The Federal Circuit reversed the district court’s admission of D R Burton Healthcare’s expert testimony due to untimely disclosure and unreliability under the Federal Rules of Evidence 702. The Federal Circuit also reversed the district court’s decision denying a new trial on infringement.

Background:

The case involves Trudell Medical International Inc. (Trudell) as the plaintiff-appellant and D R Burton Healthcare, LLC (D R Burton) as the defendant/counter-claimant-cross-appellant. The appeal is from the United States District Court for the Eastern District of North Carolina. Before trial, the case was reassigned to Judge Terrance William Boyle. 

Trudell owns U.S. Patent No. 9,808,588, which relates to devices for oscillatory positive expiratory pressure (OPEP) therapy.

Trudell appealed the district court’s decision to allow Dr. Collin’s testimony and the denial of a motion for judgment as a matter of law (JMOL) or a new trial on infringement of certain claims of the ’558 patent. D R Burton cross-appealed the jury’s verdict that the asserted claims were not invalid but withdrew the cross appeal.

Issue(s): 

Did the district judge abuse its discretion by allowing Dr. Collin’s testimony?

Holding(s):

Yes, D R Burton’s disclosure of Dr. Collins’ testimony was untimely. The district court did not explain how the untimely disclosure was substantially justified or harmless. The Federal Circuit also found Dr. Collin’s testimony unreliable under Federal Rule of Evidence 702. The case was remanded for a new trial, excluding Dr. Collins’ non-infringement testimony, and reassigned to a different district court judge. 

Reasoning:

The Federal Circuit’s decision to reassign was influenced by the trial judge’s statements, which undermined the appearance of fairness, similar to a previous Fourth Circuit case, Beach Mart, Inc. v. L&L Wings, Inc.

The Federal Circuit affirmed the district court’s denial of Trudell’s motion for JMOL of infringement, as the jury could have discredited Trudell’s expert testimony.

The case is to be retried with existing evidence, excluding Dr. Collin’s testimony, without reopening discovery.

Background

Regents of the University of California (“Regents”) and Broad Institute were engaged in a patent interference proceeding involving the adaptation of CRISPR systems to edit eukaryotic DNA. Both parties were engaged in extensive testing related to editing eukaryotic DNA during the time of the invention, and both filed multiple patent applications that became the subjects of the patent interference proceedings. Before deciding preliminary motions, the PTAB determined that the claim term “guide RNA” in both parties’ applications encompassed a single-molecule RNA configuration under the broadest reasonable interpretation. The PTAB also determined that Regents was only entitled to a January 2013 priority date because its earliest applications did not satisfy the written description requirement. Because of this priority date, the PTAB designated Regents as the junior party and designated Broad Institute as the senior party for the priority phase of the interference proceeding. In its final written decision, the PTAB determined that Broad Institute reduced the invention to practice in October 2012, and denied Regents’ claims to an earlier reduction to practice based on emails, notebook entries, and reports related to microinjection and expression vector tests. Regents appealed the PTAB’s decisions related to conception and written description. Broad Institute appealed the claim construction decision.

Issues

The Court analyzed whether the PTAB correctly analyzed the conception and reduction to practice for both parties and whether the PTAB correctly determined the priority date based on the written description requirement. The Court also analyzed whether the claim construction determinations impacted the legal interests of both parties.

Holding

The PTAB overly relied on statements from Regents’ scientists in determining conception and reduction to practice. The PTAB correctly analyzed the Regents applications under the written description requirement. Broad Institute’s claim construction appeal was moot because it did not impact the legal interests of the parties.

