Latest Director Discretionary Denials Deliver Good News for Patent Owners

In the latest slew of Director Discretionary Denial decisions issued last week by the U.S. Patent and Trademark Office (USPTO), Acting USPTO Director Coke Morgan Stewart largely delivered wins for patent owners, denying or partially denying institution on dozens of inter partes review (IPR) petitions. In one representative case, Stewart extended her increasingly important “settled expectations” doctrine to a patent that has been in force for only six years.

In Kahoot! AS v. Interstellar, Inc., the patent at issue was U.S. Patent No. 10,339,825, titled “System and method for on-line academic competition.” It was granted in 2019, making the patent just six years old, but according to Stewart’s July 31 decision, this is enough to create “strong settled expectations” for the patent owner, even in the face of a stayed parallel district court proceeding. “Petitioner’s argument that Patent Owner does not have settled expectations because Patent Owner did not previously assert the challenged patent against Petitioner does not defeat Patent Owner’s settled expectations,” wrote Stewart.

This is reportedly the youngest patent that has been granted the benefit of “settled expectations” for purposes of a Director Discretionary Denial decision. Six years is also the statute of limitations for recovering damages in a patent infringement lawsuit, which Stewart has mentioned in previous discretionary denial decisions as a litmus test for settled expectations. In Dabico Airport Sols. Inc. v. AXA Power ApS, IPR2025-00408, Paper 21 at 2–3 (Director June 18, 2025), Stewart explained:

“Although there is no bright-line rule on when expectations become settled, in general, the longer the patent has been in force, the more settled expectations should be. This approach aligns with other approaches to settled expectations and incentives, for example, for filing infringement lawsuits. Cf. 35 U.S.C. § 286 (‘Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.’).”

In an opinion piece for Bloomberg Law on Thursday, former Representative Bob Goodlatte (R-VA) and Paul Taylor of the National Security Institute at George Mason University’s Antonin Scalia Law School said the increased use of the settled expectations doctrine is “generating concern and confusion from stakeholders across America’s innovation economy.” The authors focused their comments on iRhythm v. Welch Allyn, Inc., the first case to reference the doctrine since Stewart announced the “Interim Processes for PTAB Workload Management,” which said that to ensure the PTAB can continue to meet its statutory obligations relating to ex parte appeals, the Director will exercise her discretion under 35 U.S.C. 314(a) and 324(a) to determine whether discretionary denial is appropriate for any petition for IPR or post-grant review (PGR).

The iRhythm decision was issued in June and involved a 13-year-old patent. In July, iRhythm filed a petition for Director Review of the decision, arguing that Welch Allyn let its patents lie dormant between 2012 and 2024, when it filed a lawsuit against iRhythm. “It never commercialized nor asserted them and now seeks simply to tax the commercial market it watched iRhythm build through millions of dollars of investment,” the petition said.

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Author: Devon
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