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13 “Squires hopes that reclaiming the Director’s statutory role in institution decisions will eliminate the perception that a self-interested PTAB is ‘filling its own docket.’”
Last Friday, recently confirmed U.S. Patent and Trademark Office Director John Squires issued a memorandum to all administrative patent judges (APJs) at the Patent Trial and Appeal Board (PTAB) informing the Board that Director Squires will personally decide whether to institute inter partes review (IPR) or post-grant review (PGR) validity trials. According to an open letter accompanying the memorandum, Director Squires aims to address perceptions that the PTAB is incentivized to institute America Invents Act (AIA) trials, the latest signal that the Trump Administration is reining in PTAB validity trials compared to previous regimes.
PTAB Institution Decisions in Squires’ Crosshairs Since Senate Confirmation Hearings
According to Director Squires’ memo, IPR and PGR institution decisions will follow the same workflow as the interim PTAB workload management process established this March, which brought discretionary denial determinations under the control of then-USPTO Acting Director Coke Morgan Stewart. Following consultation with at least three PTAB APJs, Director Squires will issue institution decisions in a summary notice. In important cases, the Director might address novel legal or factual issues in the institution decision or might refer institution decisions to APJs for detailed treatment of issues raised in a petition. The memo includes no indication of the timeframe for institution decisions under the new framework.
In the open letter, Director Squires acknowledged that while the delegation of institution decisions to PTAB judges was practical following passage of the AIA, this framework has led to structural and perceptual concerns impacting the public’s rightful expectation of impartiality. Given that the delegation of the Director’s authority to institute IPRs pursuant 35 U.S.C. § 314(a) and institute PGRs pursuant to 35 U.S.C. § 324(a) is non-exclusive, Squires states that reclaiming that authority within the Director’s role will align the administration of IPRs with the letter and spirit of the law.
In written responses submitted to the Senate Judiciary Committee during his confirmation process, Director Squires expressed discomfort that PTAB data appeared to be skewed in favor of IPRs over PGRs and a very high rate of invalidation, raising questions about the administration of IPR institutions. According to his letter, Squires hopes that reclaiming the Director’s statutory role in institution decisions will eliminate the perception that a self-interested PTAB is “filling its own docket” and remove perceptions of referral-signal bias by centralizing decision-making at the institution phase. The move also aims to realign the Director’s duty to be accountable for the threshold determination of trial institutions while enhancing transparency and public trust.
Pro-Patent PTAB Changes Part of Mixed Bag of Patent Policies from Second Trump Admin
In the nine months since President Trump selected Coke Morgan Stewart to serve as the USPTO’s Acting Director, several changes have been wrought upon the agency’s operating procedures, with the PTAB serving as a target for many of those reforms. As Acting Director, Stewart elevated the importance of a patent owner’s settled expectations in deciding discretionary denials of AIA trials along with tackling employment and pendency issues at the agency. Within days of Squires’ nomination, authority to determine institutions was delegated to Stewart as the USPTO’s Deputy Director, and Stewart will remain the person in charge of PTAB institution decisions when Squires has a conflict with a proceeding pursuant to another delegation executed the same day as Squires’ memo on PTAB institutions.
The early months of the second Trump Administration has received mixed reviews from the pro-patent community, with the potential value-based patent fee framework reportedly being debated within the Commerce Department raising ire due to the uncertain nature of patent valuation. Still, centralizing control of PTAB institution decisions is likely to bring more predictability to a highly panel-dependent decision-making process, which will be seen as a positive for many patent owners.
In light of the agency’s efforts to discourage patent challengers from relying on IPR petitions to avoid infringement liability, there is some belief that Director Squires’ summary institution decisions could become even less detailed than the short decisions the agency has been issuing on discretionary denial determinations. Challenges to the new framework raised by IPR petitioners under the Administrative Procedures Act (APA) likely face an uphill climb due to the discretionary nature of IPR institutions and the impact of the bar against judicial review of institution decisions codified at Section 314(d), which the U.S. Supreme Court has interpreted as a near-total bar against appeals of institution decisions in cases such as Cuozzo Speed Technologies v. Lee (2016) and Thryv v. Click-to-Call Technologies (2020).
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Join the Discussion
13 comments so far. Add my comment.
Doreen Trujillo
October 22, 2025 03:04 pmThanks, Ron. I am not an Administrative Law expert, but I don’t think we should have to look to the summary of the final rule to confirm that the determination to institute itself is delegated. I think it should be clearly stated in the rule and am puzzled why it is not.
