Lead Article: Recent Changes to Discretionary Denial Procedures in Post-Grant Proceedings Before the Patent Trial and Appeal Board

Since they were first established in 2012 by the Leahy–Smith America Invents Act, inter partes review (“IPR”) proceedings have been a popular tool for accused patent infringers to seek to invalidate patents in parallel patent office proceedings, thereby potentially avoiding the costs and risks associated with district court litigation. Starting in spring 2025, the patent office revised its procedures to implement separate discretionary denial briefing. Since then, there has been a steep increase in discretionary denials of IPR petitions, cumulating in an October 17, 2025 Notice of Proposed Rulemaking that seeks to cement these changes and further constrict availability of IPRs. These changes have led to a fundamental paradigm shift in how accused patent infringers need to approach IPRs, from a standard tactic applicable to most patent infringement litigation to a surgical tool to be evaluated and applied on a case-by-case basis.

Discretionary Denial Overview

IPRs and post-grant reviews (“PGRs”) are adversarial proceedings for challenging the validity of an issued patent.  Within three months of filing the petition, the patent owner is permitted to submit a preliminary response (“POPR”) addressing the grounds raised in the petition.  Three months after the POPR is filed, a panel of three Administrative Patent Judges (“APJs”), commonly referred as the “Board,” determines whether or not to institute an IPR or PGR proceeding.  After that, the parties submit further briefing, there is a hearing, and ultimately the panel has 12 months to decide whether the challenged patent claims are invalid.

35 U.S.C. § 314(a) provides limits on when the Director is permitted to institute an IPR, requiring the Director to first determine that there is a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition,” but does not enumerate any circumstances or facts under which the Director is required to institute an IPR.  Before the Acting Director Stewart’s overhaul of the discretionary denial procedures, the Director’s discretion was delegated to and exercised by the Board assigned to the particular IPR or PGR proceeding.  The parties would brief the relevant discretionary factors in the petition, POPR, and potentially a preliminary reply and sur-reply (if allowed by the Board).  The Board would then consider both the discretionary factors and the merits of the petition when rendering an institution decision. 

In the past, Directors had provided some guidance on the appropriate scope of discretionary denial through precedential decisions or by reversing a Board’s institution decision in response to a request for Director review.  For example, in Apple v. Fintiv, the Director designated as precedential a Board decision analyzing whether discretionary denial is appropriate when a parallel, co-pending proceeding involving the same patent has an earlier trial date than the projected deadline for a final written decision.  IPR2020-00019, Paper 11 (Mar. 20, 2020) (precedential).  The parallel district court litigation had set a trial date “six months prior to the projected deadline for a final written decision.  Id. at 4.  The Board articulated a six-factor test to determine “whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel proceeding.”  Id. at 6.  The Board ultimately exercised its discretion and denied institution, finding that “instituting a trial would be an inefficient use of Board resources.” After Apple v. Fintiv was decided, the six-factor test (commonly referred to as the “Fintiv factors”) quickly became the most frequent reason cited for discretionary denial. 

Within a year, however, the PTAB provided petitioners with a means to avoid discretionary denial based on the Fintiv factors in Sotera Wireless v. Masimo.  IPR2020-01019, Paper 12 (Dec. 1, 2020).  The petitioner in Sotera filed a stipulation in the parallel district court litigation stating that “if IPR is instituted, they will not pursue in the District Court Litigation any ground raised or that could have been reasonably raised in an IPR.” Id. at 18. The Board found that this stipulation “mitigate[d] any concerns of duplicative efforts between the district court and the Board, as well as concerns of potentially conflicting decisions,” and thus “weigh[ed] strongly in favor of not exercising discretion to deny institution.”  Id. at 18-19.

The Sotera decision encouraged petitioners to avoid discretionary denial by filing similar stipulations, referred to as “Sotera stipulations.”  Indeed, for years, Sotera stipulations were seen as a silver bullet to discretionary denial.  For example, from June 2020 to December 2021, over 96% of petitions in which a petitioner filed a Sotera stipulation were instituted. 

