Acting USPTO Director Coke Morgan Stewart has steadily expanded the use of discretionary denials at the Patent Trial and Appeal Board (PTAB) since assuming her role in January. After withdrawing guidance from her predecessor, Kathi Vidal, that limited such denials based on parallel litigation under the NHK-Fintiv rule, Stewart has imposed a broader set of factors upon which a PTAB petition can be denied and has taken over the discretionary denial process herself as part of a new two-stage institution procedure. Since then, the acting director has applied these new factors extensively, even applying them to pending inter partes review (IPR) petitions filed before the withdrawal of the Vidal guidance—prompting two recent mandamus petitions from impacted petitioners, and a subsequent series of amicus briefs from industry stakeholders. Meanwhile, Stewart has issued a series of decisions that could further increase the use of discretionary denials, including one that could curtail IPRs against patents that have been in force longer due to "settled expectations".
Stewart Rolls Back Prior Fintiv Restrictions
The aforementioned guidance, issued by former Director Vidal in June 2022, limited the application of the NHK-Fintiv rule by creating several safe harbors allowing petitioners to avoid discretionary denials in certain circumstances. In part, the guidance essentially exempted AIA reviews that are especially likely to succeed, establishing that the Board should not discretionarily deny petitions that present "compelling, meritorious challenges". The guidance also established that the NHK-Fintiv factors apply only to district court litigation and not investigations before the ITC, since the latter lacks the power to issue binding invalidity rulings. Additionally, the guidance provided that discretionary denial would not occur where petitioners agree not to assert invalidity grounds that they raised or reasonably could have raised at the PTAB in a parallel district court case—formalizing a practice established in the PTAB's December 2020 precedential decision in Sotera Wireless v. Masimo, now known as a "Sotera stipulation". The guidance also lessened the impact of the controversial NHK-Fintiv factor allowing discretionary denial when the PTAB's final written decision falls after a scheduled trial date, stating that this factor alone cannot tip the scales toward denial under NHK-Fintiv when the other factors are neutral, and further clarified that this determination must be made based on aggregate data, including the district's median time to trial.
However, Stewart returned the PTAB to the prior status quo on February 28, 2025, when the USPTO announced that it had withdrawn the 2022 guidance and all decisions relying upon it—instead referring parties back to the PTAB's precedential decisions in Apple v. Fintiv (the underlying decision, designated as precedential in 2020, that memorialized the five NHK-Fintiv factors, building on NHK Spring v. Intri-Plex Technologies, designated in 2019) and Sotera Wireless v. Masimo (discussed above). PTAB Chief Administrative Patent Judge (APJ) Scott Boalick clarified that withdrawal in a March 24 memorandum (the "Boalick memorandum") that explicitly repudiates the key points from the rescinded 2022 guidance: It explicitly established that the NHK-Fintiv factors will also apply for parallel ITC actions; explained that Sotera stipulations may be "highly relevant" but not dispositive on their own; loosened the "time to trial" factor by allowing any evidence bearing on district court trial dates or ITC final determination target dates; and underscored that "compelling merits" alone cannot be "dispositive" in the discretionary denial inquiry, providing instead that the merits are just one of the factors to be considered in a "balanced assessment". The Boalick memorandum also provided that the withdrawal applied to all PTAB proceedings in which the Board had not yet issued an institution decision or in which a request for rehearing or director review was filed and remained pending.
Two days later, on March 26, Stewart issued a memorandum that established a new two-stage process for AIA review institution: First, the USPTO director is to make a determination as to the discretionary denial factors, doing so in consultation with three PTAB APJs, and will then issue a decision explaining the reasons why discretionary denial is appropriate or inappropriate. If the latter, the director will refer the case to a standard three-member PTAB panel that will then make an institution decision that addresses the merits and other non-discretionary statutory considerations. In making her discretionary denial determination, the memorandum provides a broader list of relevant considerations drawn from certain precedent, including Fintiv; General Plastics, which lays out factors under which multiple petitions from the same petitioner can be discretionarily denied; and Advanced Bionics, which covers discretionary denials where the USPTO has previously considered the asserted prior art or arguments. The memo additionally notes that the director will also consider the PTAB's workload, including its ability to hit the statutory deadlines for AIA review trials, in making that determination—a change that is of particular significance given the sweeping staffing changes being enacted across the federal government by the administration of President Donald Trump.
Application of Withdrawal to Pending Petitions Prompts Pushback
The USPTO now faces Federal Circuit pushback from two PTAB petitioners, SAP and Motorola Solutions, that had filed IPRs prior to the withdrawal of the Vidal guidance, in which they agreed to broad Sotera stipulations in order to avoid discretionary denial as provided in the guidance.
