PTAB Permitted to Raise New Grounds for Unpatentability Following Motion to Amend

In Nike Inc. v. Adidas Inc, the Federal Circuit held that the Board may introduce independent grounds for unpatentability for claims raised on a motion to amend based on the prior art of record so long as the parties are provided notice and granted an opportunity to respond.

Following Nike I, the Board reconsidered Nike’s motion to amend. Citing art that was in the record but otherwise not relied upon to establish unpatentability, the Board issued a final determination finding Nike’s proposed substitute claims obvious over the art and denying Nike’s request for entry of the substitute claims.

On appeal, Nike argued that the Board’s final determination, specifically its failure to notify the parties of the new grounds for unpatentability, violated the APA’s notice requirement. The Federal Circuit agreed—although it was proper for the Board to rely on the art of record to develop its own theory of unpatentability, inclusion of the theory in its final determination deprived Nike of its right to notice and an opportunity to address the factual and legal underpinnings of the determination. The Court noted that the Board might have satisfied these requirements by notifying the parties of its intention to rely on the reference and requesting a supplemental brief or hearing directed to the reference’s merits.