Unsurprisingly, two of the world’s largest sportswear brands are in a seemingly never-ending war over market share and new products. Nike and Adidas have been battling over the knitted shoe for four years – the Flyknit by Nike and the Primeknit by Adidas.
Nike owns multiple patents, both American and European, over the knitted sports shoe and has been attempting to stop Adidas from selling their shoe since 2012. Adidas, in response, continues to urge the US Patent Trial and Appeal Board (PTAB) to reconsider the validity of Nike’s utility patents over the shoe, claiming that the technology and method used was not anything new.
Adidas has faced some success so far and is hoping that the patents are found to be invalid, which will stop Nike having the exclusive right to produce and commercialise the type of shoe. The PTAB can use a process called inter parties review where the relevant question is whether the patent is indeed patentable. This process is available to a business opposing a patent, whether or not they are a US company.
In February 2012, Nike debuted its knitted shoe the Flyknit in anticipation of the London Olympics. Four months later, Adidas released its own knitted footwear, Primeknit, claiming that it was the ‘first-of-its-kind running shoe’.
Instead of separate pieces stitched together, the upper part of the shoe is made up of one complete knit piece. Consequently, less material is wasted, and the shoe becomes more like a second skin rather than an additional piece of equipment. The single-piece knit method has also been adapted to cleats as well as to running shoes. Both companies claim that their products have been in development for over ten years.
Nike owns several patents regarding this shoe, so does it have the exclusive right to sell?
The underlying principles of patentability requirements are very similar around the world. In addition to the invention being a patentable subject matter, Australia’s Patents Act 1990 (Cth) outlines five criteria for patentability of an invention:
- A manner of manufacture (described in the Statute of Monopolies 1623);
- Is novel as compared to prior (existing art);
- Has an inventive or innovative step from the prior art;
- Is useful; and
- Hasn’t been secretly used in Australia before the priority date.
In the US, the term ‘non-obvious’ is used rather than the inventive step Australian patents must satisfy. Adidas’ argument heavily relies on this requirement – that the knitted shoe is in fact not an inventive step as it already exists in prior art.
Novelty and Non-Obviousness
Adidas released Primeknit in Germany to which Nike responded by filing a patent infringement lawsuit. The District Court in Nuremberg, Germany granted Nike’s injunction and ordered Adidas to stop its production and sale of the shoe. Adidas responded by challenging the validity of the European patent.
Upon closer examination into the patent’s validity, it was found that the technology had been used since the 1940s to make the upper part of the shoe. Consequently, the Court was unconvinced that Nike’s shoe met the novelty requirement for a patent. The patent and thus the previously granted injunction were declared invalid, and Nike was unable to pursue Adidas for any patent infringement in Germany. Adidas was able to continue manufacturing and selling their knitted footwear.
The Battle Continues
Although the German Court’s decision invalidated Nike’s European patent, it still holds patents in the US. Resultingly, Adidas’ mission is to have Nike’s US patents also declared invalid. Since late 2012, Adidas has filed an inter parties review (IPR) which requires the PTAB to examine the claims of a patent either in relation to the novelty or the non-obviousness, both of which are requirements for patentability.
Adidas is relying on another patent filed in 1991 that claims protection over a process very similar to the single knitted piece used in Nike’s Flyknit. Consequently making Nike’s Flyknit an obvious step, rather than involving the non-obviousness that a patent demands. In Australia, this would be equivalent to a product not having an inventive or innovative step different to the existing patent or product.
When the PTAB began its review, Nike attempted to narrow down the claims and distinguish its product from the 1991 patent. The PTAB rejected the changes stating that even the amendments to the claims were obvious and could not be accepted. Nike then appealed to the US Court of Appeal on the basis that the PTAB should not have reached the conclusion that they had and that the Flyknit and its knitted technology were indeed patentable.
The Federal Circuit Court has sent the matter back to the PTAB to determine whether the Flyknit would be considered patentable based on its non-obviousness. It’s not just one patent under attack – Adidas has filed requests with the PTAB for a number of IPR for various patents Nike owns in relation to the knitted wear.
Australians can also access the inter parties review available for granted US patents. The review can only be in relation to a lack of novelty and obviousness as described above. This is a different process to the Australian patent opposition process which allows a party to file a notice of opposition which the Patent Office does not filter. An IPR requires permission from the USPTO, and the party must convince the USPTO that there are grounds for opposition and that it is likely that at least one of the grounds will be successful.
The IPR is a viable option for Australian parties wanting to challenge the validity of a US patent on the basis of prior art, and it is a more cost-effective method than litigation in a US court. The Flyknit vs. Primeknit may be a battle of the giants, but many patents have been granted that do not necessarily meet the requirements of patentability. Smaller Australian companies should not eschew challenging patents that are preventing them from selling their products in the US, as the patent may have been granted incorrectly.
The Nike vs. Adidas situation shows that patents are often mistakenly granted and only upon further examination will a Patent Office realise that the requirements for patentability have not been met.
Questions? Get in touch with our intellectual property lawyers on 1300 544 755.