USPTO Issues Notice of Proposed Rulemaking, an Open Letter and Memorandum, Impacting Value and Availability of Inter Partes Reviews

According to the Memorandum, effective October 20, 2025, the Director will issue a summary notice to the parties that either grants or denies institution. For those proceedings involving novel or important issues, the Director “may issue a decision on institution addressing those issues.” In some instances, the decision on institution may be referred by the Director to one or more members of the Patent Trial and Appeal Board (PTAB). Once the IPR has been instituted by the Director, the proceeding will be conducted by the PTAB. The Memorandum confirmed that the processes implemented in March 2025 for briefing discretionary considerations, the merits and non-statutory considerations will not change.

The PTO’s Open Letter reaffirmed that while permitting delegation, the statutory language of 35 U.S.C. § 3(b)(3)(B), expressly vests the authority to institute IPRs and Post Grant Reviews with the Director. The letter asserts that by reclaiming his statutory role, the Director intends to:

• eliminate the appearance of self-interest by separating the power to institute from the PTAB that conducts the trial;
• remove a perceived referral-signal bias by centralizing the decision point;
• enhance transparency and public trust through a single line of authority; and
• 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 clear language of the America Invents Act, and thus Congress’s intent.

The Open Letter concludes with the assertion that such action “restores the statutory framework mandated by Congress in the America Invents Act.”

Overview of the Proposed New IPR Framework
According to the NPRM, the proposed framework seeks to enhance procedural efficiency, reduce duplicative proceedings and strengthen confidence in the finality of patent validity determinations by bringing a clearer, more predictable balance between administrative and judicial review of patent rights. For practitioners and litigants alike, the likely outcome of these changes will result in most validity disputes transitioning away from the PTO to district courts and the U.S. International Trade Commission and elevating the importance of monitoring challenges to the validity of patents potentially being asserted in the future.

The NPRM introduces the following key changes in current IPR practice:

• The PTO will no longer institute an IPR when another proceeding is likely to resolve patentability or validity first.
• The PTO will no longer institute an IPR when the PTO or another tribunal has already adjudicated the patentability or validity of the same claims.
• Institution of an IPR only in “exceptional circumstances,” when a prior or parallel proceeding exists, subject to potential sanctions for “frivolous or abusive petitions.”
• The agency will require IPR petitioners to stipulate that they will not pursue invalidity challenges under 35 U.S.C. §§ 102 or 103 in other forums.

According to the NPRM, these proposed rule changes align with the PTO’s broader goal of harmonizing administrative adjudication with judicial proceedings to ensure that patent disputes are handled efficiently and with finality. In practice, these changes will require practitioners and litigants to re-evaluate the role of IPRs in litigation strategy.

Potential Shift in Forum Workload
If IPR institution is limited in cases where district court or the U.S. International Trade Commission actions are already addressing validity, more disputes may remain in the judicial system. District courts will likely see increased emphasis on invalidity arguments that would otherwise have been addressed in an IPR proceeding.

Scope of the Stipulation Requirement
The proposal’s requirement that petitioners stipulate not to pursue §§ 102 or 103 invalidity challenges elsewhere is intended to prevent duplicative litigation. At the same time, practitioners may wish to consider whether refinements could ensure that the stipulation aligns more closely with the statutory scope of IPRs—which are limited to prior art patents and printed publications—without unintentionally restricting other legitimate defenses or discovery-based prior art issues that may arise in litigation.

Prior Adjudications and Access to Newly Discovered Art
The NPRM’s provision against instituting IPRs when patentability or validity has already been adjudicated reflects a desire for finality. While potentially addressed under the exceptional circumstances provision, some focus during the comment period should be on how the rule could address situations where new prior art or material information becomes available after the earlier proceeding or when there is a showing of a material error in the prior adjudication. Ensuring that meritorious challenges remain possible under defined conditions could preserve balance between certainty and the public interest in maintaining a sound patent system.

Coordinating Multidefendant Scenarios
When a patent is asserted against multiple defendants, timing and coordination among potential petitioners may present practical challenges. Without careful structuring, the proposed rules could incentivize early or duplicative filings. The PTO may benefit from feedback on mechanisms to streamline multiparty participation or sequencing, ensuring fair access while avoiding procedural inefficiencies.

Limited Availability of “Exceptional Circumstances” Grounds for Institution
Other than the PTO determining that the prior proceeding was brought in bad faith for the purpose of preventing future challenges or that the prior challenge is rendered irrelevant “in view of a substantial change in a statute or precedent of the Supreme Court,” the PTO’s articulated list of extraordinary circumstances warranting the institution of an IPR is extremely limited, such that it “shall not include new or additional prior art, new expert testimony, new caselaw (except as provided above) or new legal argument, or a prior challenger’s failure to appeal.” Combining these extremely limited “extraordinary circumstances” with potential sanctions for “frivolous or abusive petitions,” including the risk of an award of attorneys’ fees, severely limits the likelihood that the PTO will accept an IPR that otherwise is barred based upon the grounds articulated in the proposed rulemaking.

Potential Impact of Proposed Rulemaking
Absent material revisions, the proposed rulemaking is likely to significantly alter the role of IPRs in litigation strategy. Foregoing the ability to challenge the validity of the asserted patent in other venues as a new pre-requisite to initiating an IPR requires practitioners and litigants to strategically evaluate the benefit of challenging validity of patents before the PTO.

In addition, the proposed rulemaking formally precludes litigants involved in a parallel action from initiating an IPR if a decision in the parallel action is likely to occur prior to a decision from the PTO. Now more than ever, consideration of initiating an IPR needs to occur promptly upon notice of the parallel action and involve evaluation of the litigants’ ability to influence timing of such parallel action to enable the IPR proceeding to occur on a more accelerated schedule.

Another significant impact of the proposed rulemaking is that litigants will be unable to successfully institute an IPR if the asserted claims survived a challenge under 35 U.S.C. §§ 102 or 103 in either district court, the U.S. International Trade Commission or before the PTO. This preclusion occurs despite the petitioner not being involved in such prior matter. Given the potential impact of patent claims being upheld in such unrelated actions, companies will need to now carefully monitor pending litigation and IPR petitions involving patents that could potentially be later asserted against them, supply chain partners and/or their customers.

Enhancements to Be Considered During Comment Period
The comment period ending November 17, 2025, offers an opportunity for practitioners, industry stakeholders and patent owners to suggest important refinements that could both advance the PTO’s objectives, while limiting the potential impact of the proposed rulemaking on existing litigation strategy. Among potential discussion points the following merit consideration:

• Aligning stipulation requirements precisely with IPR’s statutory scope under §§ 102 and 103.
• Introducing procedural safeguards to manage timing across multiple defendants or parallel proceedings.
• Encouraging mechanisms for reconsideration where new, material prior art surfaces after an adjudication or in the event of a material error in the prior adjudication.
• Defining “exceptional circumstances” with illustrative examples to enhance predictability.

Each of these refinements could help ensure the new rules operate smoothly in practice while upholding the principles of fairness and procedural efficiency.

Conclusion
By seeking to limit duplicative challenges and promote greater certainty, the PTO’s proposed rulemaking and processes to be implemented as of October 20, 2025, reflects its purported ongoing commitment to enhancing the integrity and efficiency of the patent system. Given the language of the proposed provisions, it is essential for stakeholders to use the comment period to refine these provisions to increase the likelihood that they achieve their intended effect in a fair, transparent and effective manner, while limiting their potential impact on existing litigation strategy. This is an important moment for thoughtful input that can help shape a more predictable and sustainable post-grant review landscape.