The first half of 2025 has brought many changes at the United States Patent and Trademark Office (“USPTO”), including policy changes at the Patent Trial and Appeal Board (“PTAB”). At the end of March 2025, the issuance of the Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation memorandum (the “Interim Procedure”) and the Interim Processes for PTAB Workload Management memorandum (the “Workload Management”) initiated changes to discretionary denials for inter partes review (IPR) and post grant review (PGR) proceedings.[1] At the time, patent practitioners were unsure of the Workload Management’s exact impact. However, nearly six months later, we can now begin to analyze the resulting trends to understand the impact of the recent changes at the PTAB.

IPR & PGR Institution Rates

At this early stage, it appears that patent practitioners were accurate when they predicted that the number of discretionary denials would increase, resulting in a decrease in the number of institutions.

From FY22 to FY25 Q2, the institution rate for IPRs and PGRs increased from 66% to 68%.[2] Beginning in April 2025, after the issuance of the memoranda, the institution rate began to decrease. FY25 through April showed an institution rate by petition of 65%.[3] The institution rate decreased again according to the statistics for FY25 through May, which showed an institution rate of 63%.[4] Notably, the 63% institution rate by petition as of May 2025 is lower than the institution rate was in FY22, FY23, and FY24. Thus, in only a few months, the institution rate for IPRs and PGRs has decreased at a faster rate than by which it increased from FY22 to FY24.

Conclusion

Although it is too early to make conclusive predictions, the current institution rate trends show that the institution rate for IPRs and PGRs is decreasing at a rapid rate. The shift from a steadily increasing institution rate over the last few years to a sudden downward turn strongly suggests that the policy changes favor patent owners at the institution stage of proceedings. Based on the data through May 2025, the institution rate is likely to continue to decrease. In addition to the many procedural considerations at play, patent practitioners must now carefully consider the best big picture strategy for their clients. Adding some uncertainty to what is up ahead is the impending confirmation of John Squires as Director of the USPTO.  The current flurry of discretionary denial decisions is the work of Coke Morgan Stewart, the Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the USPTO.  We will need to wait and see, when Director Squires takes over, whether the policy direction that led to these discretionary denials and the decrease in institution rates will be maintained or taken in a different direction. As the landscape changes and as more data becomes available, it is vital that patent practitioners consider the practical impact of the statistical trends. 

[1] See  Memorandum from Chief Admin. Pat. Judge Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. (Mar. 24, 2025); Memorandum from Acting Under Secretary of Commerce for Intell. Prop. and Acting Dir. of the U.S. Pat. and Trademark Office Coke Morgan Stewart to All PTAB Judges (Mar. 26, 2025); see also Waltersdorff, Stephanie, The USPTO Provides Further Guidance on Discretionary Denials Policy, Rothwell Figg PTAB Law Blog (June 2, 2025), https://www.ptablaw.com/2025/01/06/trial-statistics-trends-at-the-ptab-2024-edition/.

[2] See PTAB Trial Statistics FY24 End of Year Outcome Roundup IPR, PGR, USPTO, 6, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2024__roundup.pdf (last visited Aug. 11, 2025). FY25 through Q1 was the period from October 1, 2024 to December 31, 2024. See PTAB Trial Statistics FY25 Q1 Outcome Roundup IPR, PGR, USPTO, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2025_q1_roundup_.pdf (last visited Aug. 11, 2025). FY25 through Q2 was the period from October 1, 2024 to March 31, 2025. See PTAB Trial Statistics FY 25 Q2 Outcome Roundup  IPR, PGR, https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2025_q2_roundup.pdf (last visited Aug. 11, 2025).

[3] See PTAB Trial Statistics April 2025 IPR, PGR, https://www.uspto.gov/sites/default/files/documents/ptabaia20250430.pdf (last visited Aug. 11, 2025).

[4] See PTAB Trial Statistics May 2025, IPR, PGR, https://www.uspto.gov/sites/default/files/documents/ptabaia20250531.pdf (last visited Aug. 11, 2025).

Introduction

Acting Director of the USPTO, Coke Morgan Stewart, issued a memorandum last week that will change the way petitioners levy challenges to patents via inter partes review (IPR).[1]  The change will apply to any petition for IPR filed on or after September 1, 2025.

Overview of the 2025 Memorandum

The 2025 Memorandum curbs the use of applicant admitted prior art (AAPA), expert testimony, and general knowledge evidence to establish the basis of a challenge in an IPR petition.[2]  The USPTO institutes this change by rescinding its waiver of 37 C.F.R. § 42.104(b)(4), which holds that an IPR petition “must specify where each element of the claim is found in the prior art patents or printed publications relied upon.”[3]

Because AAPA, expert testimony, and evidence of general knowledge or ordinary skill do not constitute prior art patents or printed publications, petitioners can no longer use them to provide a claim element when setting forth the basis of their challenge.[4]  The USPTO states that the change will “provide a clear means for (i) identifying the petitioner’s legal and factual basis for satisfying the threshold for instituting IPR, and (ii) providing the patent owner with notice as to the basis for the challenge to the claims.”[5]

This guidance does provide clarity by establishing a bright-line rule that petitioners will follow when setting forth the basis of their challenge, but there remain unresolved issues in this area that patent practitioners and innovators should consider.

