The Rise Of "Settled Expectations" In USPTO Review And The Fallout For Patent Owners And Challengers

Reprinted with permission from the October 2025 issue of The Intellectual Property Strategist. © 2025 ALM Global Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

Introduction

The U.S. Patent and Trademark Office (USPTO) has introduced significant changes in how it manages discretionary denials for post-grant proceedings before the Patent Trial and Appeal Board (PTAB). In early 2025, these changes were crystallized through new memoranda – most notably, Acting Director Coke Morgan Stewart's March 26, 2025 guidance – which have reshaped the process by adding a nuanced focus on the "settled expectations" of patent parties. These developments greatly impact how companies should approach patent clearance studies for new products entering the market, patent litigation, and strategic patent management.

New Bifurcated Review (from March 2025):

Stewart's memorandum shifted authority, establishing a bifurcated scheme where the Director (with at least three PTAB judges) reviews discretionary denial arguments before a petition's merits are considered. If no discretionary denial grounds exist, the petition proceeds to a three-judge PTAB panel for merits review. This new regime illustrates a return to a multifactor balancing approach when determining whether to institute an inter partes review (IPR), with consideration to the following discretionary factors:

While there is some overlap between the Fintiv Factors and the discretionary factors, the USPTO has expanded the discretionary factors to include, most notably, settled expectations of the parties, such as the length of time the subject patent has been in force.

The "Settled Expectations" Factor: A New Standard

Recent decisions have established that the length of time a patent has been in force – and the degree of petitioner awareness of the subject patent and patent publication – can itself justify denying institution of a post-grant proceeding, even where the merits might warrant further scrutiny. While Director Stewart has emphasized that there is no bright-line rule on when expectations become settled, the trend is clear:

• Settled expectations are met when a petitioner is both aware of a patent publication or patent and fails to seek early review of the patent.
• Patents in force for six years or more will likely invoke settled expectations – absent a showing of evidence against the settled expectations – favoring denial, regardless of whether the petitioner had actual notice of the patent or not.
• Patent owners may still have settled expectations in a patent that has been in force for less than six years, provided patent owners sufficiently articulate the reasons for strong settled expectations.
• Constructive notice of a patent, patent publication, or of possible infringement is sufficient for creating a settled expectation – actual notice is not necessary.
• Reasoning and considerations as to why the post-grant trial is appropriate despite the settled expectations will not be read into a petitioner's arguments.
• Evidence that the patent was not commercialized, asserted, marked, licensed, or otherwise applied in a petitioner's particular technology space, or if there has been a significant change in law since the patent issued, tend to appropriately demonstrate why the patent owner does not have settled expectations.
• Arguments that national security, economic, and public interest considerations counsel against discretionary denial tend to be unsuccessful, unless the arguments are narrowly-tailored towards particular products or methods and petitioners explain how national security, economic, or public interests warrant review of the specific patents.
• Arguments, supported by evidence, that the USPTO erred in a manner material to the patentability of the challenged patent during examination counsel against discretionary denial.

Some denial decisions that highlight this shift:

• A challenge to a patent in force since 2012 was denied because the petitioner was aware of it as early as 2013, having cited the then-pending application in an Information Disclosure Statement. iRhythm Techs., Inc. v. Welch Allyn, Inc., Nos. IPR2025-00363, IPR2025-00374, IPR2025-0076, IPR2025-00377, IPR2025-00378, Paper 10 (P.T.A.B. June 6, 2025).
• Another denial involved a patent being in force for eight years, where the Director made clear that constructive notice of a patent, patent publication, or of possible infringement is sufficient for creating a settled expectation, since patent applications become published after 18 months, and patents are publicly available to provide notice to the public, other inventors, competitors, and commercial interests. Dabico Airport Solutions Inc. v. AXA Powers APS, No. IPR2025-00408, Paper 21 (P.T.A.B. June 18, 2025).
• Yet another denial involved a patent being in force for a little over six years, illustrating that patents in force for over six years create strong settled expectations. Kahoot! As v. Interstellar Inc., No. IPR2025-00696, Paper 12 (P.T.A.B. July 31, 2025).
• A challenge to a patent in force for nine years was denied because settled expectations were created, and the petitioner did not provide any persuasive reasoning as why the IPR is an appropriate use of PTAB resources. While evidence can be provided that weighs against a patent owner's claim of settled expectations, such evidence will not be read into the petition, and the Director will not disturb the settled expectations of a patent without a clear showing of the evidence. Intel Corp. v. Proxense LLC, Nos. IPR2025-00327, IPR2025-00328, IPR2025-00329, Paper 12 (P.T.A.B. June 26, 2025).
• Director Stewart rejected a discretionary denial request involving patents in force for three and four years as not having developed strong settled expectations. However, Director Stewart hinted that patents in force for two, three, or four years may still be subject to strong settled expectations if patent owners sufficiently articulate the reasons for settled expectations. Apple Inc. v. Apex Beam Technologies LLC, Nos. IPR2025-00896, IPR2025-00900, IPR2025-00901, IPR2025-00907, IPR2025-00909, IPR2025-00910, IPR2025-00911, Paper 10 (P.T.A.B. September 3, 2025).
• A request for discretionary denial of a patent in force for fifteen years was denied because persuasive reasoning, supported by evidence, showed that the USPTO erred in a manner material to the patentability of the challenged patent during patent examination. Specifically, the patent examiner overlooked certain teachings of prior art that appeared to disclose the claimed features. Material error of the USPTO is an appropriate use of Office resources to review the potential error. Taiwan Semiconductor Manufacturing Company Ltd and Apple Inc. v. Marlin Semiconductor Ltd, Nos. IPR2025-00847, IPR2025-00848, IPR2025-00864, IPR2025-00865, IPR2025-00879, Paper 11 (P.T.A.B. September 3, 2025).

