Director Squires Reinforces PTAB’s “Alternative to Litigation” Approach with IPR Denial in Magnolia v. Kurin

Key Takeaways

• For Petitioners: File early and be prepared to explain why an IPR or PGR is a true alternative to litigation, not a “second bite at the apple.”
  
• For Patent Owners: Magnolia reinforces discretionary denial arguments where a petitioner already litigated validity, or had a fair opportunity to do so, in district court.
  
• For Both Sides: American manufacturing, small business status, examiner error, settled expectations, and forum overlap remain important discretionary denial considerations.
  
• For Rulemaking Observers: Magnolia may be a preview of upcoming rules changes to restrict parallel PTAB and district court validity challenges.
  

Introduction

On May 14, 2026, USPTO Director John Squires issued a precedential decision in Magnolia Medical Technologies, Inc. v. Kurin, Inc.[1] Director Squires denied institution of an inter partes review (IPR) petition which the petitioner filed shortly before trial, after losing the ability to present anticipation and obviousness defenses in district court. The decision reinforces the Director’s view that America Invents Act (AIA) review must serve as a true “alternative to litigation,” not a vehicle for revisiting validity after an adverse district court outcome.

The case presented an unusual procedural posture in which Magnolia Medical, despite being precluded from asserting anticipation and obviousness defenses at trial, was still able to file an IPR petition against Kurin’s patent shortly before trial began. A jury then returned a verdict finding Kurin’s patent to be not invalid, while the IPR petition remained pending.

In denying institution, Director Squires outlined the principles guiding his exercise of discretion. Emphasizing that AIA reviews are not intended solely to resolve private disputes, Director Squires highlighted “public interest” considerations, including “the economy, efficient administration of the Office, the ability of the Office to timely complete its AIA reviews, and the integrity of the patent system.”[2] With those considerations in mind, the Director concluded that Magnolia Medical’s IPR did not serve as a true alternative to litigation, because it sought to relitigate issues Magnolia Medical had already lost in district court.

For practitioners closely following developments in AIA proceedings since 2025, the Magnolia decision largely recaps principles articulated in prior decisions and statements by Director Squires. For patent owners, arguing discretionary denial, particularly if the challenged patent has issued for more than six years, continues to be viable. For petitioners, highlighting examiner error and their own settled expectations may lead to institution. Both patent owners and petitioners should also consider American manufacturing and small business considerations in discretionary denial briefing. But petitioners beware: the Magnolia decision may foreshadow an upcoming rulemaking package that will require them to forgo anticipation and obviousness defenses in district court to ensure that an AIA trial is a genuine alternative to litigation.

I. Background: Director Squires’ Shift in PTAB Institution Practice

The Magnolia decision comes almost seven months to the day after Director Squires announced what may be the most consequential shift in AIA trial practice during his tenure. In an open letter to “Colleagues, Inventors, and Americans” dated October 17, 2025, Director Squires vowed to “properly effectuate the clear language of the AIA and thus Congress’s intent” by personally exercising institution authority.[3] In the intervening months, Director Squires has issued hundreds of decisions, many of them single-line orders denying review. This approach has coincided with a lower institution rate and a drop in the number of petitions filed monthly.

On the same day as the Director’s open letter, the Office proposed rules intended “to focus inter partes review proceedings on patent claims that have not previously been challenged in litigation or where prior litigation was resolved at an early stage.”[4] The proposed rules would preclude institution if a challenged claim was, for example, “found not invalid under 35 U.S.C. 102 or 103 by a district court or jury following a bench trial or jury trial in a decision or verdict that has not been vacated or reversed in relevant part.”[5] An IPR petition would be denied if “more likely than not” a trial will precede the due date of the final written decision for the proceeding.[6] These rules seek to conserve the Office’s resources when a previous validity decision has been made, or likely will be made, before the Patent Trial and Appeal Board’s (PTAB) final decision.

The proposed rules further would require a petitioner to stipulate that it “will not raise grounds of invalidity or unpatentability with respect to the challenged patent under 35 U.S.C. 102 or 103 in any other proceeding” if an IPR petition is instituted.[7] Although the proposed stipulation requirement would have a broader preclusive effect than the estoppel that Congress attached to a final written decision, the Office framed this rule as effectuating Congress’s intent. According to the proposed rules package, Congress intended IPRs to be an “alternative” to district court patent litigation, but when such proceedings “cover the same ground as district court litigation, they cease to be an ‘alternative’ and can substantially increase litigation costs.”[8]

In response to the proposed rules package, the Office received thousands of comments through December 2, 2025. Since then, the Office has indicated that it is reviewing the comments and that the rules will issue in due course. As of this alert, however, the Office has not yet issued the final rulemaking package.

II. The Magnolia Decision: Director Squires Denies Institution

In denying the petition in Magnolia, Director Squires took the opportunity both to articulate the principles that have guided his institution decisions over the past seven months and to highlight themes underlying the proposed rules package.

