A Precedential “Window” Into the Director’s Discretionary Denial Framework in AIA Proceedings

On May 14, 2026, USPTO Director John Squires issued—and designated precedential—a Director decision denying institution of an inter partes review (IPR) in Magnolia Medical Technologies, Inc. v. Kurin, Inc., IPR2026-00097, Paper 17.

Magnolia is noteworthy because it provides insights into the current discretionary denial framework at the Patent Trial and Appeal Board (PTAB), as implemented by the Director (and Acting Director before him) since March 2025. This decision, anticipated after Director Squires hinted at such a decision at a speaking event a few weeks ago, discusses more than just the facts or considerations at issue in the case itself. Specifically, the Director presents his “principles” behind the many policy changes resulting in the lowest institution rates of AIA reviews since the proceedings came into being nearly 14 years ago.

The Director does not articulate any new discretionary policy in this decision. Instead, he provides a more fulsome explanation of his view of the purpose of the America Invents Act (AIA) and the types of discretionary considerations that inform whether institution is appropriate. Director Squires explains that “the central purpose of IPRs is to determine whether the patent at issue may have been improvidently granted and whether and to what extent that right should be recognized at all.” He also points to the “purpose of AIA reviews” as providing “a quick and cost effective alternative to district court patent litigation for resolving disputes over patent validity.”

Under this umbrella, he highlights that he considers the “public interest,” and not the interest of private litigants, when applying his discretion on whether to institute an AIA review. The Director states the “courts” — i.e., Article III courts (U.S. district courts and the Federal Circuit) and the International Trade Commission (ITC), itself an agency — “are, and always have been, the primary forum for adjudicating private disputes.” He refers to 35 U.S.C. § 316(b), which says “the Director shall consider the effect of any [] regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete” instituted reviews. The Director reads these elements as requiring him to promulgate rules “sound in the public interest rather than the private interests of the parties before the Board.”

In Magnolia, Director Squires also provides an overview of exemplary guidance issued previously by the Office that he uses to determine what the public interest entails and whether it is in that interest to institute AIA review. The considerations include:

• Guidance from the March 11, 2026, U.S. Manufacturing Memorandum
  • Petitioners and patent owners are encouraged to discuss American manufacturing and/or small business considerations to facilitate analysis whether AIA review will provide a tactical advantage to companies that do not manufacture in the United States or make American manufacturing investments.
  • Thus, as part of discretionary considerations, the Director now takes into account the extent to which:
    • “any products accused of infringement in a parallel proceeding are manufactured” in the U.S. or “are related to investments in American manufacturing operations,”
    • “any products made, sold, or licensed by the patent owner that compete with the accused products are manufactured” in the U.S., and
    • “the petitioner is a small business that has been sued for infringement of the patent.”
• Examiner Error
  • A substantial showing of apparent examiner error can overcome other factors for discretionary denial. See e.g., Padagis US LLC v. Neurelis, Inc., IPR2025-00464, Paper 12 (PTAB July 16, 2025) (informative).
• Different Claim Constructions in Different Forums
  • Taking different claim constructions before district court and the Board without sufficient explanation detracts from the Office’s goal of providing greater predictability and certainty in the patent system. See e.g., Revvo Techs., Inc. v. Cerebrum Sensor Techs., Inc., IPR2025-00632, Paper 20 (PTAB Nov. 3, 2025) (precedential).
    • Notably, the Director recently designated three other decisions informative relating to petitioners who (i) advanced “indefiniteness arguments in district court after institution without sufficient justification” or (ii) advanced “different claim construction positions before the district court and the Board and subsequently stipulated not to pursue the different claim construction in district court if the Office instituted review.” Ford Motor Co. v. AutoConnect Holdings, LLC, IPR2025-01342, Paper 27 (Director May 12, 2026) (informative); Terumo BCT, Inc. v. Haemonetics Corp., IPR2025-01374, Paper 20 (Director May 12, 2026) (informative); TikTok, Inc. v. Shopsee, Inc., IPR2025-01485, Paper 13 (Director Jan. 16, 2026) (informative).
• Foreign Sovereigns
  • Foreign sovereign petitioners and their real parties-in-interest (e.g., a company where a foreign government owns more than 10% company stock) will be treated the same as U.S. government and its agencies and thus precluded, on statutory, fairness (as a matter of symmetry), and discretion considerations, from obtaining AIA review. See Tianma Microelectronics Co. v. LG Display Co., IPR2025-01579, Paper 12 (PTAB Mar. 18, 2026) (precedential).
• Settled Expectations
  • “Settled expectations” of either party may be a factor in determining whether to institute AIA review.
  • For example, patent owners may have settled expectations based on the length of time the patent has been in force. See e.g., Dabico Airport Sols. Inc. v. AXA Power ApS, IPR2025-00408 (PTAB June 18, 2025) (informative).
  • On the other hand, a petitioner may have settled expectations when a patent has not been commercialized, asserted, licensed, or otherwise applied in a petitioner’s technology space. See Home Depot U.SA., Inc. v. H2 Intellect LLC, IPR2025-00480, Paper 11 (PTAB Sept. 4, 2025) (informative).

Although he does not appear to rely on the above-mentioned considerations when deciding this particular case, the Director applies his general principles, as discussed above, when denying institution of the instant petition. The Director states institution here would not reflect the intended role of IPRs as a “quick and cost-effective alternative” to district court litigation. He identifies the petition as a follow-on challenge after substantial district court activity where the court precluded the testimony of Petitioner’s invalidity expert. Thus, the Director found this petition to be effectively seeking a second opportunity to litigate patentability at the Office in a manner that would “fly in the face of the Congress’s stated goals for the AIA to be used as a litigation alternative.”

Why the Magnolia Decision Matters

As noted above, from a policy perspective, Magnolia does not announce any new discretionary denial tests. Rather, the significance of Magnolia lies more in its discussion of the Director’s rationales for a large number of new discretionary denial considerations put in place over the last year, leading to a notable drop in institution rates and having impact on patent litigation strategy generally. In addition, Magnolia elevates a number of discretionary denial considerations to precedential status. As explained in the PTAB’s Standard Operating Procedure 2, precedential decisions establish binding authority, while informative decisions provide norms and non-binding guidance on issues that may develop through analysis of recurring issues in many cases.

Under the current process, Director discretion decisions have primarily issued with little to no explanation for the reasons for the decision. Of the few prior decisions on discretionary denial considerations the Director has designated, most have only been designated informative. Magnolia converts a prior line of informative reasoning on discretionary considerations into binding PTAB precedent, rather than merely illustrative guidance. Accordingly, the decision here does not present a policy shift but rather a ratification of the current approach to discretionary considerations. While the Director retains the ability to de-designate decisions, Magnolia provides an important window on how the Director views his discretion authority and how he expects parties to frame discretion arguments.

Magnolia also has potential importance should the Director choose to redelegate his discretion authority back to PTAB panels. In that event, Magnolia provides binding guidance that APJs must follow. Its precedential status would then take on heightened importance and govern how discretion is exercised at the panel level.

Importantly, this decision indicates the PTAB landscape may be stabilizing. Stability itself is good news for stakeholders who need to understand the lay of the land—stability, clarity, and transparency are critically important to those making business decisions. That said, the Director’s ongoing authority to shape—and reshape—precedent means the system remains in flux, requiring continued, careful monitoring by all stakeholders.