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22 October 2025

USPTO Announces Director Institution Of AIA Trial Proceedings And Issues Notice Of Proposed Rulemaking Impacting Institution Of Inter Partes Review

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On October 17, 2025, the United States Patent and Trademark Office ("USPTO") issued a memorandum returning institution authority under 35 U.S.C. §§ 314 and 324 to the Director...
United States Intellectual Property
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On October 17, 2025, the United States Patent and Trademark Office ("USPTO") issued a memorandum returning institution authority under 35 U.S.C. §§ 314 and 324 to the Director1 and published a notice of proposed rulemaking proposing modifications to the rules of practice that the Patent Trial and Appeal Board ("PTAB") uses in instituting inter partes review ("IPR").2 The proposed changes would require broad stipulations from petitioners as a condition on institution and dramatically limit the circumstances in which an IPR can be instituted or maintained.

Return of Institution Authority to the Director

Effective October 20, 2025, the Director of the USPTO will determine whether to institute trial for IPR and post-grant review ("PGR") proceedings. This marks a departure from prior practice, in which the institution authority was delegated to a panel of Administrative Patent Judges and, more recently, in which authority to exercise discretion to deny a petition was delegated to the Acting (now Deputy) Director and, if the petition was not discretionarily denied, the ultimate institution decision was delegated to a panel of Administrative Patent Judges.

Similar to the discretionary considerations process implemented in March 2025, the Director, in consultation with at least three PTAB judges, will determine whether to institute trials in all IPR and PGR proceedings. Upon reviewing discretionary considerations, the merits, and non-discretionary considerations, the Director will issue a summary notice to the parties either granting or denying institution. The memorandum suggests that lengthier institution decisions may issue where novel or important factual or legal issues are presented, and leaves open the possibility that the Director may refer the decision on institution to one or more members of the PTAB when detailed treatment of issues raised in a petition is appropriate.

Notably, the process for briefing discretionary considerations outlined in the March 26, 2025, Interim Processes memorandum will remain the same. In an open letter released with the memorandum, Director Squires explained that returning institution authority to the Director is intended to eliminate the appearance of self-interest, remove a perceived referral-signal bias, enhance transparency and public trust, and re-align the duties and responsibilities of the Director to properly effectuate the language of the AIA.3

Proposed Rulemaking Impacting Institution of Inter Partes Review

The notice proposes significant changes to 37 C.F.R. § 42.108, which governs institution of IPR.4 Among the most significant changes, the proposed rules would require a "stipulation for efficiency" from petitioners as a condition for institution.5 Under this proposed rule, an IPR "shall not be instituted or maintained" unless each petitioner files a stipulation stating that "if a trial is instituted, the petitioner and any real party in interest or privy of the petitioner will not raise grounds of invalidity or unpatentability with respect to the challenged patent under 35 U.S.C. 102 or 103 in any other proceeding."6

If implemented, the rule would limit petitioners' ability to raise invalidity arguments in other forums (e.g., district court) beyond what would be found in a typical Sotera stipulation and encompass defenses that cannot be raised in IPRs (e.g., arguments based on system art, the on-sale bar, and public use). Notably, the stipulation would extend to the challenged patent and not just the claims challenged in the IPR.

The proposed rules would also significantly limit the circumstances in which an IPR can be instituted. The proposed rules provide that an IPR shall not be instituted or maintained if the validity of a challenged claim under 35 U.S.C. 102 or 103 (or an independent claim from which a challenged claim depends) was considered in a prior proceeding and found not invalid (e.g., a district court trial, district court summary judgment, International Trade Commission ("ITC") investigation, PTAB trial, ex parte reexamination, or Federal Circuit appeal).7 While the PTAB has long taken into account whether the same art or arguments have previously been considered by the Office for purposes of discretionary denial,8 the proposed rules go significantly further, effectively barring an IPR after a single determination of validity under sections 102 or 103 in any forum.

The proposed rules also would preclude instituting or maintaining an IPR where it is "more likely than not" that a parallel litigation in the district court, ITC, or PTAB, involving the challenged patent would address validity of a challenged claim under 35 U.S.C. 102 or 103 before the due date for a final written decision. This rule would effectively codify Fintiv9 Factor 2 and make it dispositive, though questions remain about what would be required to satisfy the "more likely than not" standard given the uncertainty of parallel trial dates.

Notwithstanding the above, the proposed rules provide for institution in "extraordinary circumstances."10 What qualifies as extraordinary circumstances, however, appears narrow and includes "a determination by the Director that [a] prior challenge barring institution was initiated in bad faith" or a substantial change in statute or Supreme Court precedent.11 Under the proposed rule, extraordinary circumstances expressly do not include new or additional prior art, new expert testimony, new caselaw, or new legal argument.12

According to the notice, the new rules are intended to focus IPR proceedings on patent claims that have not previously been challenged in litigation or where prior litigation was resolved at an early stage, as well as to promote fairness, efficiency, and predictability in patent disputes.13 From a practical standpoint, the proposed rules clearly favor patent owners over petitioners. If implemented, the proposed rules would preclude multiple validity challenges and severely limit circumstances in which an IPR can be instituted (and, apparently, limit the circumstances in which ongoing proceedings can be maintained).

The notice sets a 30-day period for comments. The PTAB Practice Group at Baker Botts is monitoring these developments closely and stands ready to assist as new developments occur.

Footnotes

1 See John A. Squires, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Memorandum: Director Institution of AIA Trial Proceedings (Oct. 17, 2025) (available at Memorandum).

2 See Revision to Rules of Practice Before the Patent Trial and Appeal Board, 90 Fed. Reg. 48335 (Oct. 17, 2025) (amending 37 C.F.R. § 42.108). The notice of proposed rulemaking is available at Federal Register :: Revision to Rules of Practice Before the Patent Trial and Appeal Board.

3 See John A. Squires, An Open Letter From America's Innovation Agency (Oct. 17, 2025) (available at open-letter-and-memo_20251017.pdf).

4 See 90 Fed. Reg. at 48341.

5 Id.

6 id.

7 id.

8 See Advanced Bionics, LLC v. Med-El Elektromedizinische Gerate GMBH, IPR2019-01469, Paper 6 (P.T.A.B. Feb. 13, 2020) (precedential).

9 See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5-6 (P.T.A.B. Mar. 20, 2020) (precedential).

10 90 Fed. Reg. at 48341.

11 See id.

12 See id.

13 See id. at 48335.

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