Reasoning

The Federal Circuit agreed with Regents that the PTAB legally erred by focusing on statements made by Regents’ scientists expressing uncertainty about whether the experiments had succeeded. The Court distinguished that what matters for conception is whether the inventors had a definite and permanent idea of the operative inventions, and determined the PTAB should have considered whether the scientists’ statements led to modifications in their experiments that substantively changed their original ideas. The Court also found the PTAB failed to consider routine methods or skill, and instead focused entirely on the scientists’ statements. The PTAB should have considered whether a person of ordinary skill could have achieved the function of editing eukaryotic DNA without requiring certainty that the invention would work. Furthermore, the Court found the PTAB failed to consider evidence of purported experimental success by others as presented on the record. Finally, the Court reasoned that the PTAB failed to consider whether Regents’ scientists described routine methods or skill in their disclosures at the asserted conception dates, and whether they used routine methods or skill in subsequent, purportedly successful experiments. Based on the above, the Federal Circuit vacated the Board’s decision on conception.

The Federal Circuit also determined the PTAB did not err in its analysis addressing the written description requirement. In particular, the Court found the PTAB correctly analyzed whether a person of ordinary skill in the art would understand that Regents had possession of the claimed subject matter, given the uncontested determination that the subject matter was highly unpredictable and complex. The Court held the PTAB correctly determined the earlier applications did not show or establish possession of the claimed subject matter. The Court also held the PTAB’s analysis satisfied the Administrative Procedures Act.

Finally, the Federal Circuit determined that the claim construction issue was moot because the preliminary motions were decided on issues independent of the claim construction determinations. In particular, the PTAB explicitly stated that its decisions were made independent of the claim construction issues. The Court held that the appeal would not have an impact on the legal interests of the parties and dismissed the issue as moot.

Background

EscapeX IP, LLC sued Google in the Western District of Texas, alleging that various YouTube products infringed U.S. Patent No. 9,009,113, titled “System and Method for Generating Artist-Specified Dynamic Albums.” Google responded by explaining that EscapeX’s original accusations improperly mixed features from different products and that EscapeX’s amended theory, targeting YouTube’s “Auto-Add” feature, was baseless because the accused functionality predated the ’113 patent’s priority date.

The Texas court granted Google’s motion to transfer the case to the Northern District of California and noted EscapeX’s “troublesome” and repeated filing failures. In parallel litigation, a district court in New York invalidated all claims of the same ’113 patent under § 101, and EscapeX did not appeal. Following that ruling, EscapeX attempted to file a “joint” dismissal falsely representing Google’s consent and an agreement that each party would bear its own fees. EscapeX withdrew the filing the same day and later submitted a corrected stipulation with Google’s consent.

Google moved for fees under § 285, and the district court awarded $191,302.18, finding EscapeX failed to conduct an adequate pre-suit investigation and pursued a frivolous case despite repeated notice. EscapeX then filed a Rule 59(e) motion to amend the fee judgment, proffering two short declarations from its president and a pre-suit engineer as “newly discovered evidence” of diligence. The court denied the motion. Google subsequently obtained an additional $63,525.30 in fees under § 1927, as well as § 285 and the court’s inherent powers, for having to oppose the frivolous Rule 59(e) motion, with joint-and-several liability imposed on EscapeX and its counsel. EscapeX appealed but did not contest that Google was the prevailing party.

Issue(s)

The appeal presented four principal questions:

1. Whether the district court abused its discretion in finding the case exceptional and awarding fees under § 285.
2. Whether the court erred in denying EscapeX’s Rule 59(e) motion to amend the judgment based on “newly discovered evidence” or “manifest injustice.”
3. Whether the additional fee award and sanctions against counsel under § 1927 were proper.

Holding(s)

The Federal Circuit held that the district court’s exceptional-case determination and fee award under § 285 were within its discretion and affirmed.

The Court further held that EscapeX’s Rule 59(e) motion was properly denied because the proffered declarations were not “newly discovered evidence,” and “manifest injustice” was neither preserved nor shown.

The Court affirmed the additional fee award and joint-and-several sanctions against counsel under § 1927 for unreasonably and vexatiously multiplying proceedings with a frivolous Rule 59(e) motion.

