In a major shift, United States Patent and Trademark Office (USPTO) Director John Squires has announced that, beginning October 20, 2025, the authority to determine whether to institute trial in all inter partes review (IPR) and post-grant review (PGR) proceedings will reside solely with the Director. This change, detailed in an open letter and memorandum issued on October 17, 2025, marks a significant departure from the Patent Trial and Appeal Board’s (PTAB) past practice, in which a panel of three administrative patent judges assigned to each case made the determination whether to institute trial.
Director Squires emphasized that the America Invents Act (AIA) assigns institution authority to the Director—not the PTAB. While delegation to PTAB panels was initially adopted for operational efficiency, the Director cited his concerns over an imbalance between the use of IPRs over PGRs (with approximately 96% of cases filed being IPRs) and “a very high invalidation rate.” He also cited concerns that the delegated institution model has given rise to a perception by some that the PTAB is incentivized to institute trial to fill its own docket. The Director stated that reclaiming institution authority will eliminate the appearance of self-interest, enhance transparency, and realign institution procedure with congressional intent.
Under the new framework, the Director will determine whether to institute trial based on discretionary factors, the merits of the patentability challenges, and non-discretionary considerations, in consultation with at least three PTAB judges. The Director also stated that he intends to issue only a “summary notice” of institution or denial, unless there are “novel or important factual or legal issues.” In addition, if the Director determines detailed treatment of the issues raised in the petition is appropriate, the Director may refer the institution decision to one or more members of the PTAB.
Discretionary Denials on the Rise
This policy shift comes amid a notable increase in discretionary denials and a corresponding decline in IPR institution rates. Between May 1 and July 1, 2025, the PTAB issued 216 institution decisions, of which 120 were denials. Strikingly, 92 of those denials—over 76%—were based on discretionary grounds, such as parallel litigation or timing concerns. The Director also signaled that he may continue with similar treatment of discretionary considerations.
This trend reflects a broader shift in PTAB practice, where discretionary considerations have increasingly influenced outcomes. The institution rate during this period stood at just 44%, a significant drop from historical averages that for many years exceeded 60%. These figures underscore growing concerns within the patent bar about predictability and fairness in post-grant proceedings.
Implications for Stakeholders
Stakeholders and attorneys should prepare for a recalibrated IPR landscape. Based on the Directors’ emphasis on high institution and invalidation rates, IPR institution rates may continue to be lower, and perhaps significantly lower, than historical averages in the coming years. In addition, in view of the USPTO’s recent notice of proposed rulemaking, which intends to limit use of IPRs to patent claims that have not already been challenged in litigation or had a prior determination of patentability in another forum, the USPTO is signaling that IPRs are to be used as an alternative option to district court for patentability challenges, rather than a second bite at the apple.
Based on these recent developments, potential patent challengers will have to revamp their strategies. Soon, it may no longer be an option to challenge validity in district court and the PTAB. In advance of any litigation, they may wish to more seriously consider PGRs (which must be filed within 9 months of issuance) or file IPRs much sooner to avoid discretionary denial, while being mindful of estoppel considerations and standing requirements for an eventual appeal. Ex parte reexaminations remain a lower cost option to challenge an issued patent.
On the other hand, patent owners wishing to assert their patents in court should consider venues that move cases quickly to trial to potentially head off IPR challenges. For patent owners facing an IPR petition, they should heed recent guidance from the PTAB’s discretionary denial decisions and, as before, make their best efforts to avoid trial at the institution phase.
For more information on this topic, please contact Fitch Even partner Paul B. Henkelmann, author of this alert.
Fitch Even IP Alert®
Paul B. Henkelmann
Paul B. Henkelmann focuses his practice on patent post-issuance proceedings, U.S. and international patent procurement, and intellectual property litigation and counseling.