USPTO Proposes New Institution Rules and Director Takes Over Merits-Based Institution Decisions

The US Patent and Trademark Office (USPTO) has announced two major, interrelated policy shifts: (1) proposed amendments that would limit the institution of inter partes review (IPR) proceedings in cases where validity has already been—or soon will be—adjudicated elsewhere, and (2) a reallocation of authority for America Invents Act (AIA) trial institution decisions back to the USPTO director.

The USPTO on October 17, 2025 published a Notice of Proposed Rulemaking to substantially revise 37 CFR § 42.108, which governs the institution of IPRs before the Patent Trial and Appeal Board (PTAB). That same day, USPTO Director John Squires issued a memorandum announcing that he will no longer delegate merits-based institution determinations to PTAB panels. Instead, the director will personally decide whether to institute a trial, issuing determinations through concise “summary notices.”

Together, these actions reflect a continued effort by the USPTO to reduce duplicative patent challenges and reinforce administrative efficiency, signaling a broader policy shift toward curtailing access to post-grant reviews.

PROPOSED CHANGES TO 37 CFR § 42.108

The proposed rules would introduce new mandatory stipulations and categorical preclusions on the institution of IPR proceedings, representing one of the most sweeping structural changes to PTAB practice since the AIA’s enactment. According to the notice, the changes aim to reduce duplicative validity challenges, conserve PTAB resources, and promote predictability in patent disputes.

Specifically, the proposal would amend 37 CFR § 42.108 to add the following four primary procedural restrictions:

1. Mandatory Stipulation Requirement

Institution or maintenance of an IPR would be prohibited unless each petitioner files a stipulation with both the PTAB and any other tribunal where the parties are, or may become, litigants regarding the challenged patent. The stipulation must state that, if an IPR is instituted, the petitioner and any real party in interest or privy will not raise any invalidity challenge under 35 USC §§ 102 or 103 in any other proceeding (such as a district court action, US International Trade Commission (ITC) investigation, or ex parte reexamination). However, ambiguity remains regarding how “proceeding” will be defined under 37 CFR § 42.2.

2. Preclusion Based on Prior Validity Findings

Institution or maintenance would be barred if the challenged claim—or an independent claim from which it depends—was previously found not invalid under §§ 102 or 103 (i.e., found valid) in any of the following, provided the prior decision has not been vacated or reversed in relevant part:

• US district court decision or verdict after trial
• US district court summary judgment
• ITC initial or final determination
• PTAB final written decision finding the claim not unpatentable
• Ex parte reexamination or board decision initiated by a third party (not the patent owner or its privies) finding the claim patentable
• US Court of Appeals for the Federal Circuit decision reversing a prior invalidity finding

In other words, if an independent claim of a patent was upheld in another proceeding, the PTAB would be categorically barred from instituting review of that claim and its dependent claims.

3. Parallel Litigation Preclusion

The PTAB shall not institute or maintain an IPR if it is more likely than not that a validity decision under §§ 102 or 103 will issue first in another forum, such as a district court trial, ITC determination, another PTAB final written decision, third-party-initiated ex parte reexamination, or a Federal Circuit decision.

4. Narrow Extraordinary-Circumstances Exception

If institution would otherwise be precluded under these provisions, a panel may refer a case to the director for possible institution only in extraordinary circumstances—such as where prior proceedings were brought in bad faith or where a material change in statute or US Supreme Court precedent has occurred. New prior art, new expert testimony, new legal arguments, or non-Supreme Court case law do not qualify. This exception will require further clarification, as its applicability remains unclear at this time.

DIRECTOR NOW MAKES MERITS-BASED INSTITUTION DECISIONS

AIA institution decisions were previously delegated to PTAB panels, creating a bifurcated process in which the director addressed discretionary denial issues while panels decided whether to institute review on the merits. This divided structure raised concerns about transparency and potential “self-referral bias.”

Under the new memorandum, Director Squires will personally issue all merits-based institution determinations, using concise summary notices instead of detailed panel opinions. Although PTAB panels will still handle certain procedural aspects, this centralization of authority represents a structural realignment of how the USPTO exercises institution discretion. This change aims to better align the agency’s procedures with the statutory text and enhance accountability.

WHY IT MATTERS

This development, coupled with the proposed rulemaking, signals a major tightening of procedural access to IPRs and continues the USPTO’s ongoing pivot toward limiting post-grant challenges and harmonizing validity determinations across forums. If implemented, the changes would have the following effects:

• Force petitioners to commit fully to the PTAB as their sole forum for §§ 102 and 103 invalidity challenges, reducing strategic flexibility in parallel disputes; the required stipulation could also expand estoppel exposure, potentially foreclosing arguments—including product prior art arguments—that could not have been raised until later in litigation
• Elevate the effect of prior validity determinations, even where later PTAB petitions rely on different prior art or arguments
• Shift emphasis from technical merits to procedural gatekeeping, potentially narrowing the PTAB’s role as a technical adjudicator
• Disproportionately affect smaller entities with limited resources to litigate validity solely in district court

CONCLUSION

The USPTO’s proposal marks a significant procedural inflection point that, if finalized, would reshape how validity disputes are managed between the PTAB and the courts. Because the proposed rules appear to apply only to IPRs, not post-grant reviews, the overall consistency of the post-grant system may soon hinge on further clarification from the USPTO.

Stakeholders should reassess litigation and patent portfolio strategies, particularly where district court and PTAB proceedings may overlap. Coordination between trial and PTAB counsel will be critical to avoid inadvertent preclusion, and executives and in-house counsel should prepare for heightened forum-selection risk given the potential loss of parallel review options.

The director’s new role in issuing summary, centralized institution decisions may streamline internal operations but could also reduce transparency and predictability in how petitions are evaluated.

While framed as procedural, these reforms could substantially curtail access to IPRs and may trigger APA challenges concerning the scope of the USPTO’s rulemaking authority. Interested parties may submit comments through the Federal Rulemaking Portal by November 17, 2025.