Reasoning

On the § 285 fee award, the Federal Circuit applied the established totality-of-the-circumstances framework under an abuse-of-discretion standard. The record supported the district court’s finding that EscapeX did not conduct a serious pre-suit investigation and advanced frivolous claims. The pleadings “cobbled together” features from different Google products, and the amended accusations targeted an “Auto-Add” feature that clearly predated the asserted patent, a fact that basic research would have revealed. Google repeatedly provided early, focused, and supported notice letters explaining why the claims were baseless and asking for dismissal, yet EscapeX pressed on. After the same patent was invalidated under § 101 in a separate action, EscapeX attempted to file a “joint” dismissal falsely asserting Google’s concurrence regarding fees, then withdrew. The district court permissibly considered party communications, pre-suit diligence, and deterrence. It found the suit was aimed at extracting a nuisance settlement rather than adjudicating the merits. The Federal Circuit rejected EscapeX’s argument that the district court penalized EscapeX because of its status as a non-practicing entity. Instead, the Federal Circuit recognized that the district court’s analysis focused on frivolousness and litigation conduct.

On Rule 59(e), the Court explained that a judgment may be amended only upon newly discovered evidence, clear error or manifest injustice, or an intervening change in controlling law. Rule 59(e) cannot be used to present evidence that could reasonably have been raised earlier. The declarations from EscapeX’s president and engineer were not newly discovered, because these witnesses and the underlying information were always within EscapeX’s control. EscapeX did not properly preserve a “manifest injustice” argument, and, in any event, the underlying § 285 award was well supported.

As to § 1927, the Court affirmed the district court’s determination that counsel acted recklessly by filing a frivolous Rule 59(e) motion that unreasonably multiplied the proceedings, despite pointed notice from Google identifying the motion’s defects. Zealous advocacy does not permit filing frivolous motions or ignoring duties to the court.

Finally, the Federal Circuit rejected EscapeX’s theory that the Federal Circuit should give less deference to to the district court because of the courts temporally limited post-transfer involvement. The Federal Circuit noted that deference does not turn on the length of time a matter is pending before the district court, and that adopting such a rule would invite gamesmanship.

The Federal Circuit’s decision reinforces that inadequate pre-suit investigation and the continued pursuit of baseless claims can render a case exceptional, justify fee shifting, and even expose counsel to sanctions. Rule 59(e) is not a vehicle to relitigate with evidence that was always available, and courts will consider early notice and deterrence in assessing fees.

The Big Reset: Prior AI Inventorship Guidance Withdrawn

The USPTO expressly rescinds the February 13, 2024 “Inventorship Guidance for AI-Assisted Inventions” in its entirety and withdraws its application of the Pannu joint inventorship factors to AI-assisted inventions as a general inventorship framework. The Office emphasizes that Pannu was and remains a doctrine to determine joint inventorship among multiple natural persons; it does not apply where the only other “participant” is an AI system, which by definition is not a person. In short, the prior approach is off the table, and the agency has refocused the analysis on traditional legal principles of conception and inventorship.

No “Joint Inventor” Question When AI Is the Only Other Actor

The New Guidance squarely states that when a single natural person uses AI during development, the joint inventorship inquiry does not arise because AI systems are not “persons” and therefore cannot be joint inventors. This resolves prior confusion over whether to run a joint-inventorship analysis in single-human-plus-AI scenarios; the answer is no. The presence of AI tools does not, by itself, trigger multi-inventor analysis.

One Uniform Standard: Traditional Conception Governs AI-Assisted Work

The USPTO underscores that the legal standard for inventorship is the same for all inventions—there is no separate or modified standard for AI-assisted inventions. Only natural persons can be inventors under Federal Circuit precedent. Accordingly, AI—regardless of sophistication—cannot be named as an inventor or joint inventor. The touchstone of inventorship remains “conception,” defined as the formation in the inventor’s mind of a definite and permanent idea of the complete and operative invention. Conception requires a specific, settled idea and a particular solution to the problem at hand; a general goal or research plan is insufficient. 

