A key tool that promotes innovation by weeding out weak patents that can be weaponized against startups is being scaled back by federal policymakers. With Senate confirmation of John Squires pending, the U.S. Patent and Trademark Office (PTO), under Acting Director Coke Stewart, is implementing new Patent Trial and Appeal Board (PTAB) policies that restrict access to inter partes review (IPR), limiting startups’ ability to challenge low-quality patents.
The patent review board was established when Congress passed the America Invents Act (AIA) in 2011, aiming to create a more affordable and accessible avenue for challenging or defending against low-quality patents. With its patent expertise and streamlined procedures, the PTAB offers an efficient alternative to federal court litigation for startups, which often lack the resources to navigate costly, time-consuming litigation. Through IPR, a petitioner possesses standing in the PTAB to proactively challenge the validity of a patent before being sued. This post-grant proceeding is an essential tool for startups to combat potential lawsuits from patent trolls while avoiding the significant drain on costs and resources that traditional litigation imposes. Creating uncertainty as to whether a patent can be reviewed by the PTAB undermines the AIA’s intent and threatens startup innovation.
When an IPR petition is filed, the PTAB has the authority to deny review through the discretionary denial process. In the precedential denial case Apple Inc. v. Fintiv, Inc., the PTAB established a six-factor test to determine whether to deny an IPR petition when parallel litigation is ongoing in the federal court system. The precedent created uncertainty and confusion as bad actors began strategically filing lawsuits in district courts with early trial dates to invoke a Fintiv-based denial and block PTAB review. Former PTO Director Kathi Vidal addressed concerns over these denials in her June 2022 memorandum, which instituted the policy that the PTAB would not discretionarily deny IPR when there is a compelling unpatentability challenge or if petitioners agree to not raise in district court any grounds that could have been raised in the PTAB. This guidance narrowed Fintiv application and ensured meritorious IPR proceedings could move forward.
Unfortunately, sweeping policy changes were initiated at the PTO in February when Acting Director Stewart rescinded the June 2022 memorandum that established safeguards around Fintiv. This move chips away at access to the most effective tool startups can use to combat low-quality or invalid patents. By eliminating former Director Vidal’s safeguards against the misuse of discretionary factors, the PTO reverted to the original six-factor Fintiv test that provides broader discretion in denying IPR petitions.
Stewart further overhauled PTO procedures in her March 2025 memorandum that created a new two-step process to determine whether the PTAB will review IPR petitions. In the first stage, the PTO Director in consultation with at least three PTAB judges determines whether discretionary denial is appropriate based on the Fintiv factors. If the petition proceeds, the second stage involves a three-member PTAB panel to assess petitions on the merits.
Since this two-pronged process has been instituted, there have been hundreds of petitions that Stewart has denied at the first stage, with brief decisions based on policy factors. In comparing the percentage of discretionary denials from before and after Stewart’s overhaul of PTAB review, IPR denials have risen from 15 percent to 77 percent of PTAB IPR decisions. These policy changes ultimately prevent low-quality or invalid patents from being reviewed. Startups are losing the affordable, efficient avenue to defend their innovation.
Unsurprisingly, first-stage denials have prompted challenges through requests for Director Review. In iRhythm v. Welch Allyn, Stewart denied iRhythm’s IPR petitions because the company’s delay in filing allowed the “settled expectations” of the patent owner to outweigh the other discretionary factors. This denial sets the precedent that IPR should not be instituted for patents even six years old, further limiting PTAB review. Most importantly, iRhythm requested Director Review of Stewart’s own decision and was denied — by Stewart. In this new system, if you have a problem with a denial at the first stage, your only chance to ask for reconsideration is to appeal to the original decision-maker.
For a startup, pursuing litigation through the PTAB to challenge a low-quality patent that poses a threat to the sole product or service that their business is built off is essentially their Super Bowl. Yet in this high-stakes game where a founder’s time and effort is on the line, if the referee makes a bad call, review of the game-determining decision goes again to the referee rather than the replay booth for review.
The confirmation of a new PTO Director delivers the opportunity to reverse these drastic changes to the PTAB and its accessibility. Denying IPR petitions does not support the mission of promoting patent quality and ensuring American competitiveness in innovation. Conflating the increasing denials of IPR petitions to ensuring adequate resources are devoted to the patent application backlog is misguided. The backlog should be addressed by providing the PTO with the proper staffing and resources necessary to examine and review patent applications effectively. Additionally, attempts to revise the PTAB through legislation such as the PREVAIL Act will only add to the current disarray at the PTO. The intention of the AIA as authorized by Congress is not being upheld in the current U.S. patent system, and startups as the drivers of innovation stand to lose the most by being shut out of access to patent review.
Disclaimer: This post provides general information related to the law. It does not, and is not intended to, provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Engine is a non-profit technology policy, research, and advocacy organization that bridges the gap between policymakers and startups. Engine works with government and a community of thousands of high-technology, growth-oriented startups across the nation to support the development of technology entrepreneurship through economic research, policy analysis, and advocacy on local and national issues.
