very much.