Conception Requires Particularity and Possession

The New Guidance reiterates that inventorship is a highly fact-intensive inquiry focused on whether the inventor possessed knowledge of all limitations of the claimed invention such that only ordinary skill would be necessary to reduce it to practice, without extensive research or experimentation. The analysis turns on the ability to describe the invention with particularity; absent such a description, an inventor cannot objectively substantiate possession of a complete mental picture. This framing reinforces the benefit of robust, contemporaneous documentation of the inventor’s mental steps and the concrete claims that flow from them—especially when AI has been used to generate or refine inputs that inform the claimed features. 

AI as a Tool: Presumptions, Naming Practices, and Rejections

As a practical matter, the USPTO maintains its presumption that inventors named on the application data sheet or oath/declaration are the actual inventors. However, the Office instructs that a rejection under 35 U.S.C. §§ 101 and 115 (or other appropriate action) should be applied to all claims in any application that lists an AI system or other non-natural person as an inventor or joint inventor. Conceptually, AI systems—including generative AI and computational models—are “instruments” used by human inventors, analogous to laboratory equipment, software, and databases. Inventors may use the “services, ideas, and aid of others” without those sources becoming co-inventors; the same principle applies to AI systems. When a single natural person is involved, the only question is whether that person conceived the invention under the traditional conception standard.

Multiple Human Contributors: Joint Inventorship Still Uses Pannu

When multiple natural persons are involved in creating an invention with AI assistance, traditional joint inventorship principles, including the Pannu factors, apply to determine whether each person qualifies as a joint inventor. Each purported inventor must: (1) contribute in some significant manner to the conception or reduction to practice; (2) make a contribution that is not insignificant in quality relative to the full invention; and (3) do more than merely explain well-known concepts or the current state of the art. Importantly, the mere involvement of AI tools does not alter the joint inventorship analysis among human contributors. Practitioners should evaluate and document each human’s inventive contribution against the claims, as usual. 

Beyond Utility: Design and Plant Patents Are Covered

The New Guidance confirms that the same inventorship inquiry applies to design patents and utility patents. For plant patents, the statute and Federal Circuit precedent require that the inventor contributed to the creation of the plant (not just discovered and asexually reproduced it). The USPTO clarifies that these principles apply equally when AI assists the development of designs or plant varieties. As a result, applicants should treat AI involvement as they would any other tool across all patent types—demonstrating human conception and contribution consistent with the governing statutes and case law. 

Priority and Benefit Claims: Inventor Identity Must Align

For applications and patents claiming benefit or priority (U.S. or foreign) under 35 U.S.C. §§ 119, 120, 121, 365, or 386, the named inventors must be the same—or at least one named joint inventor must be in common—and must be natural persons. Priority claims to foreign applications that name an AI tool as the sole inventor will not be accepted. Where a foreign application names both a natural person and a non-natural person (e.g., an AI) as joint inventors, the U.S. filing must list only the natural person(s), including at least one in common with the foreign filing. The same approach applies to national stage entries under 35 U.S.C. § 371: name the natural person(s) as inventor(s) in the application data sheet accompanying the initial U.S. submission.

Practical Implications and Action Items for Patent Strategy

• Document human conception thoroughly. Maintain detailed inventor notebooks (electronic or paper) that describe, in the inventor’s own words, the definite and permanent idea of the complete and operative invention—especially the claim limitations—before or contemporaneous with AI use. Capture prompts, inputs, iterations, and the human analysis that distills AI outputs into specific claim language or design features. This helps establish the inventor’s possession and particularity.
• Treat AI outputs like lab results, where feasible. If AI “conceives” part of the “invention” to be claimed, conduct careful analysis of whether there is sufficient human conception. Position AI as an instrument that provides data or suggestions. The decisive step is the human’s mental formation of the complete and operative invention—a specific solution and claimable features—not the mere receipt of AI-generated content.
• Adjust cross-border filing strategies. In jurisdictions that allow non-human inventors, plan ahead to avoid misalignment with U.S. requirements. Ensure that priority chains retain at least one natural-person inventor in common and that U.S. filings exclude non-natural persons from inventorship. Coordinate with foreign counsel on naming conventions to preserve U.S. priority.
• Prepare for examiner scrutiny. Anticipate that examiners may question inventorship in filings that discuss AI extensively. Have ready documentation demonstrating human conception and the particular claim limitations conceived by the human inventor(s), as well as appropriate inventorship declarations.

