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By Gene Lee, Jessica Kaiser, Christopher Marando, and Jon Carter, Partners at Perkins Coie
This is the first of three articles that will discuss changes to procedures for challenging the validity of patents at the U.S. Patent and Trademark Office (USPTO). This first article will provide background information and address important changes from the beginning of 2025 through October 2025 to set the stage for ongoing and future changes in patent validity challenges. During this period, the USPTO changed its consideration of petitions to challenge the validity of patents in the Patent Trial and Appeal Board (PTAB) in a way that increased the likelihood of such petitions being denied as a matter of discretion. The next two installments will bring further insights into how operating companies can adjust their analysis of when to challenge a patent in the PTAB, how to craft a petition to maximize the chances of institution for trial, and potential alternatives to past approaches.
Since 2012, inter partes review (IPR) and post-grant review (PGR) petitions have been the primary procedures for challenging patent validity at the PTAB.[1] The USPTO Director has discretion concerning whether to institute a trial on such petitions.[2] In 2020, the PTAB’s precedential Apple v. Fintiv decision set forth several nonexclusive factors for the PTAB to consider when determining whether to discretionarily deny an IPR or PGR petition that challenges a patent also involved in parallel district court or International Trade Commission litigation.[3] In June 2022, former USPTO Director Katherine Vidal issued a memorandum concerning application of the Fintiv factors (Vidal Memo),[4] including that “the PTAB will not deny institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition.”[5]
In 2025, however, the new presidential administration implemented significant changes concerning the discretionary denial of IPR and PGR petitions. The first change happened on February 28, 2025, when the USPTO Acting Director at the time, Coke Morgan Stewart,[6] rescinded the Vidal Memo and advised parties to rely instead on existing PTAB precedent for guidance concerning discretionary denial, including the Fintiv decision.[7] Less than a month later, on March 26, 2025, Acting Director Stewart issued a memorandum establishing a new process that bifurcated discretionary considerations from merits and other non-discretionary, statutory considerations in deciding whether to institute a trial (Stewart Memo).[8]
Under the new bifurcated process, the Director would first determine whether discretionary denial of a petition was appropriate.[9] If the Director determined that discretionary denial was not appropriate, the Director would refer the petition to a three-judge PTAB panel to evaluate the merits and other non-discretionary, statutory considerations. This bifurcated process was a significant departure from prior practice—previously, the decision-making on whether to institute trial, including consideration of both merits and discretionary issues, was delegated to the three-judge PTAB panel.[10] The Stewart Memo also provided additional briefing on discretion considerations, separate from briefing on the merits.[11]
In clarifying the factors to be considered for discretionary denial, the Stewart Memo added the following new factors:
- Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged claims
- Whether there have been changes in the law or new judicial precedent issued since issuances 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
- Any other considerations bearing on the director’s discretion[12]
Following issuance of the Stewart Memo, the USPTO also created a webpage regarding the bifurcated process.[13]
The first discretionary denial decisions under the bifurcated process were issued in May 2025, and approximately 60% of the 621 petitions considered through October 2025 were discretionarily denied.[14] As a result of the changes to PTAB practice that arose from Acting Director Stewart’s memoranda in February and March 2025, the overall institution rate by petition during fiscal year 2025 was 50%—a significant drop from the 68% rate observed during fiscal year 2024.[15]
A comprehensive review of the discretionary denial decisions under the bifurcated process reveals that the “settled expectations” factor (newly introduced by the Stewart Memo) received substantial weight in determining outcomes. For example, in iRhythm,[16] Acting Director Stewart noted that, although the Fintiv factors weighed against discretionary denial (including a later district court trial date and appropriate reliance on expert testimony), denial was nevertheless warranted based on “settled expectations” because “one of the patents has been in force since as early as 2012 and Petitioner was aware of it as early as 2013.”
In defining “settled expectations,” Acting Director Stewart provided “no bright-line rule” but indicated that “in general, the longer the patent has been in force, the more settled expectations should be.”[17] While not dispositive, the outcomes of discretionary denials indicate a presumption of “settled expectations” for patents that have been in force for six years or longer at the time of the discretionary denial decision. As of October 31, 2025, 80% of the 319 petitions involving patents at least six years old were denied, whereas only 39% of the 302 petitions involving patents less than six years old were denied. Acting Director Stewart’s new, bifurcated process thus redefined the framework for evaluating discretionary considerations for institution or denial of IPRs and PGRs and had a major impact on outcomes, resulting in a significant reduction in the institution rate.
The bifurcated process remained in place until October 2025, when newly confirmed Director John Squires announced that henceforth, the Director would decide whether to institute IPRs and PGRs, including consideration of not only discretionary issues, but merits and other non-discretionary, statutory issues as well.[18]
[1] See 35 U.S.C. § 311 et seq. (IPRs). For patents issued under the first-inventor-to-file system, PGR is available within nine months of the patent’s issue or reissue date. 35 U.S.C. § 321 et seq.
[2] See 35 U.S.C. § 314(a); SAS Inst., Inc. v. Iancu, 584 U.S. 357, 366 (2018) (“§ 314(a) invests the Director with discretion on the question whether to institute review.”).
[3] Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential).
[4] https://www.uspto.gov/sites/default/files/documents/interim_proc_discretionary_denials_aia_parallel_district_court_litigation_memo_20220621_.pdf.
[5] Id. at 9.
[6] USPTO Director John Squires assumed office in September 2025. Coke Morgan Stewart continues to serve as the Deputy Director. Id.
[7] https://www.uspto.gov/about-us/news-updates/uspto-rescinds-memorandum-addressing-discretionary-denial-procedures.
[8] https://www.uspto.gov/sites/default/files/documents/InterimProcesses-PTABWorkloadMgmt-20250326.pdf.
[9] Id. at 1.
[10] 37 C.F.R. § 42.4(a) (“The Board institutes the trial on behalf of the Director.”).
[11] Stewart Memo at 2.
[12] Id. at 2-3.
[13] https://www.uspto.gov/patents/ptab/interim-director-discretionary-process.
[14] This data was compiled using Developer Hub PTAB.
[15] U.S. Patent & Trademark Office, PTAB Trial Statistics, 2025 End of Year Outcome Roundup (2025). Note that USPTO fiscal year 2025 statistics include data for petitions decided under both the non-bifurcated process (i.e., petitions decided from October 2024 to about May 2025) and the bifurcated process (i.e., petitions decided from May 2025 to September 2025).
[16] iRhythm Techs. v. Welch Allyn, Inc., IPR2025-00363 et al., Paper 10 (June 6, 2025).
[17] Dabico Airport Solutions Inc. v. AXA Power ApS, IPR2025-00408, Paper 21 (June 18, 2025).
[18] https://www.uspto.gov/sites/default/files/documents/open-letter-and-memo_20251017.pdf.
