Key Takeaways
- Effective immediately, the USPTO will consider whether a patent challenger’s accused products or a patent owner’s products are manufactured in the United States as additional factors in the discretionary denial process for inter partes and post-grant reviews.
- Patent challengers and patent owners should address in discretionary denial briefing whether they manufacture products in the United States and how institution or denial of America Invents Act (AIA) proceedings would impact domestic manufacturing. Patent challengers with fewer than 500 employees should also self-identify as small businesses when opposing discretionary denial.
Background
Under the Trump administration, the USPTO has significantly overhauled its approach in evaluating whether to discretionarily deny inter partes review (IPR) and post-grant review (PGR) petitions. On March 26, 2025, the Acting USPTO Director rescinded a prior memo on discretionary denials and issued a new memo that bifurcated the consideration of discretionary denial factors from the merits of the petitions. That memo also introduced additional factors that the USPTO would consider in its discretionary denial analysis, such as a patent owner’s “settled expectations…such as the length of time the claims have been in force.” In October 2025, USPTO Director John Squires announced he would be making all decisions on whether to institute IPRs and PGRs rather than delegating that authority to the Patent Trial and Appeal Board (PTAB). Now, in a recent March 11, 2026 memo, Director Squires has identified several new factors he will consider when deciding whether to institute IPRs and PGRs.
Examining the Impact of IPR and PGR Proceedings on American Manufacturing
In recent years, the United States has taken steps to encourage companies to reinvest in domestic manufacturing. In the March 11 memo, Director Squires announced that he will consider whether the patent challenger’s and patent owner’s products are manufactured in the United States as an additional discretionary institution consideration for IPR or PGR proceedings. The memo notes that “[o]ver the past several decades, substantial segments of the United States’s existing manufacturing base—particularly in the electronics and computer industries—have moved overseas.” According to the Director, the trend of off-shoring manufacturing has continued, despite IPRs and PGRs being available for the last 15 years to help protect American manufacturers and small businesses. Citing studies finding “significant economic and national security damage” and threats to “America’s innovation leadership” caused by foreign manufacturing, the Director stated “[t]hese developments bear directly on the Director’s statutory obligation to consider the effect of institution standards on the economy and the integrity of the patent system.”
The March 2026 memo encourages parties to identify relevant facts about “the extent to which AIA proceedings give a tactical advantage to companies that neither manufacture in the United States, nor are making American manufacturing investment.” At the same time, the Director also encouraged patent challengers who are small businesses sued for infringement to identify themselves to help the USPTO understand how often small businesses use IPRs and PGRs to defend themselves.
The newly identified discretionary denial factors may be addressed in any IPR or PGR where the patent owner’s discretionary denial brief is not yet due as of March 11, 2026. The factors are as follows:
- “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”;
- “the extent to which any products made, sold, or licensed by the patent owner that compete with the accused products are manufactured in the United States”; and
- “whether the petitioner is a small business that has been sued for infringement of the patent at issue.”
Questions Remain Over How the USPTO Will Evaluate and Weigh These New Factors
Given the memo’s emphasis on potential economic and national security harms from off-shore manufacturing, the Director would likely look favorably on parties that present evidence of U.S. manufacturing for their products. Future decisions may provide guidance on how the Director will weigh evidence of domestic manufacturing against other, potentially conflicting, discretionary denial factors.
The complexity of global supply chains will also need to be considered. Parties should address “not only assembly of the final product in the United States, but also the extent to which components of a product are made in the United States and the extent to which products made in the United States are sent for further processing outside the United States.”
The memo also indicates that the Director will consider domestic manufacturing for method claims. For those claims, the Director will consider “the devices used to carry out the method. For example, for claims directed to a method of operating a computer, the relevant product would be the computer.” Depending on the claim, that analysis may involve many different products manufactured by unrelated third parties. It is not yet clear how the Director will weigh the potentially complicated combination of domestic and foreign-made components used in a method.
How Companies Should Prepare for USPTO Proceedings
Regardless of whether a party is a patent challenger or a patent owner, they should be prepared to explain how their position would help encourage further investments in U.S. manufacturing or protect existing manufacturing in the United States. This could include submission of documents and affidavits at the pre-institution stage quantifying U.S. manufacturing activities. Patent challengers should also explore whether they meet the small business requirements identified by the USPTO, including the Small Business Administration’s standards (13 C.F.R. §§ 121.801-121.805) and the USPTO’s definition of “small entities” (37 C.F.R § 1.27(a)).
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