The Director Decides: AIA Institution Authority No Longer Delegated To The PTAB

On October 17, 2025, almost one month after being sworn in as the Director of the USPTO, John Squires returned institution authority for proceedings under the America Invents Act (“AIA”) to himself. Previous Directors had delegated institution authority to the Patent Trial and Appeal Board (“PTAB”). But in an “Open Letter” to “Colleagues, Inventors, and Americans,” Director Squires explains that delegation has given rise to “structural, perceptual, and procedural concerns inconsistent with the AIA’s design, clear language, and intent[.]” A memorandum accompanying the letter provides additional details on implementing his authority, including that his decisions will typically provide only “summary notice.” With Friday’s announcement, institution rates of AIA proceedings, particularly inter partes reviews (“IPRs”), may continue to trend downward, and the decisions themselves will be less transparent. Whether post-grant reviews (“PGRs”)—preferred by Director Squires over IPRs—will now receive favorable treatment remains to be seen. 

The Director’s letter and memorandum come about seven months after then‑Acting Director Coke Morgan Stewart’s memorandum on “Interim Processes for PTAB Workload Management” (“Interim Processes”). That memorandum established a bifurcated approach to institution decisions for IPRs and PGRs.  The Director first determined whether to deny review under discretionary considerations, such as the challenged patent’s age or if another forum will address the validity of the patent first. If denial was appropriate, the Director issued a short decision. Otherwise, the Director referred the challenge to a three-judge PTAB panel who then determined institution based on the merits and other non‑discretionary statutory considerations.

Director Squires explains in his open letter that the delegation of institution authority to the PTAB has raised a number of concerns. First, there is a perception that the PTAB may have an incentive to institute review in view of “docket size, credit, and resource allocation.” Second, three-judge PTAB panels that receive cases under the bifurcated Interim Processes have been granting review at “extraordinarily high institution rates (at one point exceeding 95 percent) for referred cases.”  Third, delegation of institution authority to the PTAB, while permitted, is inconsistent with the AIA’s express charge that the Director make institution determinations. Director Squires also references his confirmation testimony that the AIA institution data “seemed to be ‘skewed’ in favor of certain provisions (namely IPRs over PGRs and a very high invalidation rate).” 

To facilitate the Director’s mission to “serve the public interest [] by maintaining a patent system that is fair, predictable, and respected,” the memorandum outlines the Director-institution model, effective October 20, 2025. The process for briefing discretionary considerations under the Interim Processes, and the process for briefing the merits and other non-discretionary statutory considerations will remain the same. But the Director will not issue a decision denying review based on discretionary considerations by the four-month deadline. Rather, he (in consultation with a limited group of PTAB judges) will issue a summary notice granting or denying institution based on discretionary considerations, the merits, and non-discretionary statutory considerations by the six-month deadline. The memorandum outlines a few possible exceptions to this new process. If the proceeding involves a novel or important factual or legal issue, the Director may issue a decision addressing those issues. If the proceeding involves complex issues, such as complex claim construction issues, priority analysis, or a real party in interest determination, the Director may refer the decision to one or more PTAB judges. If the Director determines that institution is appropriate, he will then refer the matter to a three-judge PTAB panel to conduct the trial. 

The new Director-institution process will be impactful for any party considering AIA challenges or facing one. First, Director Squires’ open letter mentions concerns about “a high invalidation rate” and “extraordinarily high institution rates.” Institution rates have been trending downward due to the bifurcated Interim Processes. With Friday’s announcement, the trend may continue downward, at least for IPRs, given the Director’s concerns and his authority to decide. Because Director Squires has signaled his preference for PGRs, it will remain to be seen if those proceedings will be instituted more. Would-be petitioners will likely consider other avenues to challenge the validity of a patent, such as an ex parte reexamination. Second, the decisions on institution will be replaced with a summary notice for most cases—leading to less transparent outcomes. In the case of most denials, the parties will likely not know the basis for denial. The Director’s reasoning for most institutions will also likely be non‑transparent. PTAB panels in the past have provided guidance to the parties in institution decisions, such as discussing the strengths and weaknesses of the prior art or highlighting claim construction issues for the parties to consider. Under the new process, there will be no such guidance because the Director, not a PTAB panel, will have made the decision.  Third, petitioners will likely want to present other considerations in their initial briefing beyond explaining the prior art. Emphasizing the necessity for the challenge in terms of the impact on innovation and the American economy may help increase the odds of institution. Director Squires in his letter referred to the USPTO as “America’s Innovation Agency.” Fourth, for patent owners, Friday’s announcement reinforces pressing discretionary considerations and emphasizing their own innovation story. Both sides will need to closely monitor the Director’s early decisions—to the extent transparent—for further clues on his decision making. He is now the one who decides.