In June 2022, former Director Katherine Vidal formally adopted Sotera stipulations as PTAB policy in a memorandum, stating that the PTAB will not discretionarily deny institution in view of parallel district court litigation where a petitioner presents a Sotera stipulation.  Director Vidal also limited the Fintiv factors to district court litigation only, not parallel ITC proceedings. 

Acting Director Stewart’s Overhaul of Discretionary Denial Procedures

On February 28, 2025, Acting Director Coke Morgan Stewart began expanding the scope of discretionary denial by rescinding former Director Vidal’s 2022 memorandum.  On March 24, 2025, Chief Administrative Patent Judge Scott R. Boalick issued a memorandum (the “Boalick Memo”) clarifying the practical consequences of the rescission, explaining that a “timely-filed Sotera stipulation” is still “highly relevant” to discretionary denial, it “will not be dispositive by itself,” and instead would be considered as part of a holistic analysis under Fintiv.  Boalick Memo at 2-3.  Chief APJ Boalick also confirmed that ITC parallel proceedings would no longer be exempt from the Fintiv analysis.  Id.

On March 26, 2025, Acting Director Stewart issued a memorandum titled “Interim Processes for PTAB Workload Management” (the “Workload Management Memo”).  The Workload Management Memo completely overhauled the PTAB’s discretionary denial process for IPRs and PGRs both procedurally and substantively.  Procedurally, the Workload Management Memo instituted a new process for raising and resolving discretionary denial issues.  Workload Management Memo at 1-2.  Decisions on institution are bifurcated between discretionary factors and the merits of the petition—a patent owner now files a separate, standalone brief within two months of the filing date of the petition, devoted entirely to discretionary denial issues (the “DD Request”).  The petitioner then has one month to submit an opposition brief (the “DD Response”).  In addition, all discretionary denial issues are now decided by the Director before any institution decision.  If the Director determines that discretionary denial is appropriate, the institution is denied before the projected date for an institution decision on the merits.  Otherwise, the Director refers the petition to the Board to decide institution solely on the merits of the petition following the usual time frame (i.e., within six months of the filing of the petition).

Substantively, the Workload Management Memo expanded the criteria for discretionary denial by providing a list of “relevant considerations,” including: (1) Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims; (2) Whether there have been changes in the law or new judicial precedent issued since issuance of the claims that may affect patentability; (3) The strength of the unpatentability challenge; (4) The extent of the petition’s reliance on expert testimony; (5) Settled expectations of the parties, such as the length of time the claims have been in force; (6) Compelling economic, public health, or national security interests; and (7) Any other considerations bearing on the Director’s discretion.  Id.  Of particular note is the “settled expectations,” a factor never previously relied on as a basis for discretionary denial, and which has since become one of the predominant bases for discretionary denial.

In September, the Senate confirmed John Squires as the new Director of the USPTO, with Coke Morgan Stewart continuing to serve as the Deputy Director of the USPTO.  Within days of being confirmed, Director Squires delegated his discretionary authority over IPRs and PGRs to Deputy Director Stewart, suggesting that the procedures and considerations set forth in the Workload Management Memo will continue to remain in effect going forward. 

Finally, on October 17, 2025, the patent office issued a Notice of Proposed Rulemaking cementing many of these recent changes. The new proposed rules confirm the Director’s role in deciding discretionary denial, and further expand that role to also ruling on the merits of the petition at the institution stage, and define specific circumstances where an IPR “shall not be instituted or maintained.” The proposed rules are not subject to a 30-day comment period, after which the final rules will be published in the Federal Register.

Analyzing the Recent Trends

Statistics showing the PTAB’s institution rates over time reflect a sharp increase in the rate of denials in the months following the Workplace Management Memo.  For example, the USPTO’s PTAB Trial Statistics for October 1, 2024 to December 31, 2024 indicate that of 274 institution decisions entered during that period, 97 petitions were denied institution, corresponding to a denial rate of 35%—a rate consistent with denial rates over the three previous years, which range between 34% and 32%.  For the 3-month period between April 1, 2025 and June 30, 2025, however, 166 out of 310 institution decisions were denied, resulting in a denial rate of 54%.  A closer review of recent decisions shows that discretionary denials reflect a substantial portion of all proceedings where institution was denied.  Of the proceedings subject to the new discretionary denial briefing process, 58 were discretionarily denied, and only 43 were referred to the Board for a decision on the merits—a discretionary denial rate of 57%.  The discretionary denial rate further increased to 61% for decisions entered in July 2025, without even accounting for additional denials on the merits for referred petitions.

