The Federal Circuit vacated the Patent Trial and Appeal Board's decision regarding claim 49 and remanded to reconsider the patentability of claim 49 after providing the parties an opportunity to respond. The Federal Circuit also affirmed the Board's determination that Nike's argument and evidence failed to demonstrate a long-felt but unmet need for substitute claims 47-50.
With regard to whether the Board "may sua sponte raise patentability challenges to a pro-posed amended claim," the Federal Circuit held that "the Board may sua sponte identify a patentability issue for a proposed substitute claim based on the prior art of record. If the Board sua sponte identifies a patentability issue for a proposed substitute claim, however, it must provide notice of the issue and an opportunity for the parties to respond before issuing a final decision under 35 U.S.C. § 318(a)."
"[T]he notice provisions of the Administrative Procedure Act and our case law require that the Board provide notice of its intent to rely on [a reference in the record but never cited by Adidas] and an opportunity for the parties to respond before issuing a final decision relying on [the reference]."
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