Magnolia Medical sued Kurin for patent infringement on March 4, 2024. Kurin subsequently counterclaimed patent infringement based on U.S. Patent No. 12,138,052. The ’052 patent issued on November 12, 2024, and the counterclaim was filed on November 21, 2024.[9] The parties incorporated the ’052 patent into the ongoing litigation, and Magnolia Medical served an expert report challenging the patent’s validity. Kurin moved to exclude the expert’s testimony on several grounds, including the expert’s failure to disclose his claim constructions. The court granted the motion on November 3, 2025, precluding the expert from testifying on anticipation and obviousness at trial.[10]

Nine days later—and approximately one week before the one-year statutory deadline to file an IPR petition—Magnolia Medical filed its IPR petition, raising art overlapping with the now-excluded expert testimony.[11] While the petition was pending, the parties conducted a jury trial in December 2025. The jury found the ’052 patent not invalid on a remaining written description challenge.[12] In its February 2026 discretionary denial briefing, Kurin argued the Director “should not waste resources on this [IPR] proceeding because Petitioner [Magnolia Medical] had a full opportunity to litigate the validity of the ’052 patent in Court, and a jury has found it not invalid.”[13]

Before turning to the facts at hand, Director Squires reiterated in Magnolia several themes that have defined his approach to AIA trials over the past seven months. He first emphasized his view that, according to the legislative history, “the purpose of AIA reviews was, and is, to provide a quick and cost-effective alternative to district court patent litigation for resolving disputes over patent validity.”[14] The Director further explained his view that overlap between arguments and prior art in AIA trials and district court litigation is “a tell-tale sign that the AIA review is not functioning as a litigation alternative.”[15] He also pointed to what he characterized as examples of “misuse,” including follow-on petitions for review “even after patents have been challenged unsuccessfully in district court.”[16] Finally, the Director stressed that decisions on institution should be guided by public interest considerations, such as the economy, efficient administration of the Office, and the integrity of the patent system, rather than focused “narrowly on the interests of private litigants.”[17]

In the second section of Magnolia, Director Squires briefly summarized some precedential and informative decisions that were consistent with his approach. The decisions relate to examiner error, different claim constructions in different forums, petitions by foreign sovereigns, and settled expectations of both patent owners and petitioners.

Turning to the facts of Magnolia, the Director swiftly rejected Magnolia Medical’s argument that the exclusion of trial testimony on anticipation and obviousness meant that those issues had not been adjudicated. According to the Director, Magnolia Medical “had the opportunity to fully and fairly litigate these issues before the district court, did so, and lost,” and was now attempting to use the Office “as a repeat challenge or second bite at the apple to undo its litigation loss.”[18] Permitting the petition, the Director reasoned, “would fly in the face of the Congress’s stated goals for the AIA to be used as a litigation alternative.”[19]

III. Key Takeaways for IPR Petitioners and Patent Owners

On its face, Magnolia does not present any new substantive guidance. The Director’s principles for decisions on institution have appeared in earlier decisions and statements by the Director. Even the decision’s focus on public interest considerations is not new, e.g., the Director has previously emphasized the economy and the integrity of the patent system. Moreover, his list of decisions that emanate from his principles all raise arguments that PTAB practitioners know well by this point: settled expectations, examiner error, and different claim construction positions across different forums. Both patent owners and petitioners will find viable paths for discretionary denial arguments in his listing. And his emphasis on American manufacturing and small businesses as public interest considerations suggests that that these considerations will be important going forward.

The unique facts of Magnolia put into question the decision’s broad applicability. Most IPR petitions are filed many months before trial. But, in Magnolia, the petition was filed on the eve of trial, such that the Director was presented with a district court validity decision at the discretionary denial stage. That is an uncommon procedural posture in IPR proceedings and likely only to happen in a small fraction of cases going forward.

Magnolia nonetheless underscores an issue that Director Squires seems to care about very much: the interplay between an IPR proceeding and another forum. Magnolia presented a clear argument for denial, because the district court had decided validity before the decision on institution. That argument becomes less clear in situations where the timing of the decision on validity will likely be after the PTAB’s final written decision. Still, the decision offers insight into considerations likely to shape institution practice going forward.

• For petitioners, filing an IPR petition as early as possible may reduce the likelihood that another tribunal resolves validity before the PTAB issues a final decision. Historically, petitioners have relied upon Sotera stipulations to avoid the appearance of seeking a “second bite” at a validity challenge. But Magnolia suggests that petitioners may need broader Sotera-plus stipulations—e.g., foregoing all 102 and 103 challenges in other forums—to secure institution in certain situations. At the same time, the decision reinforces examiner error, domestic manufacturing, small business status, and a petitioner’s settled expectations as factors weighing against discretionary denial.
  
• For patent owners, Magnolia places any co-pending proceedings front and center in discretionary denial arguments (beyond settled expectations, domestic manufacturing, and small business status). Patent owners are likely to characterize any overlap between proceedings as an attempt to obtain a “second bite” at a validity challenge. Even prior validity determinations involving different parties may arguably support arguments that an IPR is not functioning as a true “alternative” to litigation.
• For rulemaking observers, the Director’s repeated emphasis on AIA trials as an “alternative” to litigation suggests that the Office’s proposed rules aimed at minimizing overlap between proceedings may be finalized with relatively few changes. Time will tell whether Magnolia foreshadowed further changes to AIA trials under Director Squires’ leadership.

[1] IPR2026-00097 (Paper 17).

[2]Id. at 6.

[3]John A. Squires, USPTO, “An Open Letter from America’s Innovation Agency” at 2 (Oct. 17, 2025), https://www.uspto.gov/sites/default/files/documents/open-letter-and-memo_20251017.pdf.

[4] Revision to Rules of Practice Before the Patent Trial and Appeal Board, 90 Fed. Reg. 48335 (Oct. 17, 2025) (to be codified at 37 C.F.R. pt. 42).

[5] Id. at 48341 (quoting proposed rule 37 C.F.R. § 42.108(e)(1)).

[6]Id. (quoting proposed rule 37 C.F.R. § 42.108(f)).

[7]Id. (quoting proposed rule 37 C.F.R. § 42.108(d)).

[8] Id. at 48335.

[9] IPR2026-00097, Exs. 1001 and 2002.

[10] Id., Ex. 2006.

[11] Id., Paper 2.

[12] Id., Ex. 2007.

[13] Id., Paper 9 at 5.

[14] Id., Paper 17 at 2 (emphasis in original).

[15] Id. at 3.

[16] Id. at 4.

[17] Id. at 6.

[18] Id. at 10.

[19] Id.