Maintaining a Speedy and Robust IPR Process Should Be a Major Focus of John Squires’ Patent Quality Efforts

Guest Post by Shawn Miller, Professor of Practice, University of San Diego School of Law; CodeX Fellow, Stanford Law School; Creator, Stanford NPE Litigation Database

Just a week ago, I began dusting off the half-written paper drafts of two empirical research projects that have mostly sat on my shelf the past year while teaching an overload to aid my colleagues on sabbatical. Brushing up on current events at the USPTO, it is clear that neither patent policy stakeholders nor the second Trump administration waited around for this law professor’s summer break. We have seen several months of the very active Acting USPTO Director Coke Morgan Stewart’s reshaping of the Patent Trial and Appeal Board’s (“PTAB’s”) process of reviewing Inter Partes Review (“IPR”) petitions, particularly in ways that tend to favor patent owners. Additionally, within the past two weeks we have had the Judiciary Committee Hearing of John Squires, the President’s nominee to serve as his permanent USPTO Director.

It seems likely that Squires will be confirmed soon and begin to act on the priorities he outlined at his hearing, two of which just so happen to overlap the topics of the two projects I am scrambling to complete this summer: patent quality and IPR reform. With my slow writing pace and the clear indications that the “reform” the administration has in mind would actually tend to harm patent quality when and where it matters, I asked—and Professor Crouch graciously agreed—to publish this guest post.

To start, what is patent quality? Put simply, it is the likelihood that a granted patent meets all of the statutory requirements for protection. In other words, low quality patents are likely invalid. Different stakeholders naturally emphasize different aspects of patent quality; for instance patent owners might prioritize breadth sufficient to cover potential infringing products or claim sets robust enough to survive validity challenges. In my own research, I have focused on novelty and non-obviousness because granted patents lacking these traits are usually devoid of innovation, and promoting new technology is the primary objective for granting inventors exclusive rights in the first place. I qualify patent quality with “likelihood” because it makes sense to think of inventors’ rights as probabilistic and contingent on unknown or misunderstood information (e.g., prior art) that supports or casts doubt on the validity of the claimed matter down the road when a granted patent is tested during enforcement.

At the beginning of Squires’ Judiciary Hearing, he identified improving patent quality as one of the most important objectives he seeks to accomplish. But he also indicated his support for reforming PTAB and the aims of the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act, which consists of multiple provisions that would make it more difficult for patent challengers to bring and “prevail” on IPR petitions. Moreover, we may already have a glimpse of some PTAB reforms that will be considered through the changes made by Acting Director Stewart. I’ll discuss a few of these at the end of the post after explaining the importance of IPR in maintaining patent quality. For now, however, I think it is clear the tweaks to the IPR process that have been proposed or temporarily implemented by the Trump administration tend to decrease the effectiveness of IPR as a cheaper alternative to federal court litigation to challenge patent novelty and non-obviousness. In short, IPR reform thus far would seemingly exacerbate the problem of low-quality patents.

Overwhelming evidence from recent academic and government studies shows that Squires is absolutely right to recognize patent quality as a major problem. In its month-old report on patent quality, the Government Accountability Office (“GAO”) presented evidence that the USPTO has failed to effectively assess and manage the quality initiatives it began implementing in the wake of the 2011 America Invents Act. The GAO reports that examiners continue to believe they are incentivized to prioritize speed and quantity of examination over quality. Though unfortunate, pushing output is understandable given the current backlog of approximately 800,000 pending applications. However, the result according to the GAO is the bottom line from one academic study by John Allison, Mark Lemley, and David Schwartz that when patent validity is tested in district court, claims are invalidated nearly 40 percent of the time.

My first published work, Where’s the Innovation: An Analysis of the Quantity and Qualities of Anticipated and Obvious Patents (2013), supports the conclusion that the magnitude of the quality problem has been persistent since at least the first decade of the 2000s. In that project, I found that 37 percent of litigated patents whose novelty and non-obviousness were tested through a final judgment on the merits were invalidated on at least one of those grounds. Further, through a statistical model that aims to create an apples-to-apples comparison between litigated and non-litigated patents, I estimated that nearly 30 percent of all granted patents would be found to possess anticipated or obvious claims if their validity were litigated. Given the GAO’s count of 365,000 patents granted during the 2024 fiscal year, these earlier invalidity rates would suggest the USPTO is plausibly granting around 100,000 low quality patents every year.

The first of the two new papers I am hammering out this summer is Where’s the Innovation Part II. In this study, I apply the same empirical methods as my earlier work to patenting and litigation during the second decade of the 2000s. While I am still completing the more complex apples-to-apples comparison of litigated and non-litigated patents, the bottom line is that the invalidity rate on anticipation or obviousness of patents litigated during this decade has inched up to 39 percent! I will release the full results of this study this summer, but given the important current events at the USPTO, I believe it is important to share this empirical support for the alarm bell of the GAO’s report now.

While I share the GAO’s and Squires’ concern for patent quality, I depart from their conception about when and where to fix it. The basic reason is understood through the economic idea of “rational ignorance” that Mark Lemley first applied to patent examination. The gist of the argument is that it would be inefficient to throw additional buckets of money at the examination of most applications because such as small share of granted patents are ever enforced or licensed. Specifically, Lemley estimates that only about 2 percent of patents are ever litigated, and perhaps only about 5 percent are ever the subject of licensing efforts. These numbers suggest that the vast majority of patents serve short-term value to their owners and investors (perhaps as signals of research success) or long-term but untested defensive value. Consequently, they never reach a point in the real world where their own owners believe enforcement is worth the costs.

