An order to show cause this week by US Patent and Trademark Office Director John Squires has rankled some in the intellectual property space, domestically and abroad.
In an exercise of the wide discretionary authority bestowed upon the US Patent and Trademark Office director under the America Invents Act, John Squires on Monday left in place a stay of the inter partes review of two Micron Technology patents.His order singles out the Commerce Department's inclusion of China’s Yangtze Memory Technologies Co. (YMTC) on the Bureau of Industry and Security (BIS) list of entities “reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.”
YMTC has 14 days to make a case “why adjudicating petitions filed by such a designated entity is an appropriate use of the Office’s limited resources.”
Patent owner Micron Technology, in turn, will have 14 days to respond.
What some in the US may view as a minor procedural step — an order to show cause — is being widely interpreted in China as a far more serious sign the US patent system is starting to shut out Chinese innovators.
Beijing’s policy watchers said the move shows Washington is weaponizing its legal institutions under a national security banner.
What was once seen as a neutral, rules-based patent regime now looks, in their view, like selective gatekeeping that excludes Chinese firms just as they become more competitive.
— ‘Xenophobic lies’ —
Squires’ order is the latest development in a burgeoning multi-jurisdictional patent dispute between the parties.
YMTC has been an active enforcer of its patents even as it grapples with US trade restrictions after its addition to the so-called “Entity List.”
It leveled allegations of infringement in two separate US Northern District of California complaints, now stayed, spanning 19 patents. Additionally, since 2023, Micron has been accused of infringing YMTC patents in the Eastern District of Texas, the Shanghai and Beijing Intellectual Property Courts in China, the UK High Court Patents Court and, most recently, the Düsseldorf Local Division of the Unified Patent Court.
Its rift with Micron is not limited to patents: this summer, the Wuhan-based chipmaker filed false-advertising claims in the US District Court for the District of Columbia over “xenophobic lies” it says Micron spread that YMTC flash memory products “are capable of being used to spy on millions of Americans.”
Micron, for its part, has faced setbacks in China after failing a 2023 cybersecurity review (see here), prompting some Chinese critical-infrastructure operators to suspend purchases of its products.
It filed suit under 28 U.S.C. § 2201 et seq. last month in the Northern District of California, citing YMTC’s rival’s repeated “non-credible” efforts to enforce “facially invalid patents.”
Seeking a declaration of noninfringement of the eight patents asserted against it in Texas, the filing touts Micron’s $200 billion investment in domestic semiconductor manufacturing while characterizing Yangtze as a latecomer to the 3D NAND memory market.
At the same time, it has worked to fend off YMTC-led challenges to its technology at the Patent Trial and Appeal Board — including to US Patent Nos. 8,945,996 and 10,872,903, the subject of Squires’ show-cause order.
— ‘Novel issues’ —
Fortunately for the Idaho-based tech titan, discretionary denial of IPR has never been easier to secure. A series of changes set in motion this year under new USPTO leadership has seen the introduction of new factors for consideration and lessened the impact of others (see here).
Additionally, the office has proposed a new rule (see here) that will foreclose serial patent challenges and said Squires will begin single-handedly reviewing all petitions in consultation with members of the Patent Trial and Appeal Board (PTAB) (see here).
The net effect has been a dramatic reduction (see here) in the number of referrals for a decision on whether to institute IPR and, correspondingly, the number of petitions that are instituted.
A PTAB panel in June gave YMTC’s petitions the green light.
However, both decisions were later walked back by Senior Lead Administrative Patent Judge Michelle N. Ankenbrand, to whom then-acting director Coke Morgan Stewart delegated director review. In staying the IPRs in August, Ankenbrand said the “novel issues” raised by Micron — all centered on its claim YMTC is state-controlled — were worthy of a second look.
Now, following Squires’ order Monday, YMTC must show why its inclusion on the Entity List should not stand in the way of IPR of the ‘996 and ‘903 patents. But he arguably goes further — by threatening to cut off access to the IPR procedure as a whole — should YMTC come up short in its response.
— ‘Rule by label’ —
For many in China, a larger principle is at stake: patent disputes, they argue, should remain within the commercial realm, not the political one. By making national security a filter for access, they say the USPTO risks undermining its own neutrality.
“If you must prove your political innocence before your patent challenges can be heard,” a Beijing-based IP lawyer said, “the rule of law itself has been compromised — that’s rule by label.”
Trouble on the patent horizon for Yangtze and others deemed a threat by Commerce has been foreshadowed this year, going back to the August reclassification (see here) of patent examination as national security work.
More recently, on Oct. 28, Squires designated the Patent Trial and Appeal Board’s 2015 holding in Corning Optical v. PPC Broadband precedential. In a related, same-day memorandum (see here) he instructed the PTAB that all real parties in interest (RPIs) must be identified prior to IPR institution, in a departure from the more forgiving SharkNinja Operating LLC v. iRobot Corp. standard which had been guiding the analysis of RPI-based concerns since 2020.
SharkNinja — cited approvingly by the PTAB panel originally assigned to YMTC’s petitions — was stripped of its precedential status on Sept. 26.
“AIA proceedings should not be used by foreign adversaries to harass American patentees or otherwise provide an advantage to those that wish us ill. But the Office cannot address the misuse of AIA proceedings by foreign adversaries unless it requires patties to identify RPIs,” Squires wrote in his memorandum.
“The integrity of PTAB proceedings depends on knowing who is behind a petition — who funds it, directs it, and/or benefits from it. Any opacity in that chain of control invites exploitation, may facilitate technology transfer contrary to US law, regulation, and interests, and serves only to undermine public confidence in the integrity of the patent system,” the director added last month.
Notably, YMTC was added to the Entity List in 2022 under the Biden administration.
In a press release at the time, BIS said it based its assessment on YMTC's “risk of diversion” to entities “acquiring and attempting to acquire U.S.-origin items in support of the PRC’s military modernization.”
Although YMTC, pursuant to 15 C.F.R. § 744.16(e)), retains the right to challenge its designation, those efforts must be directed to BIS, not the USPTO.
— New legal hierarchy —
China’s legal community has been quick to argue the show-cause order represents a clear erosion of the “national treatment” principle enshrined in international treaties, which guarantees foreign entities the same procedural rights as domestic ones.
The USPTO declined a request for comment.
By allowing political considerations to influence access to legal remedies, some lawyers warned MLex, the US risks undermining the credibility of the very global IP framework it helped build.
The logic, they said, is both simple and chilling: if being on the US Entity List can limit a company’s ability to contest patents, tomorrow it could restrict its ability to obtain or enforce them in the US.
The outcome, they fear, would be a new legal hierarchy — one in which nationality, rather than merit, determines who can claim innovation rights.
Mirroring measures from Beijing are seen as unlikely for now, as China has repeatedly pledged to treat domestic and foreign IP owners equally. Yet Washington’s tightening of technology and patent access could backfire — perhaps even accelerating China’s push for greater technological self-reliance, a goal laid out in its latest five-year plan (see here).
As some industry practitioners put it, a patent filing or a challenge can be blocked, but the invention behind it cannot.
While the Chinese government has been reserved in commenting on the latest US patent-review rules, Beijing still has a range of tools to respond. These include export controls and its "unreliable entity list," which targets foreign companies and individuals deemed harmful to China’s economic or technological interests.
The unfolding saga reflects not only a growing legal rift between the world’s two largest economies but also raises fundamental questions about fairness and neutrality in IP protection.
As China and the US navigate an increasingly complex interplay of technology rivalry and geopolitics, the stakes now stretch well beyond any single patent dispute.
—Analysis by Xiaoqiong Gao
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