I also note that the summary of the proposed rule states that the determination to institute lies with a single APJ, while the summary of the final rule states it lies with the Board, even though both used the exact same language.
Anon
October 22, 2025 02:53 pmGreat exchange one and all – I absolutely love this when people engage on the merits and better understanding is achieved.
mike
October 22, 2025 08:43 amDr. Katznelson, Thank you for the clarification. I re-read your comments, and I stand corrected in that regard. I wholeheartedly agree with you. My comments aren’t necessarily incorrect either (with the exception how I interpreted yours). There could be conflict.
The Director should establish rulemaking like you said and for the reasons you stated.
All: Please see Dr. Katznelson’s thoughtful comments below.
Ron Katznelson
October 22, 2025 07:32 amMike,
Read my comments again; I did not argue that the current regulations “strip” the Director of authority to decide institution. Rather, I argue that leaving in tact the conflicting regulatory framework delegating such authority to the Board is too risky because the Director’s memo can be easily reversed. I argue that those regulations should be revised by formal rulemaking to strip the Board of that delegated authority, which it will otherwise continue to have. This formal path will give patent holders reasonable confidence that this welcome change will continue and will not be undone on a whim.
mike
October 22, 2025 06:12 amDr. Katznelson, I agree with your sentiment but I disagree with your reading of the regulations.
Nowhere does 37 CFR § 42.108 – Institution of inter partes review strip authority away from the Director from determining whether to institute. It merely adds the Board’s authority along with the Director’s. Delegating duties is not synonymous with also relinquishing the ability to perform those duties.
37 CFR § 42.108(a): “When instituting inter partes review, the Board will authorize the review to proceed …”
This says “when instituting [IPR], the Board will authorize the review to proceed…” This enables the Board to authorize a review to proceed when the Board institutes. This says nothing about what the Director can or cannot do. (This is assuming the Board is not comprised solely of the Director here.)
37 CFR § 42.108(b): “At any time prior to a decision on institution of inter partes review, the Board may deny all grounds for unpatentability for all of the challenged claims. Denial of all grounds is a Board decision not to institute inter partes review.”
Wait a second. So, the Board can deny grounds before a decision on institution of inter partes review? How is that even possible? How can the Board deny institution prior to a decision on institution? Oh wait, that’s right. Because the decision to institute can be done by the Director. 108(b) merely adds that the Board can deny all grounds prior to that decision [by the Director]. This is assuming the Board is not comprised solely of the Director here.
So, this provision provides that the Board may deny all grounds prior to a decision on institution. And this says that such denial is also a Board decision not to institute. So, what this means, in addition to the Director, the Board may also decide not to institute. This does not say that the Director cannot deny all grounds or that the Director cannot determine whether to institute or that the Director has relinquished his/her ability to perform his/her duties.
37 CFR § 42.108(c): “Inter partes review shall not be instituted unless the Board decides that the information presented in the petition demonstrates that there is a reasonable likelihood that at least one of the claims challenged in the petition is unpatentable.”
This directly mirrors 35 USC 314(a) — “The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition [demonstrates] that there is a reasonable likelihood that [] at least 1 of the claims challenged in the petition [is unpatentable]”) — and it does so because the Board can also make the decision as well (again, this assumes the Board is not comprised solely of the Director here.)
You also said “But the USPTO chose to delegate these decisions to the Board by regulation (37 C.F.R. § 42.4(a)).” (emphasis added). You also cited 77 Fed. Reg. 48612, 48616 (August 14, 2012), saying “Section 42.4(a) specifically delegates the determination to institute a trial to the Board” (your emphasis).
OK, but no. This is not what 42.4(a) says. The description of 42.4(a) in the Federal Register disagrees with the actual text of 42.4(a). 42.4(a) says “(a) Institution of trial. The Board institutes the trial on behalf of the Director.” There is no mention of any decision/determination whether to institute here. This speaks only on the institution of the trial. Not the determination whether to institute. Remember, determining whether to institute is not the same as instituting. Now, once it has been decided to institute, yes, the Board can take it from there per 42.4(a) and institute the trial.
42.108 speaks on delegation. Not 42.4. And when delegating, it does not relinquish the Director’s authority under 35 USC 314(a).
Ron Katznelson
October 21, 2025 10:47 pmPlease forgive the unavoidable length of my reply comments below. They are made not to criticize the purposes of the Director’s memo, with which I fully agree, but to help strengthen its currently uncertain force by advocating that it be promulgated by regulations.
