1. Introduction: Leadership Transitions and the New PTAB Landscape
Since the enactment of the America Invents Act (AIA) in 2012, the Inter Partes Review (IPR) procedure - central to the USPTO's Patent Trial and Appeal Board (PTAB) - has become a preferred mechanism for challenging the validity of granted patents. Particularly in technology-driven industries, IPR has been widely adopted by enterprises for its speed and technical rigor.
In January 2025, Donald Trump, a Republican, returned to the presidency of the United States. His administration, aligned with the Republican Party's support for patent owners, prioritized reducing government expenditures. This included cuts to the USPTO's budget as part of broader efforts to increase government efficiency. A flagship initiative of this effort was the establishment of the Department of Government Efficiency (DOGE), spearheaded by Elon Musk, which introduced sweeping cost-cutting measures across federal agencies, including the USPTO. The PTAB was significantly affected, with the number of Administrative Patent Judges (APJs) reduced by 13%, falling to fewer than 200 judges, and support staff cut by 17%, as confirmed by Chief Judge Boalick during a USPTO seminar in May 2025. As a result, discretionary denials became an effective tool for managing workload, with decision-making power shifting upward from PTAB panels to the USPTO Director's office.
That same month, Trump appointee Coke Morgan Stewart replaced Biden-era Director Kathi Vidal as Acting Director of the USPTO. This leadership change marked the beginning of a significant realignment of the post-grant review system, with Stewart pushing for reforms that would centralize power and streamline the IPR process. Internal data revealed a sharp decline in the IPR institution rate, which fell to just 46% between March and April 2025. Only 54 out of 118 petitions were granted, representing a 22-point drop from the 67% average under Director Kathi Vidal (2022–2024). The sharp decline can be attributed to sweeping procedural reforms introduced by Acting Director Stewart, including a March 2025 memorandum and a series of Director-led decisions aimed at centralizing discretionary authority within the USPTO leadership.
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2. The Evolution of Discretion: From Vidal's Loosening to Stewart's Restriction
To understand the systemic shifts now underway in the IPR regime, it is necessary to examine the evolution of the USPTO's discretionary framework. From the outset, the IPR framework vested the PTAB with discretionary authority over institution decisions. This discretion was originally designed to avoid duplicative litigation, preserve administrative capacity, and resolve procedural overlaps between PTAB reviews and parallel court actions.
A. The Vidal Memorandum (2022): Narrowing Fintiv's Scope and Easing Access to IPR
In its 2020 precedential ruling in Apple Inc. v. Fintiv, Inc., the PTAB introduced six discretionary factors - commonly known as the Fintiv factors - to assess whether ongoing parallel litigation justified discretionary denial of institution. These six considerations are:
a. Whether the district court has granted or is likely to grant a stay of litigation if the IPR proceeds;
b. Whether the trial date in the district court is near the PTAB's statutory deadline for a final decision;
c. The extent of investment by the court and the parties in the parallel case;
d. The degree of overlap between the IPR issues and those in the court proceeding;
e. Whether the petitioner and the court defendant are the same party;
f. Any other circumstances relevant to the Board's discretion, including the merits of the petition.
The Fintiv framework was quickly adopted as a standard tool for discretionary denial but sparked controversy due to concerns about its inconsistent application, which undermined the IPR system's effectiveness and predictability.
To address these concerns, then - Director Kathi Vidal issued the Vidal Memorandum in June 2022 - formally titled the Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings Involving Parallel District Court Litigation. The memo limited the application of Fintiv in three key situations:
- Strong Invalidity Showing: When the petition includes compelling evidence of unpatentability;
- Parallel ITC Proceedings: When the denial is based on co-pending investigations at the International Trade Commission (as opposed to district court actions);
- Sotera Commitment: When the petitioner pledges not to raise in court any invalidity grounds asserted in the IPR.
By restricting Fintiv's reach, the Vidal Memorandum curbed the overuse of the Fintiv factors and enabled the PTAB to institute more petitions even in the presence of parallel litigation. As a result, IPR institution rates rose steadily during her tenure, averaging 67%.That same month, Trump appointee Coke Morgan Stewart replaced Biden-era Director Kathi Vidal as Acting Director of the USPTO. This leadership change marked the beginning of a significant realignment of the post-grant review system, with Stewart pushing for reforms that would centralize power and streamline the IPR process. Internal data revealed a sharp decline in the IPR institution rate, which fell to just 46% between March and April 2025. Only 54 out of 118 petitions were granted, representing a 22-point drop from the 67% average under Director Kathi Vidal (2022–2024). The sharp decline can be attributed to sweeping procedural reforms introduced by Acting Director Stewart, including a March 2025 memorandum and a series of Director-led decisions aimed at centralizing discretionary authority within the USPTO leadership.
