Over the past several months the PTAB has dramatically increased the number of discretionary denials of Petitions for Inter Partes Review (IPR). The extent of, and varying rationales for, the discretionary denials has caught many members of the patent bar by surprise and led, at least for now, to significant uncertainty for those considering filing an IPR Petition.
On February 28, 2025, the U.S. Patent and Trademark Office (USPTO) rescinded former USPTO Director Kathi Vidal's 2022 memo, "Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation" (Vidal Memo). The USPTO announcement directed that parties to post-grant proceedings should "refer to Patent Trial and Appeal Board (PTAB) precedent for guidance, including Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential as to § II.A)." The period immediately following the Vidal Memo rescission saw an increased reliance on the Fintiv factors (focusing on the status of parallel proceedings such as related district court litigation) to discretionarily deny IPR institutions.
Subsequently, on March 26, 2025, Acting Director, Coke Morgan Stewart, published a memo titled "Interim Process for PTAB Workload Management" (Interim Process Memo). The memo implemented a new bifurcated process for pre-institution IPR and PGR proceedings consisting of: (i) a first phase of "discretionary considerations"; and (ii) a second phase of "merits and other non-discretionary statutory considerations." In the first phase, the Director, with at least three PTAB judges, determines whether a petition should be discretionarily denied and issues a decision accordingly. Only if the Director does not find a discretionary basis for denial is the petition referred to a three-member panel for the second phase of the bifurcated process. In the second phase, the three-member panel handles the petition "in the normal course including a decision on institution addressing the merits and other non-discretionary statutory considerations."
The Interim Process Memo listed the following as relevant considerations for discretionary denials in the first phase:
- Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims;
- Whether there have been changes in the law or new judicial precedent issued since issuance of the claims that may affect patentability;
- The strength of the unpatentability challenge;
- The extent of the petition's reliance on expert testimony;
- Settled expectations of the parties, such as the length of time the claims have been in force;
- Compelling economic, public health, or national security interests; and
- Any other considerations bearing on the Director's discretion.
The Acting Director has been referencing a "holistic assessment of all of the evidence and arguments presented," in her recent discretionary denial decisions. E.g., Tessell, Inc. v. Nutanix, Inc., No. IPR2025-00322, Paper 14 (June 12, 2025). However, as evidenced by recent discretionary denials some considerations may be more critical to the assessment than others – namely, "settled expectations."
"Settled expectations" is a new consideration that looks at the length of time a challenged patent has been in force. The Acting Director first applied settled expectations as a consideration to discretionarily deny institution of five related IPRs in iRhythm Technologies v. Welch Allyn, No. IPR2025-00363, Paper 10 (P.T.A.B. June 6, 2025). The Acting Director noted several factors weighed against discretionary denial. However, the patent owner argued "because one of the patents [had] been in force since as early as 2012 and Petitioner was aware of it as early as 2013 ... settled expectations favor[ed] denial of institution." No. IPR2025-00363, Paper 10, at *2. Finding the patent owner's argument persuasive, the Acting Director concluded "Petitioner's awareness ... and failure to seek early review ... outweigh[ed other] considerations."
In another decision, Dabico Airport Sols., Inc. v. AXA Powers ApS, No. IPR2025-00408, Paper 21 (P.T.A.B. June 18, 2025), the Acting Director once again discretionarily denied institution based on settled expectations. However, unlike iRhythm, in Dabico there was no evidence of petitioner's longstanding prior knowledge of the challenged patent. Furthermore, neither party raised the argument for settled expectations. Nonetheless, the Acting Director determined discretionary denial was appropriate because of the settled expectations created by "the challenged patent [which had] been in force almost eight years," and the petitioner's failure to provide "any persuasive reasoning why an [IPR was] an appropriate use of Office resources." No. IPR2025-00408, Paper 21, at *2. While acknowledging the lack of any "bright-line rule" to guide settled expectations, the Acting Director noted "the longer the patent has been in force, the more settled expectations should be." Id. She suggested this approach was appropriate by comparing it to the six-year statutory limit on damages for filing infringement lawsuits. iRhythm and Dabico highlight firstly, that "settled expectations" can be a critical, even dispositive, consideration in a discretionary denial.
The cumulative effect of the Vidal Memo rescission and Interim Process Memo has been a dramatic policy shift in favor of discretionarily denying inter partes reviews. Members of the PTAB bar have raised numerous questions about whether the shift towards discretionary denials is appropriate and how strategic thinking about IPR filing will be affected. Other questions have been asked about whether the USPTO's approach towards discretionary denials may shift again once USPTO Director John Squires is (presumably) approved by the Senate. Until then, members of the PTAB bar will be learning how to effectively utilize the new discretionary denials briefing phase and looking for increased clarity and predictability in the PTAB's new approach to discretionary denials.
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