In prior memoranda, the USPTO permitted the use of AAPA and like-evidence, provided it did not make up the entirety of the basis for a challenge.[6]  The guidance then in effect (and now superseded) was that this evidence could only establish the basis of a challenge when asserted “in combination with reliance on at least one prior art patent or printed publication.”[7]  Basis language like, “Prior art reference X in view of AAPA” (or vice versa) was ostensibly proper under the USPTO’s so-called, “combination rule,” because AAPA and like-evidence “can supply legally relevant information, while not constituting the ‘basis’ of the obviousness ground raised under § 103.”[8]

However, in the case of Qualcomm Inc. v. Apple Inc., 134 F.4th 1355 (Fed. Cir. 2025), to which the Acting Director of the USPTO intervened, the Federal Circuit disagreed:

[T]he plain language of § 311(b) limits “the basis” to “prior art consisting of patents or printed publications.” The statute is clear. The Board exceeded this statutory limit by determining that the mere combination of AAPA with prior art patents or printed publications automatically excludes AAPA from the basis of a ground…. [T]he question is whether a petitioner has used AAPA as the basis, or part of the basis, of a ground—not whether the request relies on AAPA in combination with prior art patents or printed publications.[9]

Still, the Federal Circuit “recognize[d] that there are instances in which a petition may rely in part on AAPA, such as to indicate the general knowledge of a person of ordinary skill in the art.”[10]  And in the end, the Federal Circuit’s holding that the basis-at-issue was improperly founded on AAPA rested solely on the fact that Petitioner “did expressly state that AAPA is included in the basis of Ground 2.”[11]  The Court did “not consider whether, in substance, Ground 2 included AAPA in its basis” and “expect[s] that future cases may require the PTO and this court to consider the substance of a petition to determine compliance with § 311(b).”[12]

Key Takeaways

There are three major takeaways for PTAB practitioners from the 2025 Memorandum and the Federal Circuit’s holding in Qualcomm. 

  1. It is improper to explicitly state that the basis of a challenge to a claim includes AAPA, expert testimony, and/or evidence of general knowledge or ordinary skill. 
  2. Following the USPTO guidance and Circuit precedent, it appears that AAPA, expert testimony, and evidence of general knowledge or ordinary skill may still be used (1) to demonstrate the knowledge of the ordinarily-skilled artisan at the time of the invention and (2) to support a motivation to combine specific references. 
  3. The USPTO and Federal Circuit will likely continue to grapple with the issue of when AAPA, expert testimony, and evidence of general knowledge or ordinary skill constitutes part of a “basis” of a challenge as opposed to an allowable use, as there is still no substantive framework for determining whether AAPA and like-evidence have been improperly incorporated into the basis of a challenge.

[1] See generally USPTO Memorandum issued July 31, 2025 titled, “Enforcement and Non-Waiver of 37 C.F.R. § 42.104(b)(4) and Permissible Uses of General Knowledge in Inter Partes Reviews” (2025 Memorandum).

[2] Id. at 3.

[3] Id. at 1 (emphasis added).

[4] Id.

[5] Id. at 3.

[6] See USPTO Memorandum issued August 18, 2020 titled, “Treatment of Statements of the Applicant in the Challenged Patent in Inter Partes Reviews Under § 311” (2020 Memorandum) at 4; USPTO Memorandum issued June 9, 2022 titled, “Treatment of Statements of the Applicant in the Challenged Patent in Inter Partes Reviews Under § 311” (2022 Memorandum) at 2.

[7] 2020 Memorandum at 8-9; 2022 Memorandum at 4.

[8] 2020 Memorandum at 6; 2022 Memorandum at 4-5.

[9]  Qualcomm Inc. v. Apple Inc., 134 F.4th 1355, 1365 (Fed. Cir. 2025) (emphasis added).

[10] Id. (citing Koninklijke Philips v. Google, 948 F.3d 1330, 1339 (Fed. Cir. 2020)).

[11] Id. at 1366.

[12] Id. at 1368.

The USPTO’s recent guidance on discretionary denials has shifted patent practitioners back to the Fintiv and Sotera Wireless framework.

The Prior Framework: Fintiv & Sotera Wireless

In Apple Inc. v. Fintiv, Inc., No. IPR2020-00019 (PTAB Mar. 20, 2020), the Patent Trial and Appeal Board (the “Board”) implemented a holistic view of six factors (the Fintiv factors) for determining whether to exercise discretionary denial when there is a parallel, co-pending proceeding.[1] The six factors included:

  1. whether a stay exists or is likely to be granted if a proceeding is instituted;
  2. the proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
  3. the investment in the parallel proceeding by the court and parties;
  4. overlap between issues raised in the petition and in the parallel proceeding;
  5. whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. other circumstances that impact the Board’s exercise of discretion, including the merits.[2]

On December 1, 2020, the Board also issued a decision in Sotera Wireless, Inc. v. Masimo Corp., No. IPR2020-01015 (PTAB Dec. 1, 2020), which set forth the Sotera stipulation.[3] A Sotera stipulation is a stipulation by the petitioner that “if IPR is instituted, they will not pursue in the District Court Litigation any groundraised or that could have been reasonably raised in an IPR.”[4] Where this stipulation is made, the fourth Fintiv factor strongly favors not exercising discretion to deny institution.[5]

The Interim Procedures Memorandum

In response to this framework, the USPTO issued a memorandum entitled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation” (the “Interim Procedures Memorandum”) on June 22, 2022.[6] Under this memorandum, the Board would not exercise its authority to deny institution in light of a parallel proceeding when the parallel proceeding was an ITC proceeding, there was a Sotera stipulation, or compelling evidence of unpatentability was presented.[7] Median time-to-trial statistics in the district of the co-pending litigation would be considered by the Board.

