In 2025, we won some hard-fought victories in the fight for patent reform: Senator Peter Welch introduced the ETHIC Act, scrutiny intensified around Merck’s Keytruda product hop and Amgen’s 30-year Enbrel monopoly, and public awareness of patent abuse continued to grow. Yet despite this progress, our year-in-review newsletter must focus on something deeply troubling: the hollowing out of the United States Patent and Trademark Office (“the USPTO”).
What does a hollowed-out USPTO look like? Pathways created to challenge wrongly granted patents are choked off. The already-low standards for examining and granting patents are then insulated and further cemented. Expertise is pushed out. Public accountability is dismantled. Transparency vanishes.
How we got here
Throughout the 2000s, there was widespread concern about patent quality. Questionable patents were chronically being issued and there were no effective mechanisms in place to curb the problem. The American Invents Act of 2011 (“the AIA”), an important reform of the patent system, was a response to this concern. The AIA established the Patent Trial and Appeal Board (“the PTAB”) and through it, Inter Partes Review (“IPR”), as a venue and mechanism to challenge wrongly granted patents. Unfortunately, the AIA was a victim of its own success. As soon as unworthy patents were being canceled at high rates, a strong pushback coalesced. This pushback led to legislative efforts such as the STRONGER Patents Act, which has since morphed into the PREVAIL Act, and the Oil States case that was litigated all the way up to Supreme Court. Within two years of the AIA being passed, the pharmaceutical industry started efforts to exempt pharmaceutical and biotechnology patents. Senator Thom Tillis, a top recipient of pharmaceutical industry campaign contributions, would attempt to amend the AIA and Title 35 of the U.S. Code to exempt certain pharmaceutical patents from IPR challenges. Over the next decade, a small group of policymakers, including Senators Thom Tillis and Chris Coons, and former USPTO Director Andrei Iancu, would push these industry-backed efforts to undermine the PTAB.
For 13 years, this coalition worked to hollow out the USPTO. And for 13 years, the agency was teetering on the brink. This year, it was finally pushed over the edge.
Where 2025 began
This year’s undoing began when Coke Morgan-Stewart, former Counsel for Pfizer and Novartis and Andrei Iancu’s former Deputy Director, was sworn in as Acting Director of the USPTO on January 20. Almost immediately, she started chipping away at the PTAB to make the patent system more friendly to corporate patent applicants, while also reducing transparency and accountability. In February, she revoked Biden-era guidance that limited the PTAB’s ability to deny meritorious IPR petitions for vague “discretionary” reasons. She replaced it with a two-step process that shifted power from a panel of PTAB judges to her own office. She then used that power to deny hundreds of petitions on discretionary grounds, employing a factor called “settled expectations” as part of her discretionary denials. Lacking any previous legal foundation, “settled expectations” is an arbitrary factor whereby the longer a patent has been in force, the greater the “settled expectations” of the patentee are of their patent going unchallenged, which according to Morgan-Stewart, weighs in favor of denying institution. Morgan-Stewart also implemented other policies that have generally made it harder for an IPR petitioner to succeed, including a policy that prohibits the use of certain types of evidence to show that a patent’s claim element was known (breaking with longstanding patent law practices at the PTAB and in federal court).
Squires dismantles the PTAB
In May, former Chief IP Counsel for Goldman Sachs John Squires appeared before Congress and offered a glimpse of the philosophy that would guide his tenure if confirmed to lead the USPTO. His exchange with Senator Tillis captured it best: Squires supported Tillis’s pharma-backed PREVAIL and PERA bills and joined the Senator in stoking fears that the U.S. is falling behind China because our patenting standards aren’t low enough. Squires was sworn in as Director on September 22. Within days, he ceremoniously granted two patents in fields that typically are subject to heightened patent eligibility scrutiny and reversed a rejection of a machine learning application on eligibility grounds. It was a message to corporate patent applicants: what was once considered unpatentable will soon be theirs to own.
In October, Squires turned his attention towards the already-weakened PTAB. In a highly-criticized move, he declared that all PTAB challenges must now funnel through the Director for a chance at a PTAB hearing. The USPTO typically receives thousands of petitions a year, typically consisting of 50-60 pages excluding any accompanying prior art evidence. No individual staff member, let alone the Director, would be able to meaningfully review them all. But Squires isn’t there to review petitions — he’s there to block them. As of this writing, of the 105 IPR petitions fully processed, Squires denied 99 on discretionary grounds and two on the merits. Only four have been instituted. He rejects petitions en masse, providing no insight into his decisions. PTAB Vice Chief Judge Michael Kim aptly described his “summary notices”, like this one, as “a proverbial thumbs up or thumbs down.”
In addition to Squire’s mission to centralize power in the Director, he also published proposed rules that provide the final nail in the coffin for the IPR process. Under the proposed rules, 1) a party that files an IPR would have to stipulate that it will not pursue invalidity challenges under anticipation or obviousness grounds in any other forum (for example, in district court or at the ITC); 2) the USPTO would refuse to institute an IPR if the challenged claim has already been judged valid in a prior proceeding (such as a prior court decision or IPR); and 3) the USPTO would refuse to institute an IPR if a “parallel litigation” in the form of, for example, a court trial or an ITC determination was “more likely than not” to occur prior to the IPR’s final written decision. Finally, the rules set forth an “Extraordinary Circumstances” exception that allows the Director to institute an IPR despite the above scenarios. As you would expect, the exception is meaningless (the exception is largely undefined besides clarification that additional prior art does not qualify but “bad faith” could).
As Morgan-Stewart and Squires lowered patenting standards and dismantled the PTAB, the USPTO also began pushing out the very examiners, judges, and advisors that make the agency work. According to Bloomberg, “the PTO has aggressively targeted its own employees, laying people off even though the agency is fully funded, breaking the union representing patent examiners on spurious national security grounds, and laying the groundwork for a ‘return to office’ mandate — even though the vast majority have worked from home for years and no office exists for them to return to. Morale is collapsing.” Commerce Secretary Howard Lutnick also disbanded the Patent Public Advisory Committee (“the PPAC”), removing experts like former Vice Chair Charles Duan who provided crucial insight into how the patent system impacts the public.
Where we go from here
This is an extreme example of agency overreach and Congress must acknowledge, through action, the gravity of the situation. While it is clear that the USPTO is abusing Congress’s delegation of authority, Congress should ensure it is clear that the USPTO does not have the authority to carry out these proposed rules or policies. In its efforts to restrain the USPTO, Congress must remind the USPTO of the stated purpose of the PTAB which is to “improv[e] patent quality and provid[e] a more efficient system for challenging patents that should not have issued.”
I-MAK and other organizations have submitted comments to the Federal Register detailing the statutory overreach and the catastrophic consequences of the recent changes and proposed rules. The comments are overwhelmingly and passionately in opposition to the USPTO’s agenda. The Administrative Procedure Act demands the USPTO to meaningfully engage with the comments which should warrant retraction of the USPTO’s policies.
Creating a black box of unfettered discretion as the USPTO has done is undemocratic and lacks transparency and due process, values that the United States has demanded of other countries’ patent systems through trade agreements and the United States Trade Representatives Special 301 Reports. The USPTO cannot continue down this rogue path that puts private interests and corporate greed above those of everyday hardworking Americans who are directly impacted by the patent system.