The upshot of recent changes to Inter Partes practice at the U.S. Patent & Trademark Office (USPTO) will be an increase in ex parte reexaminations.  In fact, this has already occurred as ex parte reexamination filings have reached an all-time high in the first nine months of 2025.  This is almost certainly due to USPTO’s expansion of its discretionary denial authority over Inter Partes Review (IPR) petitions since March 2025.

IPR Discretionary Denials Pre March 2025

       Up until March of 2025 when the Patent Trial and Appeal Board (PTAB) changed its discretionary denial policy, IPR institution rates overall were relatively steady and high, at around 70%.  During this time, discretionary denials were based primarily on: (i) prior art that was previously considered by the USPTO pursuant to 35 USC §325(d), or (ii) a companion district court case that likely would go to trial before the PTAB’s Final Written Decision pursuant to the so-called Fintiv factors in Apple, Inc. v. Fintiv, Inc., IPR 2020-00019 (Paper No 11) (March 2020)(precedential).  Between January and March 23, 2025, only about 15% of institution denials were based on discretionary grounds.  During this time, petitioners had a “get out of jail (discretionary denial) card” with what has come to be known as the “Sotera Stipulation.” 

Sotera Stipulation

       The Sotera Stipulation was introduced by former USPTO Director Kathi Vidal’s June 21, 2022 Guidance Memo (“Interim Proceedings with Parallel District Court Litigation”).  The Memo directed the PTAB not to deny institution on discretionary grounds under Fintiv if the petitioner stipulated to forego grounds in the parallel district court litigation that the IPR petition raised or reasonably could have raised.  A petitioner could all but guarantee that its petition would not be denied on discretionary grounds by filing a Sotera Stipulation. The Vidal June 21, 2022 Memo also directed the PTAB not to deny institution under Fintiv if the petition presented “compelling evidence of unpatentability.” That all changed, however, in March of 2025 when the PTAB changed its policy to specify that the Sotera Stipulation was no longer dispositive with respect to discretionary denials, nor were compelling merits presented in the petition.  Rather, the PTAB would now be able to  deny discretionarily a petition even if the petitioner filed a Sotera stipulation and/or presented compelling evidence of unpatentability.

Change in PTAB Policy & New Bifurcated Review Procedure

       The change in PTAB policy started in January 2025, when President Trump appointed Coke Morgan Stewart as the USPTO’s Acting Director, who swiftly rescinded the June 2022 Vidal Memo on February 28, 2025 (“Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation” Memorandum).  On March 24, 2025, Chief Administrative Patent Judge Scott Boalick issued a Memorandum signaling a return to a “broader more flexible” approach to applying the Fintiv factors when it comes to discretionary denial decisions.  Two days later, on March 26, 2025, acting Director Stewart issued a Memorandum introducing a major procedural overhaul for IPR Petitions (“Interim Process for PTAB Workload Management”). 

       The March 26, 2025 Memo set forth a new bifurcated institution process for petition review.  First, the Director will review the petition for discretionary considerations, which is not limited to the traditional Fintiv factors, but allows for other considerations.  These other considerations include the PTAB’s workload and resource allocation, as well as the “settled expectations” of the parties such as the length that the patent claims have been in force.[1]  Only if the Director declines to exercise discretion to deny will the petition then be referred to a three-member PTAB panel to address the merits and any other non-discretionary statutory considerations.

       Mostly as a result of the new settled expectations consideration, less than half, only 253 of 577 petitions, were instituted between March 1, 2025 and July 31, 2025.  Since July 31, 2025, roughly 61% of institution denials were based on discretionary grounds, a substantial increase from the roughly 15% historical rate.

New Director Takes Control of All Institution Decisions

       On October 17, 2025, newly confirmed PTO Director John Squires issued a Memorandum that centralized authority to the Director for not only discretionary institution decisions, but all institution decisions.  In an open letter accompanying the Memorandum, Director Squires explained that reclaiming the Director’s statutory authority is intended to (1) eliminate the appearance of self-interest by separating the power to institute from the body that conducts the trial, (2) remove a perceived referral-signal bias by centralizing the decision point, (3) enhance transparency and public trust through a single line of authority, and (4) re-align the  duties and responsibilities of the Director, as a Presidentially appointed and Senate-confirmed officer, to be accountable for this threshold determination and properly effectuate the language of the AIA and Congress’ intent.

