‘Settled Expectations,’ PTAB’s New Discretionary Denial Factor, Gains Additional Footing in Dabico

Acting Director of the USPTO Coke Morgan Stewart recently discretionarily denied institution of an inter partes review (IPR) based on a new consideration, “settled expectations,” that is, the length of time that the challenged patent had been in force. The Acting Director has since issued more discretionary denial decisions that have begun to illuminate the contours of this new factor. One such decision was Dabico, in which the Acting Director discretionarily denied an IPR petition under the new factor, finding that the challenged patent had issued more than eight years ago.

For more information on the iRhythm case in which the Acting Director first used the “settled expectations” factor, see our recent LawFlash.

NO NOTICE REQUIRED OF PATENTS OR POTENTIAL INFRINGEMENT BY PETITIONER FOR EXPECTATIONS TO SETTLE

Unlike in iRhythm, in Dabico[1] the Acting Director did not rely on any actual notice by the petitioner of (1) the patent or any of its related applications or (2) possible infringement.[2] Moreover, the Acting Director stated that actual notice is not required in determining settled expectations since patent applications are available to the public 18 months after the earliest priority date.

PETITIONER MAY BE ENCOURAGED TO CONSIDER DISCRETIONARY DENIAL FACTORS NOT RAISED BY PATENT OWNER

In Dabico, neither the petitioner nor the patent owner raised a settled-expectations argument, but the Acting Director nevertheless found expectations sufficiently settled to merit a discretionary denial. As such, even if a patent owner does not raise the settled-expectations argument, it appears that petitioners should still consider addressing this new factor in their briefs opposing discretionary denial under the new bifurcated discretionary-denial briefing procedures.

NO BRIGHT LINE RULES – BUT SOME LINES MAY BE FORMING

The Acting Director noted that “[a]lthough there is no bright-line rule on when expectations become settled . . . the longer the patent has been in force, the more settled the expectations should be.”[3] She went on to compare the time between issuance and the petition to the six-year statutory limit on damages for filing infringement lawsuits.[4]

OTHER CASES SINCE DABICO

While this case is independently significant, several subsequent decisions illuminate the contours of settled expectations further. For example, in another decision where the Acting Director declined to discretionarily deny a petition, she noted that “one of the challenged patents has not been in force for a significant period of time (issued in 2022) and the other patent is a parent of the first.”[5] The Acting Director went on to reason that since the patent owner had not developed settled expectations as to the recently issued patent, it would be an efficient use of the Board’s time to address the related patent.[6]

In another decision, the Acting Director reviewed challenges to five patents and found that the patents fell into two buckets with respect to settled expectations. She found that settled expectations applied to two of the patents, which were seven and nine years old, respectively.[7] But the Acting Director found that with respect to the other patents, which were all issued in either 2019 or 2020, settled expectations had not yet set in.[8]

In one other denial decision, the Acting Director newly explained that other circumstances can unsettle the settled expectations based on time in force alone. These other circumstances include “a significant change in law [that] may have occurred since the patent issued, and a petitioner can explain how that change in law directly bears on the patentability of the challenged claims,” or where “a patent may have been in force for years but may not have been commercialized, asserted, marked, licensed, or otherwise applied in a petitioner’s particular technology space.”[9] That said, she noted that absent such circumstances the Board is “disinclined to disturb the settled expectations of Patent Owner.”[10]

On June 23, 2025, a mandamus petition was filed with the Court of Appeals for the Federal Circuit challenging the USPTO Acting Director’s retroactive application of a binding rule change to vacate the institution of IPRs through the discretionary denial process.[11] The mandamus petition further alleges that this was in violation of the Administrative Procedure Act and the United States Constitution’s due process protections.[12]

There have been at least three mandamus petitions filed based on the Acting Director’s recent discretionary denial decisions, and the Federal Circuit’s handling of these cases could influence discretionary denial policy going forward.

Acting Director Refuses Discretionary Denial Based on Settled Expectations Factor

In one other recent decision, the Acting Director refused to discretionarily deny an IPR petition based on a petitioner’s argument related to the new settled expectations factor, arguing that the patent owner’s claims were “highly vulnerable to invalidation based on prior art” since the petitioner was successful in invalidating all of the claims to a parent of the patent that was challenged in the IPR petition at issue.[13]

The Acting Director noted that “[t]he fact that the Board previously determined related claims to be unpatentable—prior to the issuance of the challenged claims in this proceeding—tips the balance against discretionary denial,” harkening to the Patent Office’s duty to “provide consistency and predictability to the public.”[14]

Thus, while the settled expectations doctrine has been generally unfavorable to petitioners, this decision illustrates a blueprint for petitioners to use it as a tool to prevent discretionary denial in cases where other issued patents in the family had been invalidated, particularly when the findings of invalidity took place before the issuance of the patent challenged in the IPR.

ADDITIONAL TAKEAWAYS

These recent decisions are beginning to define the contours of the new settled expectations factor for discretionary denials at the PTAB, which help inform certain practice considerations:

• Whether or not it is worth petitioning for IPR if the patent at issue has been in force for more than six years. The lowest threshold we have seen is roughly seven years and the Acting Director did say that there is no bright line rule on time, but she did mention the statutory six-year limit on infringement damages as a basis for her settled-expectations threshold, thus it is possible that she may be willing to lower the bar all the way to six years.
• Assuming the patent has not been enforceable for six or more years, the patent owner should still raise the settled expectations factor, even if the petitioner did not have actual notice of a patent or infringement, as this is no longer a rigid requirement. On the other hand, the petitioner should address settled expectations regardless of whether it is raised by the patent owner since the Acting Director will consider this factor regardless of whether the parties raise the issue.
• Of note, petitioners should consider demonstrating that—regardless of the length of time in force for a patent—expectations are unsettled using some of the circumstances identified by the Acting Director, including:
• A change in the law occurring after a patent has been issued affecting the patent in some way.
• A patent, despite being issued over six years ago, not being commercialized, asserted, marked, licensed, or otherwise applied in the petitioner’s technology sector.
• We also have not yet seen discretionary denials based on other factors that were recently added to the discretionary-denial framework. Patent owners should consider applicability of any of the other new factors introduced by the Acting Director’s interim guidance (e.g., reliance on expert testimony, compelling economic, public health, or national security interests).

Summer associate Jason Arzhintar contributed to this LawFlash.