B. A Sharp Policy Reversal: Revoking the Vidal Memo and Reinstating Broad Discretionary Denials
In a significant policy shift, the USPTO, under new leadership, rescinded the Vidal Memorandum on February 28, 2025. In its announcement, the agency reaffirmed the precedential status of decisions like Fintiv and Sotera and declared:
"Any PTAB or Director review decision that relies on the [Vidal] memorandum will no longer be binding or persuasive to the PTAB."
This move dismantled the safe harbors previously provided under Vidal. These included those for compelling invalidity arguments and ITC parallel proceedings. As a result, the full scope of the six Fintiv factors was reinstated, making them once again available for discretionary denials.
The policy shift rebalanced the strategic dynamic: patent owners regained influence in parallel proceedings, while petitioners now face increased uncertainty and the risk of early-stage denial before any substantive review.
C. Stewart Memorandum (March 2025): "Dual-Stage" Review Structure, New Discretionary Criteria, and the Shift of Real Power Away from the PTAB
a. Establishment of a Dual-Stage Review Framework
On March 26, 2025, Acting Director Stewart issued the 'Interim Process for PTAB Workload Management,' marking a fundamental restructuring of the IPR institution phase. The new framework implements a two-stage review system that separates the petition review into distinct components:
- Discretionary Review: Issues involving discretionary denial - including those addressed in precedents such as Fintiv, General Plastic, and Advanced Bionics - are evaluated by a special panel consisting of the Director and three Administrative Patent Judges (APJs). The Director holds final authority to deny institution at this stage.
- Substantive Review: If the petition survives the discretionary phase, it proceeds to substantive examination by a separate panel of three PTAB APJs, focusing on statutory grounds such as novelty and non-obviousness.
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Figure 1: Stewart Memorandum: Establishing a "dual-stage" filing review structure
b. New Discretionary Considerations
In addition to the established precedents of Fintiv, General Plastic, and Advanced Bionics, the Stewart Memorandum introduced new discretionary factors - known as the "Stewart factors" - to guide institution decisions. These include:
- Whether the PTAB or another relevant authority has already ruled on the patentability of the challenged claims;
- Whether any changes in law or legal precedent since the grant could affect the validity of the claims;
- The strength and persuasiveness of the invalidity arguments presented in the petition;
- The extent of the petition's reliance on expert testimony;
- The parties' established expectations, such as how long the claims have been in force;
- Compelling concerns related to economic impact, public health, or national security;
- Any other factor deemed relevant to the Director's exercise of discretion.
c. Diminished Authority of the PTAB Panels
Previously, three-judge PTAB panels had full authority to decide whether to institute an IPR petition, considering both substantive grounds (such as novelty and non-obviousness) and procedural factors (such as the Fintiv criteria) in a single-stage decision. Under the new system, this authority is divided between two stages, with the Director now holding final say in the discretionary review phase. Under the Stewart reforms, this authority has been formally split. The Director now holds a unilateral veto power at the initial discretionary stage - substantially curbing the PTAB's independent judgment. Notably, the Stewart Memorandum identifies "PTAB workload capacity" as a legitimate factor in discretionary review, suggesting that institutional decisions may now hinge as much on internal resource constraints as on legal merit.
Together, these reforms mean that many IPR petitions may be denied before reaching substantive examination, marking a significant shift from limiting Fintiv-based denials to centralizing discretionary control in the hands of the Director.
3. Practical Impact of the New Review Framework: How the Stewart Memorandum Is Shaping IPR Institution Trends at the Discretionary Stage
A. Reinforcement of Fintiv Factors: Consideration of Parallel ITC Proceedings in the Klein Tools Case
In Klein Tools Inc. v. Milwaukee Electric Tool Corp., Acting Director Stewart overturned the PTAB's institution decision, highlighting the increasing consolidation of discretionary power at the Director level. The decision stated:
"Under a proper application of the Fintiv factors, Factors 1 and 4 support denial of institution. Here, the ITC investigation is unlikely to be stayed, and the ITC has already conducted a full evidentiary hearing, with a final determination scheduled six months ahead of the PTAB's statutory deadline. Moreover, the ITC proceeding involves the same parties, challenges the sameclaims, and includes overlapping prior art references.
As for Factor 6, the petition's substantive strength is insufficient to outweigh the other factors supporting denial. Considering all relevant circumstances, denial of institution best preserves the efficiency and integrity of the system."
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Figure 2: Timeline of the Director's Reversal of the PTAB Institution Decision inKlein Tools
(Extended reading: Klein Tools Case Director Review Decision uspto.gov)
Stewart's decision clearly demonstrates an increased emphasis on traditional Fintiv factors. These include the low likelihood of an ITC stay, the completion of a full evidentiary hearing, and a final determination expected six months before the PTAB's statutory deadline. All of these factors ultimately led to overturning the PTAB's institution decision at the discretionary review stage.
