By Sue Gerber and Matt Johnson –
As discretionary denials are on the rise and institution rates are declining at the PTAB (link), recent decisions from the PTAB have introduced the notion of a patent owner’s “settled expectations” as another reason for the PTAB to exercise discretion and deny institution. Dabico Airport Solns. Inc. v. AXA Power ApS, IPR2025-00408, Decision, Paper 21 (June 18, 2025). In Dabico, the patent owner requested a discretionary denial under Sections 325(d) and/or 314(a), arguing that the art presented in the petition was substantively identical to that before the Examiner during prosecution, that the petitioner did not allege any Examiner error, and that the petition overall “lack[ed] substantive merit.” Id., Patent Owner Request, Paper 10 (April 28, 2025). In response, petitioner argued that because there was no pending parallel litigation, no multiple or serial petitions against the challenged patent, and the petition included different prior art not previously presented to the Office, there was no basis for a discretionary denial. Id., Petitioner’s Response, Paper 17 (May 28, 2025).
In denying institution, the Decision found the patent owner’s arguments under Section 325(d) “unpersuasive.” Id., Decision at 2. It explained that because the patent had been in force almost eight years, it had “creat[ed] settled expectations” for the patent owner. Id. Moreover, although the petitioner had been given an opportunity to both respond to the patent owner’s arguments and to identify reasons that the PTAB should not deny institution, the petitioner had failed to “provide any persuasive reasoning why an inter partes review is an appropriate use of Office resources.” Id. at 2-3. Thus, the PTAB explained it was “disinclined to disturb the settled expectations of the Patent Owner in this instance.” Id. at 3. The PTAB acknowledged “there is no bright-line rule on when expectations become settled,” but explained that “in general, the longer the patent has been in force, the more settled expectations should be.” Id. at 3.
Shortly after Dabico, the PTAB issued additional decisions applying the settled-expectations standard. In Intel Corp. v. Proxense LLC, IPR2025-00327, IPR2025-00328, IPR20205-00329, Decision, Paper 12 at 2 (June 26, 2025), the PTAB granted discretionary denial because three patents had issued more than nine years ago and the patent owner had settled expectations. The decision explained that there may be persuasive reasons why the PTAB should review a patent several years after issuance—for example, a significant change in the law bearing on patentability, or a patent that had not been commercialized, asserted, marked, licensed, or otherwise applied in a petitioner’s particular technology space until recently—but in the absence of such circumstances, the PTAB is disinclined to disturb the settled expectations of patent owner. Id. at 2-3.
Applying these principles, the PTAB issued two split-the-baby decisions denying discretionary denial for three related petitions and granting discretionary denial for the other two petitions. For the three petitions, the PTAB noted that the patents had been in force for six years or less and were involved in parallel district court litigation that did not have a trial date or Markman hearing scheduled. Cambridge Industries USA, Inc. v. Applied Optoelectronics, Inc., IPR2025-00434, IPR2025-00436, IPR2025-00437, Decision, Paper 11 at 2-3 (June 26, 2025). Given that the patent owner did not have settled expectations with respect to these three patents, the PTAB denied the request for discretionary denial. Id. at 3. In contrast, the other two patents from a different patent family had been in force for nine and seven years, respectively, such that the patent owner had settled expectations justifying the discretionary denial. Cambridge Industries USA, Inc. v. Applied Optoelectronics, Inc., IPR2025-00433, IPR2025-00435, Decision, Paper 11 at 2-3 (June 26, 2025). Compare also Sig Sauer Inc. v. Lone Star Future Weapons, Inc., IPR2025-00410, Decision, Paper 13 at 2 (June 26, 2025) (granting request for discretionary denial when patent issued ten years ago and petitioner had developed a competing product without challenging the patent) with Embody, Inc. v. Lifenet Health, IPR2025-00248, IPR2025-00249, Decision, Paper 13 at 2-3 (June 26, 2025) (denying request for discretionary denial when one patent issued three years ago, the second patent is the parent of the first, and the petitioner identified art not cumulative of the art presented during examination).
Takeaway
At least one takeaway from these decisions is that when challenging a patent that has been in force for six years or longer, a petitioner needs to be prepared to respond to a patent owner’s request for discretionary denial on the substance of the challenger’s invalidity arguments, but also by giving specific reasons why the PTAB should deny the motion and expend resources reviewing a patent that may be entitled to settled expectations.
Matthew Johnson