Throwing vastly more money at front-end patent examination to ensure patents are “Born Strong” is thus a waste of resources. Instead, quality efforts should be focused on those patents that are economically valuable enough for owners to litigate and technology users to challenge. This is exactly what is happening with post-grant review—especially IPR—since enactment of the America Invents Act. Rather than worrying about the quality of hundreds of thousands of new patents every year, the American patent system has been able to focus its resources on the five-to-ten thousand patents each year that are judged worth the effort to owners and implementers.

Understandably, many patent owners dislike IPR and some changes have undoubtedly been necessary to balance the playing field and decrease instances of abusive duplicative petitions. Enter discretionary denial practice, where during President Trump’s first term the PTAB began to use the broad discretion granted by the Supreme Court in Cuozzo Speed Techs., LLC v. Lee (2016) to deny duplicative IPR petitions. While this development was welcomed by patent owners, frequent petitioners and some in Big Tech decried the practice as neutering the effectiveness of IPR as a cheap alternative to litigation to test patent quality. The story ran that too many discretionary denials were the result of PTAB accepting the overly optimistic trial schedules of some district court judges and punting petitions only to have defendants settle to avoid the greater expense, or perceived pro-plaintiff bias, of jury trial.

If this latter story were true, I believe that it would have been a major problem because cheaper testing of validity before PTAB solves a significant public goods problem that developed before the America Inventors Act, especially involving non-practicing entity and software patent litigation. In essence, broad patents covering wide swaths of new technology commerce could be serially asserted against many businesses, with each defendant finding it cheaper and thus rational to settle rather than challenge validity in court. This is an example of a public goods problem because the collective value of an invalidity trial for all alleged infringers can be greater than the litigation costs while the litigation costs are greater than the private benefit to each of the individual defendants. With the lower cost of IPR and the ability of technology users to pool their resources in policing the quality of patents that they arguably infringe, investment in the public good of testing the validity of the small share of patents that really matter to industry has increased.

In the second paper that I am releasing this summer, entitled Balancing the Scales or Undercutting Patent Quality? An Empirical Investigation of the Impact of Discretionary Denials on Invalidity Challenges, my coauthors and I investigate whether the emergence of discretionary denial practice impacted either the patent invalidity trial rate (combining trials at PTAB and in district court) or the overall invalidity rate itself. We find that the doomsday scenario asserted by some technology implementers lacks merit, at least at the macro level, and that there was no change in either the trial or the invalidity rates with the introduction of discretionary denial practice. Thus, IPR has continued to enforce patent quality while providing PTAB with an effective tool to limit abusive petitioning—we appear to have our cake and eat it too!

My recent empirical findings join the large body of research supporting the magnitude of the patent quality problem and the general conclusion that IPR is an effective solution for the patents that matter. Unfortunately, reforms of the type temporarily implemented by Acting Director Stewart do have the potential to decrease the efficacy of PTAB in ensuring the quality of enforced patents. Consider Stewart’s March 2025 “Interim Process for PTAB Workload Management” memorandum, which Professor Crouch explained in his March 29 post.

First, the memorandum has a stated goal of managing PTAB’s workload during a period of staff shortages caused by the return-to-office (“RTO”) requirement and DOGE’s recommendations. But how can it possibly conserve resources to bifurcate the discretionary denial decision and have the Director and three other PTAB judges review the record and decide just this issue, while the regularly assigned panel reviews the same record for everything else that must be decided at the institution stage? In fact, given that the memorandum enables the parties to submit longer briefs on the issue of discretionary denial, the new process allows PTAB to do less with less, rather than economize on its diminished resources. A related (and probably a much worse) idea has been floated to assign different PTAB panels to the institution and trial stages of petition work. Parties losing IPR proceedings already possess the right to appeal to the Federal Circuit, who as in district court litigation is the final arbitrator of patent validity. I think it is highly unlikely that any gains in judicial accuracy from such proposals will exceed the extra costs to petitioners and owners in prosecuting an IPRs through final decision.

Second, Acting Director Stewart’s memorandum includes a set of expanded factors PTAB can consider in determining whether to exercise discretionary denial. Several of these have little or no relationship to petitioner abuse, but will weaken IPR effectiveness. One of these is “how long the claims have been in force,” which would seem to provide owners of arguably broad but low-quality patents a path to simply fly under the radar for long enough until it would violate the owners’ “expectations” to invalidate their patents. The worst addition is “ability of the PTAB to comply with pendency goals for ex parte appeals, its statutory deadlines for AIA proceedings, and other workload needs.” This factor has nothing to do with petitioner abuse and would appear to simply provide the USPTO a case-by-case “out” from PTAB doing its work when it is under-resourced by an administration.

I believe the evidence strongly supports the conclusion that IPR is an exceptionally effective method of policing the quality of those patents that are valuable enough to matter and to do so when it matters. Further, discretionary denial practice, including the development of Sotera stipulations under former Director Vidal’s guidance, has been effective in addressing much petitioner abuse. Therefore, what is needed from the USPTO and this administration is reinvestment in PTAB so that it has the number of judges and amount of other resources it needs to continue doing its job.