USPTO’s Rescission of Interim Procedure Memorandum

On February 28, 2025, the USPTO rescinded the Interim Procedure Memorandum.[8]

Subsequent Guidance: March 24th and 26th Memoranda

As a follow up to the Interim Procedure Memorandum rescission, the Chief Administrative Patent Judge issued a memorandum on March 24, 2025 entitled “Guidance on USPTO’s rescission of ‘Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation’” (the “Guidance Memorandum”).[9] The Guidance Memorandum explained that the Interim Procedures Memorandum was only intended to provide guidance while the USPTO explored potential rulemaking. Accordingly, when no final rules were proposed, the USPTO rescinded the Interim Procedures Memorandum. The Guidance Memorandum included five key points regarding the discretionary denials policy:[10]  

  1. The rescission is applicable if (1) the Board has not issued an institution decision or (2) a request for rehearing or Director Review of an institution decision was filed and is pending.
  2. The Fintiv factors apply when there is a parallel proceeding at the ITC.
  3. Timely-filed Sotera stipulations are highly relevant and considered as part of the holistic analysis under Fintiv, but they are not dispositive on their own.
  4. The Board can consider evidence relating to the proximity of the district court’s trial date, such as median time-to-trial statistics.
  5. The Fintiv factors are to be considered as part of a balanced assessment, including the strength of the merits, but compelling merits are not dispositive on their own.

Two days later, on March 26, 2025, the Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the USPTO issued a memorandum entitled “Interim Processes for PTAB Workload Management” (the “Workload Management Memorandum”).[11]

The Workload Management Memorandum primarily addressed the procedures for IPR and PGR institution decisions.[12] Under this guidance, the institution decisions are bifurcated between (i) discretionary considerations and (ii) merits and other non-discretionary statutory considerations. First, the Director and at least three PTAB judges determine whether discretionary denial is appropriate. If it is appropriate, the Director issues a decision denying institution. If it is not appropriate, the petition is referred to a three-member panel of the Board to handle the case in the normal course.

As part of the separate discretionary denial briefing, the patent owner may file a brief explaining applicable bases for discretionary denial within 2 months of the date on which the PTAB enters a Notice of Filing Date Accorded. Subsequently, the petitioner may file an opposition brief no later than one month after the filing date of the patent owner’s brief.[13]

Moreover, the Workload Management Memorandum sets forth specific considerations that the parties are permitted to address, including, but not limited to:

  • Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims;
  • Whether there have been changes in the law or new judicial precedent issued since issuance of the claims that may affect patentability;
  • The strength of the unpatentability challenge;
  • The extent of the petition’s reliance on expert testimony;
  • Settled expectations of the parties, such as the length of time the claims have been in force;
  • Compelling economic, public health, or national security interests; and
  • Any other considerations bearing on the Director’s discretion.[14]

Conclusion

As the updated discretionary denial policy is implemented, it is likely that there will be an increase in the number of discretionary denials. Although the recent memoranda have indicated that the processes are temporary, it is unknown how long they will remain in place and what may replace them. Accordingly, practitioners before the Board should continue to monitor the Board’s discretionary denial decisions.

 More information about the USPTO’s discretionary denial policy can be found at: https://www.uspto.gov/patents/ptab/faqs/interim-processes-workload-management. 

[1] See Apple Inc. v. Fintiv, Inc., No. IPR2020-00019 (PTAB Mar. 20, 2020).

[2] See id. at 5-6.

[3] Sotera Wireless, Inc. v. Masimo Corp., No. IPR2020-01015 (PTAB Dec. 1, 2020).

[4] See id. at 18.

[5] See id. at 19.

[6] See Memorandum from Under Secretary of Commerce for Intell. Prop. and Dir. of the U.S. Pat. and Trademark Office Kathy Vidal to Members of the Pat. Trial and Appeal Bd. (June 21, 2022).

[7] See id.

[8] See USPTO rescinds memorandum addressing discretionary denial procedures, USPTO, https://www.uspto.gov/about-us/news-updates/uspto-rescinds-memorandum-addressing-discretionary-denial-procedures (last visited May 26, 2025).

[9] See Memorandum from Chief Admin. Pat. Judge Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. (Mar. 24, 2025).

[10] See id.

[11] See Memorandum from Acting Under Secretary of Commerce for Intell. Prop. and Acting Dir. of the U.S. Pat. and Trademark Office Coke Morgan Stewart to All PTAB Judges (Mar. 26, 2025).

[12] See id.

[13] Discretionary denial briefing has a limit of 14,000 words and a reply brief has a limit of 5,600 words. See id. at 2.

[14] See id.

