A recent decision by the acting director of the US Patent and Trademark Office to discretionarily deny institution of inter partes review, or IPR, of five patents in a nod to the patent owner’s “settled expectations” will have “far-reaching and damaging consequences,” former USPTO Director Kathi Vidal warns. Petitioners hoping to survive the newly bifurcated process could now need to scour Information Disclosure Statements for references to patent applications that — at the time the IDS was filed — were impossible to know would someday, even years later, erupt in dispute. Vidal isn’t alone in her criticism: Former USPTO solicitor Thomas Krause called the ruling “pure insanity,” and in interviews with MLex, both questioned the trajectory of the office they once helped run.
The US Patent and Trademark Office’s new discretionary denial framework is coming into focus — and drawing the ire of prominent voices in the patent sphere.On Friday (see here), Acting USPTO Director Coke Morgan Stewart shot down petitions for inter partes review, or IPR, of five Welch Allyn patents despite finding along the way that several of the Fintiv factors weigh in favor of iRhythm Technologies.
Among them is a planned March 2027 trial date in Delaware on Welch Allyn’s allegations of infringement, seven months after the Patent Trial and Appeal Board would have weighed in on validity.
She also conceded a “high likelihood” that the same district court proceedings would be stayed if IPR was instituted and noted “little investment by the parties” in their parallel litigation.
Ultimately, however, because iRhythm purportedly had longstanding knowledge of Welch Allyn’s patented health monitor technology, Stewart said the petitioner could — and should — have leveled its challenge earlier, and that failure “favors denial and outweighs the above-discussed considerations.”
— March memo —
That goes to the “settled expectations” of the parties, which was singled out by Stewart in a March memorandum (see here) as a relevant factor in the newly bifurcated process for securing a discretionary denial of IPR.
Others include whether the Patent Trial and Appeal Board has already ruled on the validity or patentability of the same claims, intervening changes in the law, the strength of a petitioner’s theories of invalidity, whether an IPR petition is overly reliant on expert testimony, compelling interests including the economy, public health or matters of national security and “any other considerations bearing on the Director’s discretion.”
In her decision, Stewart addressed Welch Allyn’s primary claim — that iRhythm leaned too heavily on the opinions of expert Jason Heikenfeld.
According to the patent owner, removal of the “General Knowledge of Person of Ordinary Skill in the Art,” or POSA, as defined by Heikenfeld, would doom each of the grounds for IPR advanced by the petitioner.
Stewart disagreed, instead finding iRhythm “appears to rely on its expert to explain the background knowledge of a person of ordinary skill in the art, and the expert provides citations to evidence in support of his statements in the required manner.”
Welch Allyn’s secondary position, that the petitions are overly reliant on “non-prior art, outdated, and irrelevant references,” was not substantively addressed by Stewart.
— Track record —
But the patent owner’s third argument in support of a discretionary denial — iRhythm’s “established and public track-record of monitoring existing patents,” in combination with the age of the challenged Welch Allyn patents — did land with the acting director.
There, Welch Allyn described iRhythm as “particularly focused on patent searches” during its “infancy” as a health monitor device maker. In support, Welch Allyn quoted iRhythm founder Uday Kumar in “Biodesign: The Process of Innovating Medical Technologies,” a reference document he co-authored.
Kumar credited the frequent review of “issued patents and patent applications” as an early contributor to iRhythm’s success.
The opening brief in support of discretionary denial by Welch Allyn tied that same robust patent search practice to its own portfolio, noting that among the innovations singled out for IPR is US Patent No. 8,214,007, which issued in 2012. iRhythm cited the application underlying the ‘007 patent in 2013 in an Information Disclosure Statement, or IDS, that would go on to become iRhythm’s own US Patent No. 9,241,649.
Per Friday's ruling, that was enough to establish a settled expectation by Welch Allyn of the validity of its patents.
— Search weaponized —
But the search for relevant prior art is an integral, and important, step in the patent prosecution process.
Its potential weaponization against IPR petitioners could have “far-reaching and damaging consequences,” warns former USPTO Director Kathi Vidal.
In an interview with MLex, she said the discretionary denial of iRhythm’s petitions both “discourages applicants from searching for prior art during prosecution, weakening patents overall,” while imposing "an unreasonable expectation on innovators to track every patent application they list that may later mature into a patent and to predict infringement arguments that may be made 12 years later on products that do not yet exist.”
Vidal — who returned to Winston & Strawn after stepping down as USPTO director in December 2024 — also questions whether the decision comports with legislative intent.
In enacting the Leahy-Smith America Invents Act in 2011, Congress made clear that a primary motivation in their creation of the IPR and post-grant review, or PGR, procedures was to provide parties with a more efficient, lower-cost mechanism for challenging patent validity.
Stewart’s holding could inadvertently pressure those same parties into initiating proceedings before the PTAB prematurely, before an actual dispute has even arisen; conversely, it could force them to forego a potentially meritorious patent challenge down the road, simply because of the passage of time.
Both results, according to Vidal, would be “illogical and detached from the realities of patent enforcement,” as well as counterproductive to the nation’s IP health. “Enabling weak patents to survive through every discretionary loophole encourages opportunistic litigation behavior and frivolous suits, erodes confidence in the patent system, stifles innovation, and harms the very job of creators the system is meant to support,” she said.
— ‘Pure insanity’ —
Those sentiments are echoed by other IP stalwarts, including Thomas Krause.
The ex-USPTO solicitor in an interview with MLex called the iRhythm ruling “pure insanity,” questioning the wisdom of requiring businesses to pursue IPR and PGR of patents for which they have no current expectation of suit and the fairness of subjecting petitioners to a discretionary denial based upon a factor which was only articulated after they sought review.
What’s more, Krause lamented, the decision and March memo by Stewart are silent as to how the acting director will make her determination that expectations were, in fact, “settled.”
To that end, IDS’s regularly list hundreds of references, but they need not be — and indeed often are not — compiled by executives or other decision-makers in a position to recognize whether a need to negotiate exists.
That lack of clarity is problematic and potentially costly for all involved, Krause observed, as parties may now find themselves plunged into disputes over who knew what and when.
Vidal, for her part, admits harboring concerns over the USPTO’s “trajectory” and said she fears the IPR procedure is being taken “dangerously off course.” It’s a leap Krause said he understands, following Friday’s discretionary denial.
Although reiterating his respect and admiration for the acting director, he questioned whether it is Stewart or someone else “calling the shots,” musing, “under any rational system of agency procedure or patent law, you wouldn’t get a decision like this.”
Please email editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.