Introduction

A long time ago—well, in 2022—the forces of petitioners at the Patent Trial and Appeal Board (“PTAB”) believed they had secured a decisive victory. The Vidal Memo had curtailed discretionary denials under Fintiv, restoring predictability to inter partes review (“IPR”) strategy. For a time, the galaxy of patent litigation settled into a familiar rhythm, with roughly 70% of all patent claims challenged at the PTAB facing invalidation.

But peace was short-lived.

In 2025, under the leadership of Acting Director Coke Stewart (the “Director”), discretionary denial returned with unprecedented powers. Now, before a petition can even reach the merits stage, it must first survive a separate review by the Director’s office—a tribunal wielding its discretion like a force. In this new PTAB saga, if a defendant once had the chance to challenge a patent but chose not to, the gate may close permanently.

This article explores the reawakening of discretionary denial, the rise of the bifurcated institution process, and the weaponization of “prior opportunity” and “settled expectations” as decisive forces in post-grant battles. Whether one represents accused infringers or patent owners, one truth is clear: discretionary denial has returned.

Background: From Vidal to Stewart

In June 2022, former USPTO Director Kathi Vidal issued a memo that curtailed the PTAB’s use of discretionary denial under Apple Inc. v. Fintiv, Inc., 958 F.3d 1338 (Fed. Cir. 2020). The Vidal memo instructed PTAB panels to avoid denying institution solely based on parallel district court litigation if the petition presented “compelling merits” or included a full Sotera-style stipulation (i.e., a waiver of invalidity arguments in the parallel lawsuit). That memo was largely welcomed by technology companies and petitioners who viewed Fintiv as too subjective and arbitrary.

However, on February 28, 2025, the USPTO formally rescinded the Vidal memo. The Director announced a new “Interim Process for PTAB Workload Management,” centralizing discretionary denial decisions within the Director’s office. This policy change, formally implemented on March 26, 2025, bifurcates IPR into two stages: an initial discretionary denial review followed by merits review only if the petition survives the first stage. This structural overhaul represents the most significant change to PTAB proceedings since the enactment of the America Invents Act itself.

The New Two-Stage Review Process

Under this bifurcated regime, the first stage involves a discretionary denial review in which a panel led by the Director evaluates petitions solely on discretionary factors, including the Fintiv considerations such as timing of parallel litigation, overlap of issues, and the existence of a Sotera stipulation, as well as public interest concerns and the petitioner’s “prior opportunity” to challenge the patent. Only if the petition survives discretionary review does it proceed to the second stage, where a merits panel evaluates whether there is a reasonable likelihood that the petitioner would prevail under 35 U.S.C. § 314(a). The Director’s office has instituted a structured briefing process allowing up to 14,000-word submissions for both parties and a 5,600-word reply by the petitioner, formalizing the advocacy stage and mirroring traditional litigation practice in its complexity and procedural rigor.

Recent Director Decisions

Since the USPTO implemented its interim discretionary denial framework, the Director has issued eighteen decisions, granting discretionary denial in seven petitions while allowing eleven to proceed to merits review. These decisions illustrate how the Director weighs policy goals, fairness, efficiency, and litigation posture in exercising discretion, with prior opportunity and settled expectations emerging as decisive, independent grounds for denial.

The iRhythm v. Welch Allyn decision exemplifies the weight of prior opportunity. Despite favorable timing and a full Sotera stipulation, the Director denied five IPRs because iRhythm had cited the asserted patent in its information disclosure statements as early as 2013 but waited to challenge it until after litigation commenced in 2025. The Director concluded that permitting a challenge after more than a decade of awareness would undermine the patent owner’s settled expectations and reward strategic delay. This decision establishes prior opportunity to challenge—independent of the statutory one-year bar—as a powerful discretionary denial factor, particularly when long-standing awareness exists without proactive action.

The AXA Power decision on June 18, 2025, further expanded the settled expectations doctrine. The Director granted discretionary denial solely because the patent had been in force for nearly eight years, reasoning that time alone favors settled expectations. She explained that although there is no bright-line rule for when expectations become settled, patents gain stability the longer they remain unchallenged. Drawing policy parallels to 35 U.S.C. § 286, which limits damages recovery to six years before a complaint, the Director underscored that settled expectations are rooted in fairness to patent owners and the public, as patents are limited-duration property rights intended to provide certainty if unchallenged over time.

Other denials, such as Arm v. Daedalus Prime and Ericsson v. Procomm International, focused on trial timing, where district court trials were scheduled months before projected PTAB decisions. In Tessell v. Nutianix, denial was based on fairness, as former Nutianix employees sought to invalidate a patent they themselves had been awarded before leaving to start Tessell, with the Director concluding that allowing inventors to later attack their own issued patents was not an appropriate use of PTO resources. Similarly, Advanced Micro Devices v. Concurrent Ventures and Shenzen Tuozhu v. Stratasys were denied due to parallel proceedings creating inefficiencies that even a Sotera stipulation could not fully alleviate.