What Did Not Change

• Despite evolving capabilities, AI cannot be named as an inventor in the U.S., and the inventorship standard is unchanged: it centers on human conception.
• Traditional inventorship doctrines continue to apply. Conception, joint inventorship, and priority requirements remain grounded in statutory and Federal Circuit principles. AI is treated as a tool, not as a co-inventor.
• Claims drive the analysis. Whether one inventor or many, the question is who (or what) conceived the limitations of the claimed invention. The presence of AI does not alter the claim-centric nature of inventorship assessments.

Bottom Line

The USPTO’s New Guidance simplifies and clarifies the path forward: there is no AI-specific inventorship test, AI cannot be named as an inventor, and traditional conception standards govern. For single-inventor, AI-assisted cases, focus on documenting human conception with particularity. For multi-inventor scenarios, continue to apply Pannu among human contributors. Extend these principles across utility, design, and plant filings, and ensure priority claims align with natural person inventorship to avoid fatal defects. With careful documentation and claim-focused analysis, AI can be a powerful instrument in innovation while maintaining clear, defensible human inventorship.

Background

Canatex Completion Solutions owns U.S. Patent No. 10,794,122. This patent covers a releasable connection device for a downhole tool string used during downhole operations in oil and gas wells. The device has two parts locked together. In circumstances where the further downhole (first) part of the device has gotten stuck, the operator can disconnect the two parts of the device, leaving the further downhole (first) part in the well while pulling the upper (second) part to the surface.

Canatex accused Wellmatics, LLC, GR Energy Services, LLC, GR Energy Services Management, LP, GR Energy Services Operating GP, LLC, and GR Wireline, L.P. (collectively, “Defendants”) of infringing the ’122 patent in the District Court for the Southern District of Texas. In response, Defendants challenged the ’122 patent’s validity. The claimed phrase at issue was “the connection profile of the second part.” Defendants argued the claims that included this phrase were indefinite for lack of an antecedent basis, while Canatex argued the phrase contains an evident error and that the intended meaning was “the connection profile of the first part.”

The district court agreed with Defendants that the claims were indefinite, ruling that “the error” identified by Canatex “is not evident from the face of the patent and the correction to the claim is not as simple as [Canatex] makes it seem.” In fact, the court ruled this “error” “was an intentional drafting choice and not an error at all.” The court further concluded that Canatex’s failure to seek correction from the USPTO pursuant to 35 U.S.C. § 255, which expressly permits the USPTO to correct certain clerical, typographical, and minor errors, suggested that the error is neither minor nor evident on the face of the patent.

Canatex appealed to the Federal Circuit, challenging as legally erroneous the district court’s determinations that (i) no error in the claim phrase at issue was evident on its face of the patent and (ii) there was no unique evident correction.

Issues

1. Whether it is evident on the face of the ’122 patent that the claim language at issue contains an error.
2. Whether Canatex’s correction of “second” to “first” is the unique correction that captures the claim scope a reasonable relevant reader would understand was meant based on the claim language and specification.

Holdings

1. Yes. It is evident on the face of the ’122 patent that the claim language at issue contains an error.
2. Yes. The correction of “second” to “first” is the unique correction that captures the claim scope a reasonable relevant reader would understand was meant based on the claim language and specification.