The Patent Trial and Appeal Board (PTAB) recently designated its decision in Cambridge v. Sfara (IPR2024-00952) as an informative decision.[1] This designation addresses an important issue in inter partes review (IPR) proceedings: inconsistent claim construction arguments between district court litigation and PTAB petitions.

Claim Construction Inconsistency

The PTAB’s holding centered on Petitioner’s proposed construction of the term “component.” The term “component” appeared repeatedly within the independent claims related to vehicle crash detection. For example, “a first detecting component operable [to] detect a first parameter and to generate a first detector signal based on the first detected parameter.”

In the corresponding district court litigation, Petitioner’s position was that “’component’ terms in the challenged claims should be means-plus-function terms governed by §112(f) and that such terms are indefinite for failure to identify corresponding structure to perform the recited functions.”[2] Petitioner also emphasized that whether means-plus-function applies to the term “component” “will be most significant to the resolution of the case and/or will be case or claim dispositive or substantially conducive to promoting settlement.”[3]

Petitioner’s IPR petition took a very different approach. Instead of arguing that the “component” terms were governed by §112(f), Petitioner instead argued that these terms should be given their plain and ordinary meanings. Moreover, Petitioner’s IPR petition only mentioned their district court means-plus-function argument in a footnote. Failing to address its means-plus-function argument was fatal for Petitioner’s IPR petition.

The Board held 37 C.F.R. § 42.104(b)(3) mandated that the “Petition should have explained why the plain and ordinary meaning of the ‘component’ terms should apply in this proceeding (why the inconsistent positions are warranted) or set forth an alternative means-plus-function claim.”[4] In denying the petition, the Board highlighted Petitioner’s deterministic language from its district court filing (e.g., “will be most significant” and “will be case . . . dispositive”) as an important factor in its decision.[5]

Key Takeaways for Practitioners

The PTAB’s designation of this case as informative serves as a cautionary example for practitioners whose cases are being litigated simultaneously in district courts and IPR proceedings. To the extent practitioners take differing claim construction approaches in the two proceedings, they should offer a clear and justified explanation for why they are doing so.

[1] Found at Precedential and informative decisions | USPTO

[2] Cambridge Mobile Telematics, Inc. v. Sfara, Inc. (majority opinion), IPR2024-00952, Paper 12 (December 13, 2024), at p. 6.

[3] Id. at 7.

[4] Id. at 8.

[5] The deterministic language was from the Joint Claim Construction and Prehearing Statement. Specifically, the Board highlighted the following passage, “construction of the listed “component” terms—specifically, whether those terms are means-plus-function limitations governed by 35 U.S.C. § 112(f), and if so, whether the specification properly discloses corresponding structure for the recited function in those limitations—will be most significant to the resolution of the case and/or will be case or claim dispositive or substantially conducive to promoting settlement.” Id. at 7.

The Federal Circuit’s holding in United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662 (Fed. Cir. Jan. 30, 2025) reversed a Patent Trial and Appeal Board (“PTAB”) decision finding no motivation to combine.  The opinion is nonprecedential, but the Federal Circuit’s analysis of the facts in light of recent precedent is instructive for patent practitioners. 

On May 11, 2022, the PTAB granted PNC Bank N.A.’s (“PNC”) petition for inter partes review (“IPR”) of claims 1-20 of U.S. Patent No. 10,769,598 (“the ’598 patent”).  The ’598 patent is directed to remote check deposit technology and owned by the United Services Automobile Association (“USAA”).  In its final written decision, the PTAB found claims 1 and 8-20 obvious over a combination of three prior art references but declined to find dependent claims 2-7 obvious over the same combination.

Dependent claims 2-7 of the ’598 patent require an error processing step to verify that the image of a to-be-deposited check meets certain criteria, i.e., the check is legible, appropriately sized, correctly oriented, etc.  Crucially, claims 2-7 require that an error processing step occurs on the client’s mobile device, before the image is relayed to the bank’s server.

In the IPR, PNC pointed to a client-side error processing step disclosed in one of the three prior art references it successfully asserted in combination against claim 1, arguing that one of ordinary skill in the art would have been motivated to include in the combination “a thin client” that “‘detect[s] whether the check is endorsed’ and ‘check[s] for an imprint image, a scanned serial number, and the like, to indicate that the check had been properly scanned’ before uploading the check image to the payee bank.”  See PNC Bank N.A. v. United Servs. Auto. Ass’n, No. IPR2022-00076, at 58 (P.T.A.B. May 10, 2023) (citing the prior art).  As the PTAB wrote, “Petitioner contends that an ordinary artisan would have been motivated to include Byrne’s error checking in the mobile device of the Garcia-Byrne-Singfield combination.”  Id.

The PTAB disagreed with PNC: “Even if an ordinary artisan could have made the proposed combination, we are not persuaded that Petitioner has sufficiently shown that he would have been motivated to do so.”  Id. at 59 (emphasis original).  The PTAB gave significant weight to USAA’s argument that “there would be substantial reason not to [use client-side error processing].”  Id. at 58.  PNC presented known advantages of incorporating client-side error processing, but the PTAB found that PNC’s expert testimony undercut its argument when they admitted “[t]here are tradeoffs associated with doing the verification processing on either the client or the server.”  Id. at 61 (internal cite omitted).  The PTAB ruled that it could not find a motivation to combine under a preponderance of the evidence.  PNC cross-appealed the ruling on claims 2-7.  USAA appealed the ruling on claims 1 and 8-20.