Strategic Considerations for Companies

With "settled expectations" now being an explicit discretionary factor:

• Act Early
  Companies should flag potentially problematic third-party patents long before the six-year mark from issuance. Because the burden is on the petitioner to be aware of the patents and patent applications in their area of technology, early freedom-to-operate and clearance studies are critical to preserve the opportunity to challenge patents at the PTAB. Companies should also consider designing around problematic patents as this may be less costly than a PGR or IPR at PTAB.
• Consider PGR Actions

Because PGRs must be filed no later than nine months from the grant of a patent, consider bringing a PGR action to avoid the settled expectations factors. Director Stewart has previously emphasized that petitions for post-grant review are favored because they must be filed no later than nine months from the grant of the patent (35 U.S.C. § 321(c)), are close in time to examination, and occur before expectations in the patent rights are strongly settled. Furthermore, if an earlier petition for PGR was not instituted, subsequent petitions for IPR will generally not be discretionarily denied based on the non-instituted PGR. This holding provides petitioners additional pathways for subsequent challenges should an initial PGR challenge fails.

• Docket Strategically
  Consider scheduling major risk assessments and possible PTAB filings around a third-party patent's five-year anniversary of issuance, ensuring flexibility before settled expectations arguments take hold. Reviewing at the five-year anniversary ensures some time to conduct prior art invalidity searches and preparation of an IPR petition. Filing IPRs after the patent's six-year anniversary of issuance could exhaust valuable resources and reveal your arguments and strategies with little confidence of an institution.
• Develop Persuasive Reasoning
  Assess any reasons or acts that rebut a settled expectation – such as the patent not being commercialized, asserted, marked, licensed, or otherwise applied in a petitioner's particular technology space – and explicitly provide these reasons or acts in the petition regardless if the third-party patent has been in force for less than six years. Further, evaluate the cited prior art in the prosecution history of the subject patent for USPTO error, such as the examiner overlooking teachings of the prior art. These reasons or acts will not be read into a petitioner's arguments.
• Develop a Patent Owner Strategy
  For owners, waiting at least six years post-issuance before asserting a patent against a potential infringer can tilt the scales toward settled expectations, strengthening defenses against future PTAB trials. However, recent Director's decisions have illustrated that patent owners may have strong settled expectations in a patent that has been in force for less than six years – reasons for settled expectations in such patents should be sufficiently articulated.
• If Sued Early
  Defendants in a litigation should strive to file IPR petitions as early as possible in a patent's lifetime and not wait until the one-year bar under 35 U.S.C. § 315(b) is about to expire.
• Final and Non-appealable Decisions

Regardless of any factor relied upon, the Director's decision whether to institute an IPR is "final and non-appealable." As a result, once discretionary denial is granted, whether under the settled expectations factor or not, the petitioner has no statutory avenue for challenging the decision. This underscores the importance of new strategic considerations for petitioners with respect to timing, briefing, and anticipating how a discretionary denial factor such as settled expectations may impact institution of their IPR.

• Consider Ex Parte Reexaminations

Consider filing an Ex Parte Reexamination if a patent has been in force more than six years and there are no reasons or acts for rebutting settled expectations. Ex Parte Reexaminations allow parties to request that the USPTO reassess the validity of an issued patent if a substantial new question of patentability is raised based on prior art patents or printed publications. Discretionary denials under 35 U.S.C. §§ 314(a) and 324(a) do not apply to Ex Parte Reexaminations.

Taft Takeaways

• Early, proactive monitoring and action are now vital for effective PTAB challenges.
• Companies should treat the five-year window from patent issuance as a "last call" for considering PTAB post-grant trials before settled expectations could block their path.
• Provide detailed, persuasive reasons – such as lack of commercialization, licensing, application in the particular technology space, USPTO error, or recent changes in law – if attempting to challenge older patents.
• Patent owners should leverage the new "settled expectations" factor by timing assertions strategically, articulating why their patents' have strong settled expectations, and documenting their patents' marketplace relevance.

The landscape for discretionary denials at PTAB is evolving quickly; both patent challengers and owners must adapt their strategies to ensure they are not left behind by the USPTO's new approach.

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.