Adelyn Schmidt
Associate Editor
Loyola University Chicago School of Law, JD 2027
The United States Patent and Trademark Office (USPTO) recently changed how it decides whether to move forward with patent challenges known as inter partes reviews (IPRs). Instead of a single panel deciding both discretionary and merit questions, Acting Director Coke Morgan Stewart (Stewart) created a bifurcated, two-step process. First, the Director decides whether to deny a case based on discretionary factors. If the case is approved, the Patent Trial and Appeal Board (PTAB) panel will then evaluate the merits.
Although designed to streamline review and manage workload, the new system has instead generated conflicting guidance and expanded discretion. Some of the new factors tend to favor patent owners, while others favor petitioners. Without clearer guidance, both sides are left uncertain: patent owners cannot reliably gauge whether their rights will hold, and petitioners cannot predict when their challenges will be heard. Clearer instruction should be given by the USPTO.
What’s an IPR?
When a company believes a patent was improperly granted, it may petition the USPTO to file an IPR. An IPR is a trial proceeding conducted by the PTAB to reconsider the validity of issued patent claims. These reviews are generally faster and less costly than district court litigation. Before an IPR can proceed however, the PTAB has to decide whether to institute the case. That decision involves discretionary considerations and the merits of the challenge.
The March 2025 change
The new bifurcated process was the latest turn in a policy tug-of-war. In 2020, the PTAB’s Apple Inc. v. Fintiv, Inc. decision created six factors for denying IPRs when parallel litigation was pending. Soon after, Sotera Wireless, Inc. v. Masimo Corp. offered challengers a way around denial through broad stipulations. In 2022, Director Kathi Vidal attempted to ease concerns with a memo limiting Fintiv’s scope and emphasizing that “compelling” invalidity arguments should proceed. That memo however, was rescinded in February 2025.
Weeks later, Director Stewart issued the Interim Processes for PTAB Workload Management, establishing the current two-step system. First, the Director decides whether to deny based solely on discretionary factors. Then, if the case survives, the PTAB panel decides on the merits.
This new process allows patent owners to file a dedicated discretionary denial brief with challengers given an opportunity to respond. While the stated goal was to simplify, thepractical effect has been far less clear.
New Developments: iRhythm and “settled expectations”
In June 2025, Director Stewart drew significant attention by denying five IPR petitions filed by iRhythm, even though most of the traditional factors weighed in favor of institution. The basis for denial was a newly articulated consideration: “settled expectations.”
Since the challenged patents dated back to 2012 and iRhythm had known about them as early as 2013, the Director Stewart concluded it was too late to initiate review. According to her reasoning, the patent owner could reasonably expect stability after so many years without challenge. Subsequent decisions suggested that the settled expectations factor can cut both ways. It may shield long-standing patents from late challenges, but it does not apply where a patent has already expired or where the challenger acted promptly after becoming aware of the patent.
The practical implication is straightforward: timing has assumed greater significance in the IPR process. Petitioners that wait too long risk forfeiting review, while patent owners gain new leverage by having the ability to invoke a challenger’s early awareness to reinforce the presumption of stability
Early case outcomes
In the first month under the new framework, Director Stewart issued 19 decisions, denying eight petitions so the patents remained in force and approving 11 petitions that proceeded to review. The early decisions reveal several themes.
Older patents appear more secure, with long-standing rights often shielded by the settled expectations rationale. By contrast, newer patents face greater risk, as early petitions are framed as promoting predictability. Parallel court proceedings still matter, but their weight has diminished. Even when a trial date is scheduled sooner, petitions may proceed if statistics suggest likely delays. Finally, examiner errors have gained traction, with alleged mistakes during prosecution now cited as a reason to allow review to move forward.
Why the “fix” feels confusing
The new split-decision process was presented as a means of enhancing clarity — with Director Stewart taking first crack at discretionary denials before a panel addresses the merits. In practice however, it has produced the opposite effect. Rather than adhering to established factors, Director Stewart has relied on loosely defined considerations and has even introduced new ones, most notably, settled expectations.
As a result, practitioners face greater uncertainty: it’s no longer sufficient to address the factors outlined in prior memos or FAQs; counsel must also anticipate what Director Stewart may deem relevant in any given case. The intended simplification has instead added another layer of unpredictability to an already complex process.