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USPTO Announces New Discretionary Factors For Patent Review Proceedings, Prioritizing U.S. Manufacturing And Small Business Interests
04/23/2026On March 11, 2026, United States Patent and Trademark Office Director John A. Squires issued a memorandum introducing additional discretionary factors for the institution of inter partes review (“IPR”) and post-grant review (“PGR”) proceedings before the Patent Trial and Appeal Board (“PTAB”). The memorandum signals a notable shift in how the USPTO intends to evaluate petitions challenging patent validity, placing new emphasis on domestic manufacturing activity and small business status.
The America Invents Act (“AIA”) requires the Director, in setting standards for instituting IPR and PGR proceedings, to consider the effects of those standards on “the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings” under 35 U.S.C. §§ 316(b) and 326(b). Director Squires' memorandum frames the new discretionary factors as a direct exercise of that statutory mandate, citing concerns about the offshoring of American manufacturing—particularly in the electronics and computer sectors—over recent decades. The memorandum references studies by the Departments of Commerce and Homeland Security that have documented the economic and national security consequences of this trend, including threats to America's innovation leadership.
While some stakeholders have argued that IPR and PGR proceedings serve an important role in protecting American manufacturers and small businesses, the memorandum observes that offshoring trends have continued despite the broad availability of these proceedings for fifteen years. Director Squires further noted that many of the most frequent users of IPR and PGR proceedings are large companies that, according to their own public financial disclosures, lack a significant manufacturing presence in the United States and are not taking concrete steps to invest in domestic manufacturing. These observations, the memorandum states, raise “a legitimate question about whether the current institution framework appropriately weighs the interests of entities that invest in domestic production.”
Under the memorandum, the Director will now consider three additional factors when deciding whether to institute IPR or PGR proceedings:
First, the Director will evaluate the extent to which any products accused of infringement in a parallel proceeding are manufactured in the United States or are related to investments in American manufacturing operations. Second, the Director will consider the extent to which any products made, sold, or licensed by the patent owner that compete with the accused products are manufactured in the United States. Third, the Director will assess whether the petitioner is a small business that has been sued for infringement of the patent at issue.
The memorandum provides additional guidance on how these factors will be assessed. With respect to manufacturing, the Director will look beyond mere final assembly in the United States, and will also consider the extent to which a product’s components are made domestically and the degree to which products assembled in the United States are sent abroad for further processing. For method claims, the relevant products are the devices used to carry out the claimed method—for example, for claims directed to a method of operating a computer, the relevant product would be the computer itself.
As to small business status, the Director will consider all relevant facts raised by the parties, including the Small Business Administration’s size standards set forth in 13 C.F.R. §§ 121.801 through 121.805 and 37 C.F.R. § 1.27(a), which govern eligibility for reduced patent fees.
The memorandum applies to all IPR and PGR proceedings in which the due date for a patent owner’s discretionary brief has not yet elapsed. The Office has encouraged parties to identify relevant facts regarding manufacturing and small business status in their discretionary briefing, and has specifically encouraged petitioners which are small businesses sued for infringement to identify themselves so that the Office can better understand how frequently small businesses use these proceedings defensively.
This memorandum represents a significant development in PTAB practice. By incorporating domestic manufacturing considerations into the institution calculus, the USPTO is signaling that the economic footprint of the parties—not just the merits of a patentability challenge—may influence whether a petition proceeds. Companies that lack a domestic manufacturing presence may face a higher bar in seeking review, while patent owners with U.S.-based production and small business petitioners defending against infringement suits may find a more favorable procedural posture. Practitioners and stakeholders on both sides of PTAB proceedings should take note and be prepared to address these new factors in their filings.