       Under the new policy announced in the Squires Memo, the Director will now decide all institution issues, including both discretionary and merits considerations.  The Director will consult with at least three PTAB Judges in making final institution decisions, and the institution format will generally be a summary notice granting or denying institution.  The practical effect of the new procedure will be less transparent decisions.  The use of summary notices for most cases means that the USPTO will not issue detailed citable opinions, explaining the reason for granting or denying institution on the merits.  It will also mean much fewer IPR institutions, thereby strengthening patent owner rights.  These changes to strengthen patent rights should not come as a surprise as they are consistent with the comments Director Squires expressed during his May 21, 2025 confirmation hearing before the Senate Judiciary Committee.

Director Squires’ Proposed New Rules

       Besides introducing a new institution decision workflow, Director Squires also introduced Proposed New Rules § 42.108 on October 17, 2025.  These proposed new rules make additional substantial changes to IPR procedure, changes that will drastically limit the ability or desire to file IPRs.

i. Mandatory Stipulation

       The Proposed Rule § 42.108(d) requires the IPR petitioner to file a mandatory stipulation not to pursue validity challenges under 35 USC §102 or §103 in other forums.  Proposed Rule § 42.108(d) would even require the stipulation to be filed in order to maintain a pending IPR instituted before the rule change. Proposed Rule § 42.108(d) would expand IPR estoppel to instituted IPRs, as opposed to Final Written Decisions under the existing IPR estoppel rule.  Proposed Rule § 41.108(d) would also expand IPR estoppel to all 35 USC §102 or §103 grounds, not just printed publication prior art, which is the only prior art that can be presented in an IPR proceeding according to 35 U.S.C. §311(b).  That is, upon institution, the petitioner would be estopped from presenting any prior art grounds under 35 USC §102 or §103 in a companion district court case, including on-sale bars and product prior art grounds that are not permitted to be raised in an IPR petition. 

       Finally, the proposed new rule would expand the estoppel to the entire patent, not just the petitioner’s challenged claims, which would almost certainly affect a parties’ decision whether to file an IPR at all. For example, a defendant that has strong printed publication prior art for some asserted claims, but only strong product prior art for other asserted claims might think twice about filing an IPR petition.  This is because only the printed publication prior art could be presented in the IPR and if instituted, then the defendant would be estopped from presenting the product prior art in the companion district court case.   Proposed Rule § 42.108(d) would result in this outcome even though 35 U.S.C. §311(b) prohibits product prior art from being used in the IPR petition.

ii. Preclusion Based on Prior Validity Findings

       Proposed Rule § 42.108(e) would also expand IPR preclusion beyond the petitioner or the petitioner’s real party in interest or privy.  If passed in its present form, no IPR would be instituted or maintained if a challenged claim (or an instituted claim from which a challenged claim depends) was found to not be invalid in a prior U.S. District Court Trial or Summary Judgment Decision, ITC Initial or Final Determination, PTAB Final Written Decision, Ex Parte Reexamination Office Action, Board Decision or in a Federal Circuit Decision.  The proposed rule is not limited to the real party in interest or privy, but rather applies to every potential petitioner  regardless of whether there was any participation in the prior proceeding that found the patent claim not to be invalid.  In other words, the preclusive effect of Proposed Rule § 42.108(e) would apply to an unrelated party not involved in the prior proceeding even if that party uncovered stronger prior art or new evidence. 

iii. Parallel Litigation Preclusion

       Proposed Rule § 42.108(f) indicates that the USPTO will not institute or maintain an IPR when another proceeding is “more likely than not” to be the first to determine the validity of the claims under 35 USC §102 or §103.  These include a U.S. District Court trial, a U.S. International Trade Commission initial or final determination or PTAB Final Written Decision by the Board under 35 U.S.C. § 318(a) or § 328(a).  The PTAB has already taken the view that litigation preclusion applies to parties not named in a pending District Court case.  Koito Mfg. Co., Ltd. v. Longhorn Automotive Group LLC, IPR2025-00955 (Paper No. 9) (September 19, 2025), but the proposed new rule would go further by applying preclusion based on pending IPRs.  This proposed rule could have the effect of creating a race to be the first filed IPR petition since any earlier-filed instituted IPR would prevent subsequent IPRs from being instituted.

iv. Narrow Exceptions to Preclusion

       Proposed Rule § 42.108(g) provides narrow exceptions to the preclusion rules under § 42.108(d), (e) or (f) for “extraordinary circumstances.”  Examples of such circumstances include whether the prior invalidity challenge was made in bad faith, e.g., an insincere challenge, or if the prior challenge is rendered irrelevant in view of a change in statute or Supreme Court precedent.  But, preclusion would still apply under § 42.108(d), (e) or (f) even if new prior art, expert testimony or non-Supreme Court case law presented a compelling invalidity argument.