On appeal, the Federal Circuit affirmed the PTAB’s obviousness ruling on claims 1 and 8-20.  For claims 2-7, the Federal Circuit held that “the Board erred in rejecting PNC’s motivation to combine solely because this alternative arrangement also had claimed benefits.”  United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662, at 9 (Fed. Cir. Jan. 30, 2025).  “The Board’s preoccupation with the benefits associated with server-side error processing led it to ignore the undisputed benefits of [client-side error processing].”  Id. at 10.

The Federal Circuit considered recent precedent in articulating a standard for motivation to combine.  “The combination does not need to be the best or preferred approach but need only be ‘desirable in light of the prior art.’”  Id. at 9-10 (quoting Honeywell Int’l Inc. v. 3G Licensing, S.A., 124 F.4th 1345, 1356 (Fed. Cir 2025) (emphasis added).  “[T]he relevant inquiry is simply whether skilled artisan would have been motivated to modify the prior art as claimed.”  Id. at 9 (citing Intel Corp. v. Qualcomm Inc., 21 F.4th 784, 797 (Fed. Cir. 2021) and Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1073 (Fed. Cir. 2015)) (emphasis added).

When applying the law to the facts, the Federal Circuit stated that this is “the precise situation where a person of ordinary skill in the art is ‘left with two design choices,’ in which case we have explained that ‘[e]ach of these two design choices is an obvious combination of prior art elements.’”  Id. (quoting ACCO Brands Corp. v. Fellowes, Inc., 813 F.3d 1361, 1367 (Fed. Cir. 2016)).

Considering the PTAB’s overwhelmingly positive record of affirms on appeal, patent practitioners should pay close attention to the Federal Circuit when it decides to step in.  Here, in reversing the PTAB’s determination, the Federal Circuit provides several articulations of the standard for motivation to combine.  PTAB practitioners should craft their arguments around the Federal Circuit’s preferred language to optimize their chances on appeals and best protect their clients’ interests.

SOURCES

PNC Bank N.A. v. United Servs. Auto. Ass’n, No. IPR2022-00076 (P.T.A.B. May 10, 2023)

United Servs. Auto. Ass’n v. PNC Bank N.A., No. 2023-2171, 2025 WL 339662 (Fed. Cir. Jan. 30, 2025)

On March 4, 2025, the Federal Circuit affirmed the Patent Trial and Appeal Board’s (“PTAB”) decision in Restem, LLC v. Jadi Cell, LLC, No. 23-2054, 2025 WL 679195, at *1 (Fed. Cir. Mar. 4, 2025), finding that the patent challenger failed to prove that the claims were unpatenable and offering two key takeaways.

The Parties and the Patent

Jadi Cell, the patent owner, owned U.S. Patent No. 9,803,176 (“the ’176 patent”). The ’176 patent is directed to “stem cells with specific cell markers…obtained from the subepithelial layer (SL) of mammalian umbilical cord tissue through a two-step process[.]” See id. (citing U.S. Patent No. 9,803,176 (filed Dec. 31, 2012)). Claim 1 of the ’176 patent recites:

1. An isolated cell prepared by a process comprising:

placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate; and

culturing the subepithelial layer such that the isolated cell from the subepithelial layer is capable of self-renewal and culture expansion,

wherein the isolated cell expresses at least three cell markers selected from the group consisting of CD29, CD73, CD90, CD166, SSEA4, CD9, CD44, CD146, or CD105, and

wherein the isolated cell does not express NANOG and at least five cell markers selected from the group consisting of CD45, CD34, CD14, CD79, CD106, CD86, CD80, CD19, CD117, Stro-1, or HLA-DR.

’176 Patent.

Restem, the patent challenger, challenged claims 1-15 of the ’176 patent based on inherent anticipation or, alternatively, obviousness. See Restem, LLC, 2025 WL 679195 at *1.[1]

Claim Construction

Before addressing the inherent anticipation argument, the Federal Circuit first addressed the claim construction of two terms: (1) “placing” step and (2) “isolated cell.” See id. at *1-3.

Regarding the first term, the PTAB did not import additional steps from the specification “because the specification [did] not uniformly require those steps in all disclosed embodiments.” See id. at *1 (citing Joint Appendix). The PTAB consequently determined that the prior art references disclosed the claimed two-step process, but did “not disclose the [specific cell markers] because the prior art processes do not necessarily produce cells with the claimed cell marker expression profile[.]” See id. at *1 (internal citations omitted). Restem argued against this claim construction because it implicitly “require[d] steps beyond the claimed two-step process.” See id. at *2 (citing Appellant’s Brief). However, the Federal Circuit did not agree. See id. Thus, the Federal Circuit found no error in the PTAB’s construction of “placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate” as “to intentionally place umbilical cord tissue comprising the subepithelial layer so that it touches a growth substrate to permit cell culture.” See id. at *1 (citing Joint Appendix).  