First, S&R’s comment below misses key points. It refers to the Director’s review of a Board decision once made by the PTAB panel — not to the decision itself. And of course, the Director may decide to reverse such institution decisions under the existing regulations, having the effect of being the final decision maker on institution in those cases. However, no Director memo was required for doing that.
S&R then states that “the Director is a statutory member of the PTAB under 35 USC 6. So the Director could act alone as ‘the Board’ under 37 CFR 42.4.” That action alone is inconsistent with the PTAB procedure requiring that Board decisions be made by a majority of three APJs. See PTAB Standard Operating Procedure 1 (SOP 1), §II.A.
Accordingly, S&R’s comment is also inconsistent with the actual regulations on institution: 37 C.F.R. § 42.108 provides as follows:
“(a) When instituting inter partes review, the Board will authorize the review to proceed on all of the challenged claims and on all grounds of unpatentability asserted for each claim.
(b) At any time prior to a decision on institution of inter partes review, the Board may deny all grounds for unpatentability for all of the challenged claims. Denial of all grounds is a Board decision not to institute inter partes review.
(c) Inter partes review shall not be instituted unless the Board decides that the information presented in the petition demonstrates that there is a reasonable likelihood that at least one of the claims challenged in the petition is unpatentable.”
All these decisions are currently made by a panel majority of the Board.
To be sure, as pointed here repeatedly, the statute authorizes, indeed requires, the Director to make institution decisions. But the USPTO chose to delegate these decisions to the Board by regulation (37 C.F.R. § 42.4(a)), subject to Director’s Review (37 CFR § 42.75) at his discretion. Doreen’s comment below misses the nature of § 42.4(a) as the delegation instrument of the Director’s statutory authority to decide on institution — not “to begin a legal proceeding.” See 77 Fed. Reg. 48612, 48616 (August 14, 2012) (“Section 42.4(a) specifically delegates the determination to institute a trial to the Board”)(my emphasis).
Second, many of us welcome Director Squires’ memo as an important support of arguments we’ve made all along for removing the institution decision from the Board. The Director’s important letter accompanying the memo aptly articulates these compelling reasons.
However, effectuating this welcome change in practice with an internal memo without rulemaking is its very weakness. Under current regulations, the Director’s Review provisions clearly authorize the Director to reverse or intervene in every institution decision. But that is not what his recent memo says. Rather, the memo essentially says that the Director, in consultation with PTAB judges, “will determine whether to institute trials” in every case and “will issue a summary notice to the parties granting institution.” That effectively vacates the blanket delegation authority in 37 CFR § 42.4(a), and its implementation in 37 C.F.R. § 42.108. The memo does so without amending these binding regulations, leaving a conflict. The fact that the memo is silent about the existing regulations in §§ 42.4(a) and 42.108, while constructively rescinding them, is an indication of the weakness and administrative infirmity of the memo.
Unfortunately, this memo can be readily rescinded with a stroke of a pen in another memo at any time. In any event, it may also be legally challenged by dissatisfied petitioners that are refused institution, as conflicting with binding regulations, thus being “arbitrary and capricious” under the APA, 5 U.S.C. § 706. That vulnerability is clearly undesirable.
To instill public confidence, to ensure that the Director’s laudable goals listed in his letter are reliably achieved and are unassailably maintained, the Director should protect patent holders by promulgating this memo through notice and comment rulemaking under the APA, 5 U.S.C. §553. This will impart legal reliability by expressly revising the regulations in §§ 42.4 and 42.108. This proper rulemaking process will include in the record the detailed goals listed in the Director’s letter as compelling reasons for the regulatory change, and also include the public comments that will no doubt support and further elaborate on these reasons for rulemaking. This will help solidify what is now a tenuous construct.
By this trusted administrative process, a next Director would not be able to rescind the revisions with a stroke of a pen through another memo. Reverting then to the Board deciding on institution practice would have to be by new rulemaking, with the added burden that “an agency changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance.” Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29, 42 (1983). This will likely be a non-trivial obstacle. Finally, to accelerate this process, the USPTO may opt to publish with “good cause” under 5 U.S.C. § 553(b)(4)(B) an “interim final rule” in the Federal Register immediately, but with a request for public comments after it takes effect.
Director Squires, if you truly wish to help patent holders protect their patent rights, which I trust you do, please do not let the USPTO cut corners and please promulgate the changes listed in your memo by proper notice and comment rulemaking under 5 U.S.C. § 553.
mike
October 21, 2025 03:42 pmThere’s a difference between a) instituting a trial that has been authorized, and b) authorizing/determining that a trial be instituted in the first place.