A review of exemplary discretionary denial decisions issued since the Workplace Management Memo suggests that the sharp increase in the rate of discretionary denials is largely due to the new “settled expectations” consideration, and the renewed focus on the Fintiv factors (especially trial date) even when a Sotera stipulation is in place.

Fintiv Factors and Sotera Stipulations

Several recent decisions demonstrate that the Fintiv factors have newfound force in discretionary denial decisions and that Sotera stipulations are no longer a silver bullet that can overcome an early trial date.

For example, in IPR2025-00780, the petitioners, on top of a Sotera stipulation, filed an additional stipulation not to “rely in the litigation on any product or system that is ‘based on the same evidence presented’ in this IPR” or “advance a theory of obviousness based on the combination of prior art that is asserted in any ground presented in the Petition with any other prior art, including product or system prior art, against the challenged claims.” Paper 7, at 2.  Petitioners alleged that this stipulation would “materially reduce overlap with district court proceedings.”  Id.  However, as the district court trial was scheduled six months before the projected final written decision due date, the Director still found that it would “result[] in significant duplication of effort, additional expense for the parties, and a risk of inconsistent decisions” and denied the petition.  Id.

In IPR2025-00223, the petitioners filed a Sotera stipulation, and the projected final written decision due was only 16 days after the trial date set in parallel district court litigation.  Paper 9, at 2.  The time-to-trial statistics further suggested that trial could begin months after the final written decision would be due.  The Director even acknowledged that “a district court trial date that occurs after a projected final written decision date reduces the possibility of conflicting decisions,” but ultimately held that “that benefit does not outweigh the efficiencies gained by avoiding parallel proceedings in this instance because of the parties’ meaningful investment in the district court proceeding discussed above” and denied the petition.  Id.

These decisions indicate that the Director appears to be affording Sotera stipulations substantially less weight than under Director Vidal’s guidance, even if the only relevant denial factors are addressed by the stipulation.  Notwithstanding the above, in several cases that were discretionarily denied, the failure to file a Sotera stipulation was still cited as one reason for the denial.  Thus, filing a Sotera stipulation is no longer a silver bullet against discretionary denial, failing to file such a stipulation can still doom a petition.

“Settled Expectations” Is the Strongest Predictor of Discretionary Denial

In recent decisions, “settled expectations”—and specifically, “the length of time the claims have been in force”—has become the primary basis for discretionary denial and serves as the strongest predictor for whether a petition will be denied at the discretionary denial phase.  The Director has stated that “there is no bright-line rule on when expectations become settled,” and that “[t]he longer the patent has been in force, the more settled expectations should be.”  IPR2025-00408, Paper 21.  However, a review of the actual decisions evaluating “settled expectations” suggests otherwise: if the challenged patent is more than six years old, the Director routinely finds that “settled expectations” applies; and if the challenged patent is less than six years old, the Director routinely finds that “settled expectations” does not apply.  Compare IPR2025-00664 Paper 12 (“strong settled expectations” for 6 years, 1 month) with IPR2025-00436 Paper 11(“[PO] has not developed strong settled expectations” for 5 years, 7 months). 

Cambridge Industries USA, Inc. v. Applied Optoelectronics, Inc. demonstrates the power of settled expectations. The discretionary denial decision resolved DD Requests for five different petitions challenging five patents asserted in a parallel district court case. IPR2025-00436, Paper 11 at 2. The Director acknowledged that the district court had not yet set any trial or Markman dates and that the patent owner’s other arguments were not persuasive.  Id. at 2-3.  As a result, the Director found that discretionary denial was not appropriate for the three petitions challenging patents that had been in force for less than six years.  Id.  But for the two petitions challenging patents that had been in force for 8 years and 1 month and 6 years and 5 months, respectively, the Director found that “Patent Owner’s settled expectations … are stronger and discretionary denial is appropriate as to these proceedings.”  Id.