Regarding the second term, the PTAB “declined to construe ‘isolated cell,’ but construed ‘expresses/does not express’ to mean ‘the marker is confirmed present/absent relative to a control sample,’ which is ‘consistent with [the PTAB’s] interpretation of ‘isolated cell’ as indicating a cell population[.]’” See id. at *2 (internal citations omitted). Finding the intrinsic evidence unclear, the PTAB used extrinsic evidence and found agreement among the experts. See id. Restem argued that the PTAB should not have construed the second term contrary to its express definition. See id. Although the Federal Circuit agreed with Restem that the PTAB “implicitly construed ‘isolated cell’ as ‘a cell population,’” it determined that this construction was supported by the claim language and prosecution history. See id. at *2-3.

Restem’s Inherent Anticipation Challenge

Relying on precedent, the Federal Circuit clearly stated the law regarding inherent anticipation and product-by-process claims. “Inherent anticipation requires ‘the disclosure of the prior art [be] sufficient to show that the natural result flowing from the operation as taught in the prior art would result in the claimed product.’” Id. at *3 (quoting SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1343-44 (Fed. Cir. 2005) (cleaned up)). A product-by-process claim is defined as “one where the product is defined, at least in part, in terms of the process by which it is made.” Id. (citing SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1315 (Fed. Cir. 2006)). For product-by-process claims, the focus is different in determining invalidity versus infringement. For invalidity, the focus is on the product, not the process. See id. (citing Amgen Inc. v. Hoffman-La Roche Ltd., 580 F.3d 1340, 1369-70 (Fed. Cir. 2009)) (emphasis added). For infringement, the focus is on the process and the product. See id. (citing Amgen Inc., 580 F.3d at 1370) (emphasis added).

Restem’s inherent anticipation argument was that “inherency is automatic for product-by-process claims” because “once the process steps are met, the product is necessarily present.” See id. (citing Appellant’s Brief). However, the Federal Circuit disagreed, explaining that “Restem’s argument conflates the anticipation and infringement analyses for product-by-process claims by improperly shifting the analysis from whether the prior art discloses the claimed product to whether the prior art discloses the claimed process.” Id. (emphasis original).

The PTAB found that the cells claimed in the ’176 patent were distinguished from other stem cells based on the cell marker expression profile. See id. In its review, the Federal Circuit determined this finding was supported by substantial evidence. See id. at *4. Specifically, the Federal Circuit stated that “Restem did not provide any testing evidence to show cells produced by [the prior art’s] process would inevitably, as inherency requires, have the claimed cell marker expression profile.” See id. (citing Joint Appendix and In re Montgomery, 677 F.3d 1375, 1380 (Fed. Cir. 2012)). Thus, the Federal Circuit affirmed the PTAB’s decision that Restem failed to show the claims were unpatentable. See id.

Conclusion

The takeaways from this case are twofold.

First, the analysis for invalidity of product-by-process claims is distinct from the analysis for infringement of product-by-process claims. For invalidity of product-by-process claims, it matters whether the prior art discloses the claimed product, not the claimed process.

Second, this case serves as a helpful reminder to patent practitioners that the prosecution history of a patent can have a significant impact during litigation. Thus, practitioners prosecuting a patent should carefully consider the future impact of arguments set forth during prosecution. Similarly, patent litigators should consider utilizing a patent’s prosecution history to their client’s advantage during litigation.

[1] The PTAB found that claim 9 was not obvious for two reasons, but Restem only challenged the PTAB’s alternative basis. See id. at *4. For this reason, the Federal Circuit held that it “need not reach the [PTAB]’s alternative basis to affirm.” See id.

On Friday, February 28, 2025, the United States Patent and Trademark Office (USPTO) announced the withdrawal of the June 2022 memorandum titled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation,” which had been issued by former USPTO Director Kathi Vidal.

The 2022 Memorandum was intended to clarify the Patent Trial and Appeal Board’s (“PTAB”) application of the 2020 decision in Apple Inc. v. Fintiv (“Fintiv”). The rescinded memorandum outlined three scenarios in which the PTAB would not deny institution of an inter partes review (“IPR”) petition based on Fintiv:

  1. The PTAB will not deny institution when a request for denial under Fintiv is based on a parallel International Trade Commission (ITC) proceeding.
  2. The PTAB will not deny institution under Fintiv if the petitioner stipulates not to pursue the same grounds in a parallel district court proceeding or any grounds that could have reasonably been raised in the petition (known as a Soltera stipulation).
  3. The PTAB will not deny institution under Fintiv if a petition presents compelling evidence of unpatentability.

With the rescission of this guidance, the PTAB’s approach to discretionary denials is likely to change in several ways:

  • The PTAB will now consider whether a petition related to an ongoing ITC proceeding is subject to discretionary denial.
  • The PTAB will no longer consider Soltera stipulations as definitive in determining whether to exercise discretion to deny institution.
  • The Board will evaluate the petition based on the Fintiv factors rather than the “compelling merits” analysis outlined in the 2022 Memorandum.

Going forward, practitioners and patent owners are instructed to refer to the PTAB’s precedential decisions for guidance, including Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential as to § II.A). Additionally, practitioners should also be aware that any portion of a PTAB or Director Review decision relying on the 2022 Memorandum will not be considered binding on the PTAB.

