USPTO’s New Discretionary Factors for PTAB Proceedings Focus on US Manufacturing, Small Businesses

The USPTO issued a memorandum identifying new discretionary factors for consideration by the Director in deciding whether to institute inter partes review or post-grant review. These factors are tied to (1) US manufacturing presence and investment and (2) whether the petitioner is a small business that has been sued for infringement. The memorandum signals a policy-oriented shift in PTAB institution practice that may affect strategy in parallel litigation and AIA challenges, especially where domestic manufacturing and supply chain factors are likely to be emphasized.

On March 11, 2026, USPTO Director John A. Squires issued a memorandum identifying additional discretionary considerations when deciding to institute an inter partes review (IPR) or a post-grant review (PGR). The America Invents Act (AIA) directs the USPTO to consider the effects of its regulations governing these proceedings on the economy, the integrity of the patent system, efficient administration, and the Office’s ability to timely complete proceedings.

The memorandum frames the new considerations in the context of economic and supply chain concerns that stem from the declining domestic manufacturing in the United States and states that those concerns bear directly on the Director’s statutory obligations under the AIA.  

NEW DISCRETIONARY CONSIDERATIONS AT INSTITUTION

In deciding whether to institute an IPR or PGR, the Director will consider:

• US-Manufactured Accused Products: “The extent to which any products accused of infringement in a parallel proceeding are manufactured in the United States or are related to investments in American manufacturing operations”
• Patent Owner’s Competitive Products: “The extent to which products made, sold, or licensed by the patent owner that compete with the accused products are manufactured in the United States”
• Small Business Petitioner Status: “Whether the petitioner is a small business that has been sued for infringement of the patent at issue”

The USPTO aims to assess the impact of IPR and PGR proceedings on domestic industry and encourages the parties to address these factors in their discretionary briefing. In doing so, parties should keep the following key takeaways in mind:

Director’s Expanded View of ‘Manufactured in the United States’

The memorandum indicates that the Director may look beyond final assembly to consider whether components of the accused product are made in the United States and whether accused products made in the United States are sent abroad for further processing.

Relevant ‘Product’ for Method Claims

For method claims, the relevant “product” is the device used to perform the method; for example, for a method of operating a computer the relevant product would be the computer.

Small Business Assessment Includes Existing Standards

In evaluating whether a petitioner is a small business sued for infringement the Director may consider facts raised by the parties, including the Small Business Administration’s size standards and the standards referenced in the USPTO’s reduced-fee rules.

Applicability to Pending Proceedings

The memorandum applies to all IPRs and PGRs in which the due date for a patent owner discretionary brief has not yet elapsed, including certain proceedings filed before the memorandum issued.

IMPLICATIONS FOR PTAB PRACTICE

The memorandum introduces considerations that may influence institution outcomes and shape how parties develop the record in PTAB proceedings. In particular, the following areas may affect PTAB practice:

Discretionary Briefing Will Likely Become More Fact Intensive

The memorandum invites parties to develop a record on manufacturing footprint, investment, and supply chain location. Parties should expect increased reliance on declarations and business documentation such as sourcing and assembly information, contract manufacturing arrangements, and evidence of domestic investment.

Patent Owners May Have a Stronger Basis to Argue Against Institution

Patent owners with US manufacturing or supply chain ties may use the memorandum to frame institution as implicating the AIA’s required balancing of economic and system-integrity considerations, rather than focusing solely on the merits.

Patent owners may also consider highlighting a petitioner’s lack of meaningful US manufacturing presence or investment in American manufacturing operations in their opposition briefs where relevant, however, the memorandum expressly identifies small business status only in connection with a petitioner that has been sued for infringement of the patent at issue.

Petitioners May Adjust Their Approach

Petitioners may emphasize US-based operations, component sourcing, domestic manufacturing investment, and similar facts. They may also tighten petition scope, refine claim selection, and consider stipulations aimed at reducing discretionary denial risk.

Small Business Status May Affect Leverage in Parallel Disputes

If a petitioner credibly qualifies as a small business that has been sued for infringement of the patent at issue, that fact may be raised in opposition to discretionary denial and could affect settlement leverage in some cases, particularly in disputes with larger, well-funded companies.

Patent owners should be prepared to scrutinize any claimed small-business status, including corporate structure, affiliation, and applicable size standards.

Companies May Need Operational Readiness to Support PTAB Briefing

Because manufacturing and investment narratives may now influence institution outcomes, companies should plan for rapid coordination among legal, supply chain, manufacturing, and finance functions to assemble supporting evidence within PTAB timelines.

LOOKING AHEAD

The memorandum raises several open questions regarding how the Director will apply these factors in practice and how they will interact with existing discretionary denial considerations.

Parties to PTAB proceedings should:

• Watch for early Director decisions applying these factors and clarifying how they are weighed relative to other discretionary considerations.
• Expect disputes over what qualifies as “manufacturing,” including how to treat component sourcing versus final assembly and how global supply chains and contract manufacturing arrangements fit within the framework.
• Because the memorandum applies immediately to matters where the patent owner discretionary-brief deadline has not yet passed, parties should assume these issues may already be live in pending proceedings and consider addressing them where appropriate. In already-filed matters, petitioners may need to seek authorization to address these factors depending on procedural posture.