In SAP's case, the withdrawal of that guidance, and the Boalick memorandum's extension of that withdrawal to pending IPRs, both took place before the PTAB had issued its institution decisions. As a result, when the Board did so (handling discretionary denial rather than the director doing so separately and first, as the two-stage process only applies for those IPRs with a preliminary response filed on or after March 26), it granted patent owner Cyandia, Inc.'s requests for discretionary denial—finding that because SAP's Sotera stipulation would not bar it from asserting an district court invalidity defense based on the public use or sale of the same prior art (i.e., system prior art), a ground not available in the IPR, the stipulation would not sufficiently avoid duplicative litigation.
The Motorola IPRs, meanwhile, had already been instituted by the time that Stewart withdrew the guidance, the PTAB having done so weeks beforehand. However, Stewart reversed those institution decisions two days after the Boalick memorandum's issuance, in response to a request for director review from patent owner Stellar, LLC. Stewart ruled in part that the PTAB had given Motorola's Sotera stipulation too much weight because Motorola also asserted district court invalidity arguments based on system prior art that the stipulation was unlikely to moot.
– SAP and Motorola File Mandamus Petitions
Both parties then turned to the Federal Circuit—but since direct appeals of matters related to institution are barred under the Supreme Court's Cuozzo Speed Technologies v. Lee decision, they did so through petitions for writ of mandamus, which Cuozzo—as interpreted by the Federal Circuit in Mylan Laboratories v. Janssen Pharmaceutica—allows for "colorable constitutional claim[s]" related to discretionary denials.
SAP's mandamus petition underscores that former Director Vidal issued the June 2022 memorandum under her "authority to issue binding agency guidance to govern the PTAB's implementation of various statutory provisions". The petition alleges that SAP relied on that "binding guidance" to take its time investigating prior art and drafting its petition, knowing that under the guidance SAP would be able to avoid discretionary denial by submitting a Sotera stipulation. SAP asserts that by withdrawing the guidance without explanation and without considering the reliance interests of petitioners like SAP, and then by making the withdrawal apply retroactively to pending IPR petitions, the USPTO violated the Due Process Clause of the Fifth Amendment to the US Constitution.
SAP additionally alleges that the USPTO violated the separation of powers through its treatment of the Sotera issue. The AIA, SAP notes, establishes that an IPR petitioner is estopped (or barred) from asserting any ground that it raised or could have raised in its IPR. SAP explains that as interpreted by the Federal Circuit's May 7, 2025 opinion in Ingenico v. IOENGINE, "the estoppel statute bars a petitioner from raising in district court any Section 102 or 103 invalidity ground based on patents or printed publications that it reasonably could have raised in the IPR" (noting that Ingenico explicitly held that IPR estoppel does not encompass district court invalidity claims based on system prior art). SAP asserts that when the PTAB issued a discretionary denial despite its Sotera stipulation, and held that SAP would have had to agree to also "forgo unpatentability challenges based on system art that it could not have raised in IPR" to overcome that denial, the USPTO had "effectively conditioned institution on SAP accepting a level of invalidity defense forfeiture in court at odds with Congress's statutory framework". That "inconsistency with the statute", per SAP, violates the separation of powers.
Motorola's mandamus petition, filed on June 23, also asserts that the USPTO violated the Fifth Amendment's Due Process Clause by retroactively applying the withdrawal of the Vidal guidance. Per Motorola, such a violation also occurred through the Acting Director's refusal, in response to its requests for hearing, to consider certain post-withdrawal facts and arguments, including Motorola's offer of an expanded Sotera stipulation covering all district court prior art invalidity arguments as well as the district court's stay of the parallel case and subsequent vacatur of the trial date.
Motorola additionally asserts that both the withdrawal of the Vidal guidance and the "retroactive" application of that withdrawal violate the Administrative Procedure Act (APA), arguing that when Vidal adopted a "binding" rule through the June 2022 guidance, it could not be later rescinded by Stewart without notice-and-comment rulemaking.
In both mandamus proceedings, the Federal Circuit has ordered Stewart and the respective patent owners to file responses to the petitions.
– Amicus Briefs Supporting SAP
A host of industry associations have also sought to file amicus briefs in support of the petitioners in both cases.