Although “settled expectations” is a strong indicator of the likelihood of discretionary denial, it is not dispositive; some petitioners have been successful in avoiding discretionary denial of petitions challenging older patents.  Recent cases suggest that effectively rebutting “settled expectations” requires strategic marshalling and presentation of facts specific to the particular petition and patent at issue. 

For example, in IPR2025-00480, an IPR was instituted on a patent that has been in force for twelve years because the patent had not been “commercialized, asserted, marked, licensed, or otherwise applied in its technology space” and “Patent Owner only previously targeted smartphones, tablets, and watches, whereas Petitioner, Home Depot, is the proprietor of a chain of hardware stores and did not have reason to anticipate assertion of the patent against it.” Paper 11, at 2-3. Similarly, in IPR2025-00438, the Director referred a petition challenging a ten-year old patent to the Board for addressing its merits, reasoning that although the age of the patent “creat[ed] strong settled expectations,” the petitioner presented evidence that “the challenged patents have never been ‘commercialized, asserted, marked, licensed, or otherwise applied’ in Petitioner’s ‘particular technology space,’” which “weigh[ed] against Patent Owner’s claim of strong settled expectations.”  Paper 10 at 3.

Another avenue for overcoming settled expectations is by identifying examiner error or facts the examiner overlooked during original prosecution of a patent. In IPR2025-000847, for example, the Directed allowed a petition challenging a fifteen year old patent to proceed to the merits determination (while discretionarily denying other petitions) because the petitioner successfully demonstrated that “the patent examiner overlooked certain teachings in [a prior art reference considered by the examiner] that appear to disclose the claimed features that the patent examiner indicated were not taught by the prior art of record.”  Paper 11, at 3-4. According to the Director, “it is an appropriate use of Office resources to review the potential error” even though the age of the patent might otherwise weigh in favor of discretionary denial.  Id. 

Finally, a recent discretionary denial opinion in IPR2025-00806 went in almost the exact opposite direction as other settled expectations outcomes, finding that because the patents in question were expired, the petitioner reasonably “expected non-enforcement of the challenged patents.”  Paper 13 at 2-3.  So while an older patent might entitle a patent owner to strong settled expectations, a patent that is too old might tilt the scales back in favor of a petitioner.

The above decisions highlight that while settled expectations can very likely result in a petition’s discretionary denial, other factors can still lead to institution, meaning that filing an IPR on an older patent isn’t a simple lost cause.

The October 17, 2025 Notice of Proposed Rulemaking (“NPFM”) Extends the New Normal

The NPFM is the culmination of the changes first started with the Workplace Management Memo.  The NPFM codifies that a Sotera stipulation is no longer sufficient, instead requiring a stipulation that “petitioner will not raise grounds of invalidity or unpatentability with respect to the challenged patent under 35 U.S.C. 102 or 103”—which includes prior art systems—in any other proceeding.” See Proposed 37 § 42.108(d). The NPFM also partially implements the “settled expectation” doctrine by specifying that IPRs are unavailable if the challenge patent’s validity was previously upheld in another proceeding, including by a district court on summary judgment or in trial, a prior IPR, or a prior ex parte reexamination. See Proposed 37 § 42.108(e). Finally, an IPR will not be instituted if, “more likely than not,” there will be a district court or ITC trial before the due date of the final written decision in the IPR.  See Proposed 37 § 42.108(f). Although the absolute nature of these requirements will give practitioners pause, they are not fundamentally different from the requirements the Director imposed in recent discretionary denial decisions. Rather, they are further confirmation that, unlike previously, IPRs are no longer available as an additional forum for deciding invalidity in many patent infringement lawsuits and instead need to be evaluated on a case-by-case basis as potential replacement for litigating prior art invalidity in district court.

Conclusion

It remains to be seen whether the PTAB’s revised discretionary denial procedures are temporary or just the start of a new world order and whether the proposed new rules will become final. But in any event, it is harder than ever to achieve success in IPR institutions.  Significant litigation progress, an approaching trial, or even simply an older patent could serve as a death knell for a petition.  Petitioners would be wise to consider these factors when deciding whether pursuing an IPR is the best course of action, and if so, under what circumstances petitions should be filed.