Back in March, I wrote about Acting Director Coke Morgan Stewart’s overhaul of the pre-institution discretionary denial process. Since then, much has been written on the topic and, for better or worse, the dust has started to settle, and one thing is clear: discretionary denials are on the rise. Here’s a concise update on where things stand and what it means for stakeholders.
- Overview. The new discretionary denial framework was introduced by the Acting Director in a Memorandum and further clarified in a Boardside Chat and updated FAQs. The stated goals of the new process are to: (i) reduce pendency for ex parte appeals and AIA statutory deadlines, (ii) improve PTAB efficiency, and (iii) promote consistency in discretionary considerations.
- Updated Statistics. In 2024, excluding pre-institution settlements, the PTAB’s institution rate was around 75%. Under the new regime, it has dropped to approximately 35%--a dramatic 40% decline that reflects a major policy shift. Key grounds for discretionary denial include: the new “settled expectations” doctrine, ongoing parallel proceedings, and impending trial dates in related litigation.
- Settled Expectations. In June, the Acting Director issued her first discretionary denial decision based on “settled expectations.” See iRhythm Techs. v. Welch Allyn, Inc., IPR2025-00363, Paper 10. Under this doctrine, institution may be denied based on the failure to challenge the patent early in its life. Although the Director’s opinion in iRhythm considered the petitioner’s early knowledge of the patent (e.g., shown in an IDS), follow-on decisions indicate that such knowledge is not required for denial under this doctrine. While there’s no bright-line rule, the PTAB has pointed to the six-year damages window under 35 U.S.C. § 286 as a reference point. For example, in Kahoot! AS v. Interstellar Inc., IPR2025-00696, Paper 12, the PTAB found that a patent in force for over six years had “strong settled expectations.”
- PGR free pass. Another discretionary denial trigger is the so-called “follow-on petition”—a petition filed after a previous one was denied. Emphasizing that early patent challenges are favored, however, the Acting Director recently indicated that “petitions for inter partes review will generally not be discretionarily denied because of an earlier petition for post-grant review when the post-grant review was not instituted.” LifeVac v. DCSTAR, IPR2025-00454, Paper 11. Thus, petitioners have increased flexibility after an initial PGR challenge fails.
- Strategic Considerations.
- Patent Owners: If asserting a patent is part of your long-term plan, consider waiting at least six years from issuance to file suit. Doing so may shield the patent from later IPR challenges under the “settled expectations” doctrine.
- Defendants: If sued early in a patent’s lifetime, file your IPR petition as soon as possible—don’t wait until the one-year bar under 35 U.S.C. § 315(b) is about to expire.
- Freedom-to-Operate (FTO): Now more than ever, recurring FTO reviews are crucial. Identifying concerning patents early allows time to file a PGR or IPR well within the “safe” window.
- PGR Strategy: Don’t be afraid of filing a PGR. Even if it is denied institution, that shouldn’t be held against you in filing a follow-on IPR petition based on better art and arguments.
- Docketing Tip: For any potentially problematic third-party patent, docket the five-year anniversary of issuance. That gives a one-year cushion to assess and file any necessary IPR before “settled expectations” arguments take hold.