Sure, under 37 CFR § 42.4, “the Board institutes the trial on behalf of the Director,” but prior to that institution, it must be determined/authorized. And that power squarely belongs with the Director. Anyone arguing that the Director does not have the authority needs to read 35 USC § 314. Failing that, they also apparently need a flowchart.
35 USC § 314 states:
(a) THRESHOLD.—
The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.
(b) TIMING.—
The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after—
(1) receiving a preliminary response to the petition under section 313; or
(2) if no such preliminary response is filed, the last date on which such response may be filed.
(c) NOTICE.—
The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence.
(d) NO APPEAL.—
The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
And if someone still maintains that the authority to determine institution solely lies with the Board, they must face the fact that the Director is a member of Board per 35 USC § 6(a): “The Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board.”
Doreen Trujillo
October 21, 2025 01:33 pmTo Ron’s comment, the reg does not state that the “decision” to institute is to be made by the Board. It states that the Board “institutes” the trial on behalf of the Director. The word “institute” means to begin a legal proceeding. So I do not think there is any inconsistency.
Further, the law, which the reg must be consistent with, specifies the Director is to make the decision to institute.
35 U.S.C. 314 Institution of inter partes review.
(a) THRESHOLD.—The Director may not authorize an
inter partes review to be instituted unless the Director determines
that the information presented in the petition filed under section
311 and any response filed under section 313 shows that there
is a reasonable likelihood that the petitioner would prevail with
respect to at least 1 of the claims challenged in the petition.
(b) TIMING.—The Director shall determine whether to
institute an inter partes review under this chapter pursuant to a
petition filed under section 311 within 3 months after—
(1) receiving a preliminary response to the petition
under section 313; or
(2) if no such preliminary response is filed, the last
date on which such response may be filed.
(c) NOTICE.—The Director shall notify the petitioner and
patent owner, in writing, of the Director’s determination under
subsection (a), and shall make such notice available to the public
as soon as is practicable. Such notice shall include the date on
which the review shall commence.
(d) NO APPEAL.—The determination by the Director
whether to institute an inter partes review under this section
shall be final and nonappealable.
Statutes and Regulations
October 20, 2025 02:28 pmRon’s comments miss three important points.
First, 37 CFR 42.75 states that “the Director may review any decision on institution” and “The Director … may initiate sua sponte Director Review of a decision…” So the Director is already permitted by the regulations to determine whether to institute.
Second, the memo attached to the Director’s open letter states “… the Director, in consultation with at least three PTAB judges, will determine whether to institute trials in all IPR and PGR proceedings.” So the Director will be working directly with “the Board” under 37 CFR 42.4.
Third, the Director is a statutory member of the PTAB under 35 USC 6. So the Director could act alone as “the Board” under 37 CFR 42.4. This is confirmed by 37 CFR 41.2 which defines the Board as “a Board member” for decisions such as institution decisions.
On the surface, Ron may have thought he made good points, but Ron didn’t fully consider the relevant law and regulations.
Anon
October 20, 2025 01:28 pmGreat points Ron.
To be binding – on the Office or otherwise, the proper steps need be taken.
Ron Katznelson
October 20, 2025 12:52 pmNote also, that the Squires memo does not even mentions 37 C.F.R. § 42.4(a) , and cannot be regarded as interpreting that regulation.
Ron Katznelson
October 20, 2025 12:42 pmAnon, the problem is worse than you portrait below:
Even today, the Squires memo may lack legal effect. The current regulation is 37 C.F.R. § 42.4(a) (“The Board institutes the trial on behalf of the Director.“) (my emphasis). An established agency regulation is binding on the agency and the public. An agency cannot promulgate regulations by memos. To change that, the USPTO must promulgate a new regulation under the APA, 5 U.S.C. § 553, that rescinds § 42.4(a) . Until it does do, 37 C.F.R. is binding and controls over any internal USPTO memo.
Anon
October 20, 2025 08:51 amI suspect that this Executive Branch Office decision to be only as long-lived as the current administration.
I also suspect that the known pundits that pushed for weak patent rights and for the America Invents Act (AIA) will be quite besides themselves and will choose to label this Executive control as (even) “Arbitrary and Capricious” – even as it clearly is well within the letter of that very same AIA.
Mind you, we still have a ways to go (and that would be actions within Congress) to restore strong patent rights and promote innovation.
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