B. Advanced Bionics Framework Tightened: Burden of Proof Elevated in the Ecto World Case
The Advanced Bionics framework, established by the PTAB in Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH (2020), is a two-step process for evaluating prior art cited in IPR petitions. It applies in situations where the prior art cited in an IPR petition was already presented during an earlier USPTO examination - such as prior art disclosed in the Information Disclosure Statement (IDS) of the original patent application. The framework condenses the six considerations from Becton, Dickinson into two stages: the first step asks whether the cited prior art or rationale is identical or substantially similar to what was previously reviewed; if so, the second step requires the petitioner to show that the earlier USPTO review involved a material error affecting patentability - typically evaluated under Becton, Dickinson factors (c), (e), and (f).
In the Ecto World, LLC v. RAI Strategic Holdings, Inc. case (May 19, 2025), Acting Director Stewart issued a ruling that further clarified the burden of proof under the Advanced Bionics framework.
- Citing prior art that was already included in the IDS satisfies the first step of the Advanced Bionics
- Even if the examiner did not rely on that prior art in rejecting the claims, the petitioner must still address the second step of Advanced Bionics.
- Under step two, the petitioner must apply Becton, Dickinson factors (c), (e), and (f) to explain how the examiner erred in overlooking the prior art.
The Ecto World decision clearly heightened the petitioner's burden of proof: even where the examiner ignored the IDS-cited reference, a full second-step analysis is still required under< em>Advanced Bionics.
C. Strengthening of Established Expectations: Early Warning Obligations in the iRhythm Case
The case of iRhythm Technologies, Inc. v. Welch Allyn, Co. highlights the increasing weight of the "established expectations" factor in discretionary denial decisions:
a. Factors disfavoring discretionary denial
- Final Written Decision expected August 2026 vs. district court trial scheduled for March 2027
- High likelihood of litigation being stayed
- Minimal investment in the district court proceedings
b. Factors favoring discretionary denial
- Established Expectations - The petitioner had previously cited an application that was later granted as the '007 patent in its 2013 IDS
c. All IPR denial requests were granted
- "The petitioner was aware of the patentee's application but failed to timely seek review, which supports denial and outweighs the other considerations discussed above."
The iRhythm decision introduces a forward-looking obligation on petitioners, requiring them to promptly challenge known patents to avoid the risk of discretionary denial.
4. The Surge in Discretionary Denials: A Deeper Look into Their Role as a Workload Management Tool
Stewart's dual-stage review framework has notably expanded the Director's authority in discretionary decisions, thereby reducing the PTAB's influence over institution determinations. Compounding this shift, ongoing staffing reductions at the PTAB since President Trump's inauguration have further accelerated the transfer of discretionary power.
At the USPTO's official seminar in May 2025, Chief Judge Boalick disclosed the following:
- The number of Administrative Patent Judges (APJs) had dropped by 13%, bringing the total below 200.
- Support staff had been reduced by 17%.
The reduction in personnel, as noted in the Stewart Memorandum's reference to "PTAB workload capacity," has made discretionary denials an effective tool for managing internal workload, further consolidating discretionary authority at the Director level.
Recent filing data reflects this trend, with discretionary denials increasing significantly, which parallels growing concerns about PTAB's workload capacity.
From January 21 to March 23, 2025, discretionary denials made up 15% of all cases (10 out of 66), with 30% (3 out of 10) of those denials citing district court trial dates as a factor.
Between March 24 and April 30, 2025, the discretionary denial rate surged to 59% (38 out of 64), with 79% of those (30 out of 38) citing trial scheduling as the primary reason for denial.
5. Conclusion: Trends and Strategic Recommendations Amid Institutional Uncertainty
The U.S. IPR regime is undergoing a phase of institutional rebalancing - from a petitioner-friendly approach under Vidal to a more structurally constrained, workload-focused framework under Stewart, which limits the PTAB's discretion in institution decisions.
For Chinese companies and global innovators, this shift presents both strategic challenges and opportunities that must be carefully navigated in order to remain competitive in the U.S. patent landscape.
First, the timing for asserting or challenging patent rights in the U.S. must be carefully reassessed, as the shift in discretionary authority under Stewart may lead to increased delays or denials at the PTAB, requiring petitioners to act earlier.
Second, a thorough understanding of how the Fintiv factors and related discretionary considerations operate under the new regime is essential, as they will significantly influence the likelihood of IPR institution.
Third, petitioners should now prepare more robust invalidity arguments, act with greater urgency to align with shifting deadlines, and manage parallel litigation with careful strategic precision to maximize the chances of success.
Finally, with the PTAB playing a diminished role, it is crucial to give increased attention to alternative routes such as Ex Parte Reexamination (EPR), district court proceedings, or Section 337 investigations, which may offer more favorable outcomes and greater flexibility under the new framework.
While the Stewart regime may favor patent owners by streamlining the patent dispute process, it presents significant challenges for alleged infringers, including increased difficulty in securing IPR institution and more pressure to litigate in district courts. Further structural and policy shifts in the IPR process are likely, making it essential for stakeholders to stay agile in response to these evolving dynamics. Chinese and international stakeholders must closely track these developments, proactively adapt their U.S. patent strategies in real time, and remain prepared to pivot as the IPR landscape continues to evolve.
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