Among those weighing in for SAP is the Public Interest Patent Law Institute (PIPLI), which filed its proposed brief on June 20. PIPLI argues that when the USPTO withdrew the Vidal guidance, it failed to meet the requirements for an agency to lawfully change its policies as laid out by the Supreme Court in its April 2025 decision in Food & Drug Administration v. Wages & White Lion Investments. Under that ruling, PIPLI explains, an agency must (1) "provide a reasoned explanation for the change," (2) "display awareness that [it is] changing position," and (3) "consider serious reliance interests". Per PIPLI, the USPTO's initial, three-sentence withdrawal announcement and the Boalick memorandum failed to provide a "reasoned explanation" for the USPTO's change in policy and failed to consider the "reliance interests" of current or prospective petitioners.
Moreover, PIPLI argues that the change failed to show "awareness" of the change by "purporting to 'restore' guidance while announcing entirely new policies". In particular, PIPLI asserts that the Boalick memo goes beyond Fintiv through its extension of the Fintiv test to ITC proceedings: This change, PIPLI argues, "practically . . . guarantees IPR petitions will be denied when ITC proceedings are underway" because ITC rules set forth a "projected final determination date within 16 months—two months earlier than PTAB's 18-month deadline for final written decisions". PIPLI also contends, more briefly, that the withdrawal of the Sotera safe harbor similarly exceeded the prior policy by going "beyond any guidance the agency had previously provided".
PIPLI additionally lays out the USPTO's adherence to the rule of law in this instance as "an issue of paramount importance to the public"—highlighting research on how IPRs leading to the invalidation of drug patents have led to reductions in drug prices, as well as the role of IPRs in helping to protect the public's interest in ensuring that "that patent monopolies are kept within their legitimate scope" (citation omitted). PIPLI further asserts that the erosion of "certainty, transparency, and fairness" resulting from these changes will deter potential petitioners from investing in validity challenges and, in turn, "prolong" the aforementioned harms with regard to drug pricing.
Also weighing in for SAP was a group of industry associations—US Manufacturers Association for Development and Enterprise (d/b/a US*MADE), the Alliance for Automotive Innovation, ACT | The App Association, the High Tech Inventors Alliance, and the Computer & Communications Industry Association (CCIA) (named in that order)—that also sought leave to file a proposed amicus brief on June 20. The amici argue that "an administrative agency such as the USPTO cannot apply new rules retroactively" without express authorization from Congress, which the agency lacks here. They also contend that the withdrawal of the "safe harbors" provided by Sotera stipulations and the "compelling merits" standard is being applied not just retroactively but unconstitutionally, as a violation of due process.
The amici relatedly assert that since the withdrawal, "at least 74 inter partes review petitions have been procedurally barred under Fintiv despite the petitioner's entry of a Sotera stipulation", petitions that the brief alleges would have all been immune from Fintiv under the Vidal guidance. "These retroactive procedural denials are deeply prejudicial to petitioners", the amici allege, noting that "[t]he PTAB is the only adversarial forum for reviewing patent validity that is staffed by technical experts" and stating that in the amici's experience, the PTAB "provid[es] a markedly more reliable and accurate form of patent validity review" as a result.
Additionally, the amici lay out various other decisions laying out other recent discretionary denial decisions establishing retroactive rules that raise due process concerns—including one, in iRhythm v. Welch Allyn, that is discussed in further detail below.
– Amicus Briefs Supporting Motorola
Among the three amici filing briefs for Motorola was the same group of industry associations as the second brief discussed above—minus the CCIA, which filed its own separate brief instead. The first two sections of the group's brief, dealing with the impropriety of the USPTO's retroactive rule, and resulting due process issues—are "substantially the same" as the corresponding sections in the group's SAP brief. In lieu of its recap of recent rulings, the group instead "addresses USPTO arguments that agency 'discretion' immunizes PTAB procedural rules from the constraints of the" APA. Specifically, while the USPTO has asserted that Fintiv is not a "rule" for APA purposes because it does not dictate how the PTAB decides cases and is a mere statement of policy, the amici argue that Fintiv is in fact a rule, because—despite its "multi-factor and purportedly 'holistic' nature"—Fintiv operates in a "binding" fashion by shortening filing deadlines with only limited exceptions like inconsistently applied "strong" merits.
The CCIA, in a separate brief, also argues that Fintiv is a rule that was implemented without a formal rulemaking process as required by the APA. The organization further asserts that the USPTO has unreasonably expanded the scope of director's discretion over institution; and that even if the director's discretion does reach that far, she must still explain the merits.
Also filing an amicus brief for Motorola was Unified Patents, which highlights the frequent changes that have impacted the Fintiv rule over the years—and argues that as a result, it is not just "bad policy", it is also an "erratic policy" (emphasis in original). After giving a history of Fintiv and subsequent decisions being designated as precedential, including Sotera; the issuance of the Vidal memo; and the Biden administration's ultimately unsuccessful rulemaking efforts from 2023 and 2024; Unified proceeds to assert that the USPTO's rulemaking in Fintiv and follow-on decisions "must be reined in, especially for rules that already failed the rigor of formal rulemaking required by the" APA.