Conversely, eleven petitions survived discretionary denial. In Twitch v. Razdog and Amazon v. NLGiken, absence of imminent trial dates and likely stays favored institution. In Globus v. Spinelogik, the patent had expired four years earlier, undermining settled expectations arguments. Tesla avoided denial in multiple proceedings by demonstrating that the complexity and diversity of patents at issue favored PTAB adjudication. In Charge Fusion, Tesla showed material PTO error, justifying institution. Other cases such as Resmed v. Cleveland Medical Devices and Merck v. Halozyme emphasized that early challenges promote robust, predictable patent rights, while Microsoft v. Partec allowed institution despite timing factors due to material examination error. Savant v. Feit Electric demonstrated diligence by filing a new IPR within three months of new claims being asserted in district court, and Imperative Care v. Inari Medical was instituted because there was no trial date, a stay was likely, and the patent had issued recently.

Together, these decisions reveal that prior opportunity and settled expectations now operate as decisive discretionary denial doctrines, shifting the analysis beyond traditional procedural timing to questions of diligence, fairness, and institutional policy.

Strategic Implications

The Director’s emerging discretionary denial doctrine significantly reshapes strategic considerations for both petitioners and patent owners. For petitioners, these decisions underscore the critical importance of early action and diligence. Awareness of a patent—whether through IDS citations, internal competitor monitoring, or licensing discussions—creates immediate risk under the prior opportunity doctrine if an IPR is not filed promptly. Petitioners must implement robust monitoring processes and evaluate potential exposure well before litigation commences to avoid discretionary denial based on delay or strategic inaction.

Moreover, petitions must now be framed as institutionally justified, not merely strong on the merits. Demonstrating diligence, explaining the timing of filing, and rebutting settled expectations with evidence of lack of awareness, recent commercialization, or intervening legal developments will be essential to overcoming these procedural hurdles.

For patent owners, the expansion of prior opportunity and settled expectations doctrines provides powerful defensive leverage. Demonstrating petitioner awareness through prosecution history citations, licensing negotiations, or public statements can establish strategic delay and bolster settled expectations arguments. Additionally, emphasizing the duration the patent has been in force reinforces discretionary denial positions, as the Director has explicitly drawn policy parallels to statutory six-year damages limitations as a guidepost for when expectations become settled.

Finally, these decisions highlight the importance of narrative framing. The Director’s opinions increasingly reflect policy-based rationales rooted in fairness, efficiency, and resource stewardship rather than mere procedural formalism. Both petitioners and patent owners must adapt their strategies to this broader institutional context, crafting petitions and responses that not only satisfy statutory requirements but also align with the USPTO’s overarching goals of certainty, timely resolution, and equitable enforcement of patent rights in a dynamic innovation economy.

Conclusion

The PTAB’s March 2025 procedural reforms mark a decisive return to discretionary denial as a potent force in post-grant proceedings. Through its bifurcated process and the expanding doctrines of prior opportunity and settled expectations, the USPTO has empowered patent owners to block late-stage challenges and compelled petitioners to act with greater diligence and strategic foresight. In this climate, success at the PTAB depends as much on timing and narrative as on legal strength. Understanding and engaging with the discretionary denial framework is now an essential element of any effective patent litigation and validity strategy.

Sources

1. USPTO, “Interim Process for Discretionary Denials,” March 26, 2025, available at www.uspto.gov.
2. IPWatchdog, PTAB 70% Claims Invalidation Rate Continues to Raise Concern (Jan. 12, 2025),?https://ipwatchdog.com/2025/01/12/ptab-70-claims-invalidation-rate-continues-source-concern/id=184956.
3. Baker Donelson, “USPTO’s New Director Review Process: Bifurcation and Strategy,” June 2025, available at www.bakerdonelson.com.
4. Reuters, “Patent Office Introduces New Discretionary Denial Process,” May 16, 2025, available at www.reuters.com/legal/legalindustry/patent-office-introduces-new-discretionary-denial-process-challenges-issued-2025-05-16.
5. IPWatchdog, “PTAB’s Director Review: A New Era of Discretionary Denial,” May 2025, available at www.ipwatchdog.com.
6. IPWatchdog, “Stewart Expands on ‘Settled Expectations’ Criteria,” June 19, 2025, available at www.ipwatchdog.com/2025/06/19/stewart-expands-settled-expectations-criteria-interim-discretionary-denial-process/id=189750.
7. IPWatchdog, Recapping Stewart’s Director Discretionary Denial Decisions So Far, June 16, 2025, https://ipwatchdog.com/2025/06/16/recapping-stewarts-director-discretionary-denial-decisions-far/id=189663/.
8. iRhythm Techs., Inc. v. Welch Allyn, Inc., IPR2025-00363 (USPTO, May 2025).