On January 27, 2025, the Federal Circuit held that the Patent Trial and Appeal Board (“PTAB”) “has jurisdiction over IPRs concerning expired patents.” See Apple Inc. v. Gesture Tech. Partners, LLC, 2025 WL 299939, *2 (Fed. Cir. Jan. 27, 2025).

Background and Procedural History

Apple, the inter partes review (“IPR”) petitioner, filed an IPR petition in June 2021. See id. at *1. The patent at issue was U.S. Patent No. 8,878,949 (“the ’949 patent”), related to image capture technology and owned by Gesture. See id. Apple asserted that all claims of the ’949 patent were obvious over the prior art. See id. The PTAB held that several claims of the ’949 patent were unpatentable and that others were not shown to be unpatentable. See id. Both parties appealed the PTAB’s decision to the Federal Circuit. On appeal, the Federal Circuit addressed arguments directed towards both jurisdiction and obviousness. This blog discusses only the jurisdictional portion of the court’s analysis.

Patent Owner Argues PTAB Lacks Jurisdiction over Expired Patents

At the Federal Circuit, Gesture argued “that the [PTAB] could not exercise jurisdiction over this IPR because the ’949 patent expired in May 2020, before Apple filed its petition in June 2021.” See id. at *2. Gesture relied on Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 584 U.S. 325 (2018), stating that “jurisdiction over the expired patent becomes limited to the Article III courts” because patent owners lose their exclusionary rights when a patent expires. See id. Rather, the patent owner’s rights “become[ ] limited to collecting damages that formerly existed through an infringement action in an Article III court[.]” See id. Therefore, Gesture reasoned that the PTAB did not have jurisdiction over the ’949 patent.

Federal Circuit’s Holding

Acknowledging that the Federal Circuit has not “squarely addressed whether the [PTAB] may institute IPRs for patents after they have expired[,]” the court stated affirmatively that “the [PTAB] has jurisdiction over IPRs concerning expired patents.” See id. To support its holding, the Federal Circuit relied on Oil States and the public-rights doctrine. See id. at *3. The Federal Circuit also noted that this is not the first case it has reviewed involving expired patents in an IPR decision, which implicitly shows that the PTAB has jurisdiction over expired patents. See id.

Despite its reliance on the same case, the Federal Circuit rejected Gesture’s argument. The Court summarized the Oil States holding, stating that “IPRs fall within the public-rights doctrine and do not violate Article III.” See id. (citing Oil States Energy Services, 584 U.S. at 337). The Court further emphasized the fact that although an expired patent limits a patent owner’s rights, it does not eliminate their rights. See id. For example, a patent owner of an expired patent can sue for past damages. See id. (citing Genetics Inst., LLC v. Novartis Vaccines & Diagnostics, Inc., 655 F.3d 1291, 1299 (Fed. Cir. 2011). In that light, the Federal Circuit reasoned that “Gesture fail[ed] to explain why an IPR, which ‘would have a consequence on any infringement that occurred during the life,’ of the patent, falls outside the scope of the public-rights doctrine solely because the patentee’s prospective right to exclude others has terminated.” See id. (internal citations omitted) (citing Sony Corp. v. Iancu, 924 F.3d 1235, 1238 n.1 (Fed. Cir. 2019).

Conclusion & Takeaway

With the Federal Circuit’s confirmation that the PTAB has jurisdiction to conduct IPR proceedings over expired patents, PTAB practitioners can now proceed with confidence when challenging an expired patent. Apple, Inc. v. Gesture Tech. Partners makes it clear that the PTAB has jurisdiction over IPR proceedings involving expired patents.

The Federal Circuit’s recent decision in Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2024 WL 5114204 (Fed. Cir. Dec. 16, 2024) concerns an obviousness determination based on a motivation to combine.  Below is a discussion of the case and a key takeaway for patent practitioners and innovators.

Before the Patent Trial and Appeal Board (“PTAB”) in an Inter Partes Review, the Petitioner, Palo Alto Networks, Inc., asserted that the patent-at-issue is invalid as obvious over the prior art, arguing that one skilled in the art at the time would have had a motivation to combine two prior art references.  Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. IPR2021-01150, 19-20 (P.T.A.B. Feb. 16, 2023).  Specifically, one reference disclosed all the limitations of the patent-at-issue except one, and a second reference disclosed the absent limitation.  Id.  The Petitioner urged the PTAB to find a motivation to combine the two references because their combination reflects an “application of known techniques [] to improve similar devices [] to provide predictable results in the same way.”  Id. at 24 (internal citation omitted).

The PTAB ruled in favor of the Patent Owner, holding that the Petitioner failed to adduce a “necessary bridge showing that one of ordinary skill in the art would have appreciated” that the two prior art references could be combined to yield the inventive aspects of the patent-at-issue.  Id. at 26.  The Petitioner then appealed the PTAB’s final written decision to the Federal Circuit.

On appeal, the Federal Circuit vacated and remanded the case because the PTAB did not adequately explain why a person of ordinary skill in the art would not have had a motivation to combine the two prior art references.  Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2 (Fed. Cir. Dec. 16, 2024).  In particular, the Federal Circuit could not “discern with any confidence what the Board meant” by “necessary bridge.”  Id. at 11.  “If the Board meant to say that it found no motivation to combine—and we do not know whether it did—it certainly failed to explain why a person of ordinary skill in the art would not have been motivated to [combine the two prior art references].”  Id.