Decision Allowing Denials Based on "Settled Expectations" Draws Controversy
As noted above, Stewart has continued to issue decisions that could further expand the use of discretionary denials since withdrawing the Vidal guidance. One that has attracted some of the most heated criticism has been Stewart's June 6 decision in iRhythm v. Welch Allyn.
In the March 26 memorandum that created the bifurcated institution process, Stewart set forth a series of factors the director may consider in deciding whether to discretionarily deny institution—including "[s]ettled expectations of the parties, such as the length of time the claims have been in force". The iRhythm decision makes it clear that Stewart may deny institution solely on the basis of such "settled expectations": In that case, the acting director noted that the petitioner had cited the then-pending application that would issue as the challenged patent in a 2013 Information Disclosure Statement (IDS) filed in its own patent application, finding that that "awareness of Patent Owner's applications and failure to seek early review of the patents favors denial and outweighs the above-discussed considerations".
Former Director Vidal has since warned that the iRhythm decision could have "far-reaching and damaging consequences", stating in a June 9 interview with MLex that the ruling "discourages applicants from searching for prior art during prosecution, weakening patents overall", and places "an unreasonable expectation on innovators to track every patent application they list that may later mature into a patent and to predict infringement arguments that may be made 12 years later on products that do not yet exist". Vidal further predicted that the decision could force companies to "forego a potentially meritorious patent challenge down the road, simply because of the passage of time" (as summarized by MLex). Those two outcomes, Vidal stated, would be "illogical and detached from the realities of patent enforcement", further cautioning that "[e]nabling weak patents to survive through every discretionary loophole encourages opportunistic litigation behavior and frivolous suits, erodes confidence in the patent system, stifles innovation, and harms the very job of creators the system is meant to support".
Stakeholders have also sparred over whether "settled expectations" should protect petitioners or patent owners. Vidal, for instance, has argued for the former, telling Law360 that patent owners should have "no expectation that a patent would be upheld, since there's always been some way to challenge them" (as summarized by Law360). Josh Malone, an inventor and fellow at US Inventor, has countered that inventors should only have to face a shorter window available for PGRs to gain "quiet title" to their inventions, rather than IPRs being filed years later. Yet Stanford Law School Professor Mark Lemley has said that there is a reason early challenges may not be practical, explaining that while "individuals could be aware a patent exists, they may not make a product that could be infringing until years later" (as summarized by Law360)—while late challenges often result from a patent nearing the end of its life that is sold to an NPE for assertion.
Stewart has more recently clarified the metes and bounds of the "settled expectations" factor in a series of follow-on discretionary denial decisions: On June 18, Stewart held in Dabico Airport Solutions v. AXA Power that "[a]lthough there is no bright-line rule on when expectations become settled, in general, the longer the patent has been in force, the more settled expectations should be". The ruling also provided that since patent applications (after 18 months) and issued patents are publicly available, "actual notice of a patent or of possible infringement is not necessary to create settled expectations". However, in a June 26 decision granting a discretionary denial request from Proxense LLC against Intel, the acting director ruled that there may be certain "persuasive reasons" why the PTAB should still review a patent "several years after" its issue date, including where there has been a "significant change in law" that bears on patentability (one of the factors specified in the March 26 memo establishing the two-stage institution process), or where the patent has not been "been commercialized, asserted, marked, licensed, or otherwise applied in a petitioner's particular technology space, if at all".
On July 3, petitioner iRhythm Technologies filed a request for director review of Stewart's discretionary denial decision, noting that the ruling had "unsettled the IP community" (citing some of the aforementioned criticism). iRhythm further asserted that Stewart had not considered all of the "settled expectations" here: that while it had launched its first product in 2012 (the year the earliest challenged patent issued) and has since continued to release new products, patent owner Welch Allyn sat on its patents and watched the market develop. Thus, the petitioner argues that the acting director had failed to "consider the expectations Welch Allyn's inaction created". iRhythm additionally contends that the "settled expectations" policy runs counter to Stewart's stated goals of "laudable goals of reducing the PTAB's workload and improving patent quality" by incentivizing "mass filing of IPRs, even for patents that may never be asserted, a wasteful outcome for both parties and the PTAB". The petitioner also argues that by creating the "settled expectations" concept and applying it retroactively, the USPTO has violated the APA and due process.
Stay tuned for RPX's upcoming report on the second quarter for more on the PTAB—and the other trends that shaped patent litigation in Q2.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
