PTO Defends Its Recent Policy Changes Regarding Discretionary Denials – Trademark

In the past few months, the U.S. Patent and Trademark Office
(“PTO”) Acting Director has made substantial changes to
the process for, and factors considered in, exercising discretion
to deny institution of an inter partes review
(“IPR”) petition. We have discussed these changes and
recent decisions in prior blogs. Now, the PTO is facing legal
challenges stemming from these policy changes. In one pertinent
example, SAP America, Inc. filed a Petition for Writ of Mandamus to the Federal
Circuit resulting from the PTO’s discretionary denial of its
IPR petition, challenging the PTO Acting Director’s authority
to enforce these new policies.

On October 1, 2024, SAP America filed an IPR petition seeking to
invalidate a patent that was asserted against it in a pending
district court litigation. In its IPR petition, SAP America argued
that the PTO should not exercise its discretion to deny institution
based on the factors and guidance within the former PTO
Director’s June 2022 memorandum. The current Acting
Director’s decision to rescind this guidance memorandum was
issued on February 28, 2025. The PTO denied institution of SAP
America’s IPR petition under its discretion on April 7, 2025.
In its decision, the PTO found that SAP America’s
Sotera stipulation had “limited practical
effect”—a factor which, under the previous guidance,
would have been accorded significant weight against exercising
discretion to deny institution.

On April 17, 2025, SAP America asked the Federal Circuit to
review the PTO’s revocation of the prior Director’s
guidance on discretionary denials. Since SAP America’s initial
filing, the PTO has provided additional guidance regarding
discretionary denials, including the relevant factors that will be
considered and implementing a new, bifurcated process governing how
institution decisions are made. SAP America argued that the
PTO’s actions violated due process—by retroactively
revoking “binding agency guidance”—and further
violated the separation of powers by “effectively
rewrit[ing]” the IPR statute. SAP America asked the Federal
Circuit to make applicable the June 2022 memorandum to all IPR
petitions that were filed prior to the current Acting
Director’s February 2025 decision to rescind that guidance.

On July 18, 2025, the PTO Acting Director submitted her response. First, the Acting Director
contended SAP America’s writ petition was procedurally
improper. She argued SAP America’s claims should have been
addressed at the PTO and were “capable of remedy through the
administrative process.” Summarily, because SAP America failed
to raise these complaints before the PTO, the Federal Circuit
should decline the opportunity to review them now. Additionally,
the Acting Director argued SAP America’s claims were barred
under 35 U.S.C. § 314(d) which precludes judicial review of
PTO institution decisions.

In her response, the Acting Director also engaged with the
merits of SAP America’s arguments concerning the
constitutionality of her actions regarding discretionary denials.
She emphasized her Congressionally-approved “wide latitude to
manage AIA proceedings.” And she further explained that she
“faces a significantly different situation than existed in
2022.” Highlighting the backlog of PTAB cases, fewer available
judges, and hiring freeze as factors that underlie the necessity of
her issued policy changes regarding discretionary denials, the
Acting Director argued her actions were both legally allowable and
administratively necessary.

Whether the Federal Circuit will entertain SAP America’s
pleas remains to be seen. While the current PTO guidance is
unlikely to change based on the pending writ, the outcome could
alter the course of future IPR institution denials. As we have
emphasized previously, these PTO policy changes are reshaping both
petitioner’s IPR strategies and patentees’ litigation
approaches. The Proskauer Team is continuing to monitor the
PTO’s evolving guidance on discretionary denials and decisions
as well as legal challenges to the PTO’s guidance. We are happy
to discuss any questions you may have regarding how these
developments may affect your IPR strategy.

PTO Defends Its Recent Policy Changes Regarding
Discretionary Denials

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