USPTO Expands on ‘Settled Expectations’ as Basis for PTAB Discretionary Denials

Background

On the heels of two recent memoranda reshaping the Patent Trial and Appeal Board’s (PTAB) approach to discretionary denials for parallel proceedings and nearly 20 Director Denial decisions since May, Acting Director Coke Morgan Stewart issued a decision on June 6 denying institution of an inter partes review (IPR) for “settled expectations.” The USPTO’s first memo clarified how the PTAB should address discretionary denials after the recission of the Fintiv memo, creating a holistic approach to the Fintiv factor analysis. The second memo put forward the interim procedure for institution decisions, which bifurcates between (1) discretionary considerations and (2) non-discretionary considerations and merits.

Following the implementation of the new memos and procedure for discretionary denial, Director Stewart’s June 6 decision discretionary denied the IPR petition “because one of the patents has been in force since as early as 2012 and Petitioner was aware of it as early as 2013—having cited the then-pending application that issued as the challenged patent in an [IDS] petitioner filed in its own patent application—settle expectations favor denial of institution.” IPR2025-00363, -00374, -00376, -00377, -00378, Paper 10 at 3 (PTAB June 6, 2025). Director Stewart’s decision appeared to have created a new basis for discretionary denial, even in the face of Fintiv factors weighing against denial.

Expanding upon the June 6 decision, Director Stewart issued another discretionary denial decision on June 18^, applying the same “settled expectations” doctrine. IPR2025-00408, Paper 21 at 2 (PTAB June 18, 2025). This time, Director Stewart found that the expectations became settled after the patent had been in force for almost eight years, regardless of whether the petitioner had actual knowledge of the patent during that time. Id. at 2-3.

Practical Considerations

The latest Director Discretionary Denial decision provides several key takeaways for both patent owners and petitioners alike. First, petitioners need to do more than just respond to a patent owner’s discretionary denial arguments; they should “provide any persuasive reasoning why an [IPR] is an appropriate use of Office resources.” Second, there is no bright-line rule for when expectations become settled but “in general, the longer the patent has been in force, the more settled expectations should be.” Third, actual notice of the patent “is not necessary to create settled expectations.” Going forward, petitioners should be prepared to seek review earlier in a patent’s life-cycle where possible and provide rationale for why institution is an appropriate use of USPTO resources. Conversely, patent owners should be prepared to include justifications beyond the Fintiv factors as to why the totality of circumstances, including settled expectations, favor denial.