Effects & Expectations: Post-IPR Era

       The consequence of the PTAB’s new workflow, procedure and rules (including the proposed new rules) will be a significant reduction in IPR filings.  Given the existing discretionary denial considerations and the expansive scope of estoppel and preclusion attendant in both pending and future IPRs, parties will certainly think twice before filing an IPR.  Accused infringers will need to ask themselves what are the chances the Patent Office will institute the IPR, and is it worth the attendant estoppel if the IPR is instituted.  As part of this calculus, parties should also consider whether filing an ex parte reexamination makes more sense than an IPR. 

Pros and Cons of Ex Parte Reexaminations

       For the most part, ex parte reexaminations fell out of favor since the introduction of IPR proceedings in 2012 when the Leahy-Smith America Invents Act (AIA) took effect.  This was largely because reexaminations allow the third-party requester only limited participation in the proceeding.  After the third party files the initial request for reexamination, the requester has little involvement in the proceeding (except in limited circumstances).  The proceeding is mainly between the patent owner and the U.S. Patent Office.  Reexaminations also allow patent owners wide latitude to amend existing claims to avoid prior art and to add new claims, which could result in the requester being worse off than before the reexamination request was filed. Given the recent changes to IPR practice, however, ex parte reexaminations are expected to increase significantly.  In fact, reexamination filing have already reached an all-time high in the first nine months of 2025.  This is almost certainly due to the increased discretionary denial authority since March 2025.

       Although reexaminations provide a requester with only limited participation, they are often expected to be the only viable option for challenging patent claims going forward.  While reexaminations have their shortcomings, they do offer some strategic advantages over IPRs, even under the prior IPR rules and law. 

i. Lower Institution Standard Resulting in Higher Institution Rate

       Reexaminations offer a lower institution standard than IPRs.  A reexamination request has no limitation on length and need only raise a “substantial new question of patentability” (SNQP). 37 CFR §510(b)(1).  The IPR standard for institution requires the petitioner to develop a reasonable likelihood that it will prevail on at least one challenged claim.  The lower standard for reexaminations has resulted in a historically very high institution rate of about 95%. 

ii. No Statutory Estoppel, Request May be Anonymous,

       The requester of a reexamination does not face any statutory estoppel, allowing a challenger, for example, to use the same prior art submitted in the reexamination in a companion or subsequent litigation.  In addition, unlike in an IPR where the petitioner must be identified along with all real parties in interest and privies, a reexamination requester can be anonymous, thus not putting themselves on the patent owner’s radar for possible infringement. 

iii. Not Subject to Discretionary Denial or Time Limits

       Unlike IPRs, reexaminations are not subject to discretionary denial under 37 CFR §314.   As such, a requester need not address the Fintiv factors or stipulate to forgo prior art defenses in a companion district court case.  Reexaminations also provide greater flexibility than IPRs as to timing.  IPR petitions must be filed within one year of service of a district court complaint. 35 USC §315(b).  Reexaminations have no such time limitation, and thus can be filed more than a year following service of a complaint.

iv. Can Stay a District Court Litigation, Reduce Liability & Lower Cost to File

       As with an IPR, a reexamination can serve as a basis for a stay in a district court litigation.  Although a reexamination allows the patent owner the ability to amend claims and to add new claims more easily than in an IPR, the patent owner is not permitted to broaden the claim scope in any respect similar to an IPR. 37 CFR §1.535.  Moreover, amendments to the claims can create intervening rights for the requester, and the ability to force a patent owner to amend the claims to avoid prior art can result in eliminating any past damages.  Last, but certainly not least, the cost of a reexamination is substantially less than an IPR proceeding.

       Although an ex parte reexamination does not allow a patent challenger the same robust participation provided in an IPR proceeding, the high grant rates, lower costs and no estoppel still make reexaminations an appealing way to challenge patent claims.  Moreover, in view of the significant limitations and disadvantages placed on existing and future IPRs, ex parte reexaminations will likely become the proceeding of choice to challenge patent claims at the USPTO, and to stay a district court litigation.