Patent practitioners and innovators should revisit this case when deciding whether to appeal a PTAB decision to the Federal Circuit, especially if the Board’s determination turns on a motivation to combine.  Remember that the PTAB must clearly state its findings.  A final written decision that mixes analysis with ambiguous or untested terminology (i.e., “necessary bridge”) increases the likelihood of a successful appeal.

Sources:

Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. IPR2021-01150 (P.T.A.B. Feb. 16, 2023)

Palo Alto Networks, Inc. v. Centripetal Networks, LLC, No. 2023-1636, 2024 WL 5114204 (Fed. Cir. Dec. 16, 2024) 

With U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal’s return to private practice in December 2024 and the future permanent Director yet to be tapped for nomination, it is a good time to reflect on one of the most impactful processes that grew during Vidal’s tenure — Director Review.  It was not until shortly before the end of Director Vidal’s term, on October 31, 2024, that the USPTO implemented 37 CFR § 42.75 and effectively codified the Interim Director Review Process. The following provides an overview of the origin of Director Review, the process as it has been codified, and a recap of the statistics under Director Vidal’s purview.

Background

Director Review was born from the Supreme Court’s decision in United States v. Arthrex, Inc., where the Court explained that “constitutional principles chart a clear course: Decisions by [administrative patent judges (APJs)] must be subject to review by the Director.” 594 U.S. 1, 24 (2021). The Court further held that “the Director has the authority to provide for a means of reviewing PTAB decisions” and “may review final PTAB decisions and, upon review, may issue decisions [themself] on behalf of the Board.” Id. at 25.

Process

Availability and Filings

A party to a Patent Trial and Appeal Board (PTAB) decision may request Director Review of any decision including Derivation Proceedings (35 U.S.C. §§ 135), inter partes review (35 U.S.C. §§ 314, 318), and post-grant review (35 U.S.C. §§ 324, 328).  The request must be filed either: (1) within 14 days of the entry of a non-final decision or a decision to institute a trial, or (2) within 30 days of the entry of a final decision or a decision not to institute a trial.  37 C.F.R. § 42.71(d).

Generally, the appellee is not permitted to respond to a request for Director Review; however, the Director may authorize such a response as well as the submission of new evidence or arguments if warranted (e.g., in cases addressing issues of first impression or issues involving intervening changes in the law or USPTO procedures, guidance, or decisions).

Determination of Whether to Grant Director Review

A request for Director Review is evaluated by the Advisory Committee, which is established by the Director and comprises at least 11 members from various USPTO business units (e.g., Office of the Under Secretary, Patent Trial and Appeal Board, Office of the General Counsel, etc.).  The Advisory Committee then provides a recommendation to the Director, who may take it into consideration along with the underlying decision and the associated arguments and evidence.

The Director may also grant review sua sponte (on the Director’s own initiative)—although it is typically reserved for issues of “exceptional importance,” which are flagged by the PTAB’s internal post-issuance review team.

 Process Following Determination

Should the Director determine to deny review, an order denying the request will be entered into the record. The Director is not required to (and generally opts not to) provide any reasons for denial.

Should the Director determine to grant review, the Director may issue an initial order granting review and identifying the issue(s) to be addressed by a later order.  Alternatively, the Director may issue a single decision that simultaneously grants Director Review and resolves the identified issue(s).

In cases where the Director remands a decision to the Board, the Board is expected to issue a new decision either by: (1) the due date specified in the Director’s remand order, or (2) absent a due date set by the Director, six months from the date of remand.

Challenging Director Review Decisions

Depending on the underlying decision subject to the Director Review order, parties may seek an appeal to the Federal Circuit.  Specifically, a party may appeal a Director Review decision of a final, rehearing, or other appealable decision under 35 U.S.C. §§ 135 (derivation proceeding), 316 (IPR), or 328 (PGR). Conversely, Director Review decisions of Board decisions on institution are not appealable. See 35 U.S.C. § 314(d).

In the alternative, a party may file one request for rehearing a Director Review Decision.  However, such a request must specifically identify what matter the Director Review decision overlooked and may not serve as an opportunity to raise new issues or arguments.

Director Review under Director Vidal

The following chart provides a breakdown of Director Review under Director Vidal (as of Dec. 15, 2024, available at https://www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests):

In sum, Director Vidal faced 332 requests for Director Review during her two-and-a-half-year tenure. At a high-level, it is evident that Petitioners have had greater success in receiving grants to requests for Director Review– as opposed to their counterpart Patent Owners — 21.2% grant rate compared to a 1.48% grant rate (dismissed, withdrawn, and pending not considered).  Additionally, Director Vidal notably took the initiative to conduct Director Review sua sponte in 36 cases, begging the question of whether the future Director will similarly take the onus to review without a party’s invitation. 

With the number of requests growing year by year and the recent codification of Director Review, Patent Owners and Petitioners alike may feel encouraged to continue to request Director Review—even in the face of limited success rates as shown above.  But, with Director Vidal’s stepping down, one may only guess how the future Director will wield the power of Director Review. 

See generally 37 CFR § 42.75; see also https://www.uspto.gov/patents/ptab/decisions/director-review-process.