Reasoning

1. Error evident on the face of the ’122 patent. The Federal Circuit reasoned that a relevant artisan would immediately see that, as written, there is an error in the claim. The phrase at issue plainly requires an antecedent (“the connection profile of the second part”), but no “connection profile of the second part” is previously recited in the claim. In addition, the Federal Circuit reasoned that the reference to a nowhere-identified “connection profile of the second part” “makes no sense” given the claim language. Further, the Federal Circuit reasoned this error was evident in view of the patent specification. Regarding Canatex’s failure to seek correction from the USPTO, the Federal Circuit distinguished between a correction made by the PTO under § 255, which is only made as prospective (i.e., going forwards), and a judicial correction, which determines the meaning the claim has always had.
2. The unique correction. The Federal Circuit reasoned that the only reasonable correction was to change “second” to “first” in the claim language. This was what the claim language as a whole required. Further, the specification showed that the patentee plainly meant the connection profile of the first part. Nothing in the prosecution history suggested otherwise. The Federal Circuit rejected Defendants’ arguments that there are other reasonable corrections, reasoning that Defendants’ alternative corrections were either unavailing or inconsistent with the claim’s meaning.

Conclusion

The Federal Circuit reversed and remanded. The Federal Circuit concluded that it is evident the claim contains an error and that a relevant artisan would recognize that there is only one correction that is reasonable given the intrinsic evidence. Although the Federal Circuit recognized a judicial correction to claim language in this case, this opinion nevertheless highlights “the very demanding standards for judicial correction of a claim term” and that such corrections are only “proper in narrow circumstances.”

Background

Smartrend Manufacturing Group (SMG) sued Opti-Luxx for allegedly infringing a design patent and a utility patent, which cover illuminated school bus signs. The district court ruled in favor of SMG on both patents, denied Opti-Luxx’s motion for JMOL, and entered a permanent injunction against Opti-Luxx. Opti-Luxx appealed, challenging the district court’s claim construction for the design patent and the finding of infringement under the doctrine of equivalence for the utility patent.

Issues

1. Whether the district court erred in construing the design patent’s “transparency” description; and
2. Whether the accused products infringed the utility patent under the doctrine of equivalents.

Holdings

1. The panel held the district court improperly broadened “transparency” to encompass both transparent and translucent features.
2. The panel reversed the DOE infringement judgment, finding that no reasonable jury could conclude Opti-Luxx’s integrated frame performed the same functions as the claimed separate frame.

Reasoning

First, in reviewing the design patent’s claim construction, the Federal Circuit stressed that when a design is claimed “as shown and described,” as was the design patent at issue, the patent’s scope is limited by both the drawings and the accompanying written description. Here, SMG’s description stated that “oblique shading lines visible in the front and perspective views denote transparency.” Despite this clear limitation, the district court broadened the meaning of “transparency” to also include “translucency.” The Federal Circuit found this interpretation improper, holding that both the claims and specification restrict the term to truly transparent features—not translucent ones. The panel further cautioned that expert testimony cannot be used to expand or override the plain and ordinary meaning of a claim term unless it is backed by reliable, objective extrinsic evidence.

Second, the Federal Circuit evaluated infringement under the doctrine of equivalents by applying the function-way-result test. The panel determined the patent specification clearly described the function of the “frame” as being “configured to removably receive the sign.” The panel found that Opti-Luxx’s accused product, which featured an integrated frame, could not perform this essential function. Notably, SMG’s own expert conceded the accused product lacked this capability. Based on this undisputed evidence, the Federal Circuit reversed the finding of infringement, concluding the accused product did not perform the claimed functions.

Conclusion

The Federal Circuit’s decision underscores the importance of adhering closely to the intrinsic evidence when construing patent claims—particularly in design patents where the description and illustrations explicitly define scope. The ruling also reinforces that, under the doctrine of equivalents, infringement cannot be found if the accused product does not perform all functions required by the patent claims.

The Rules at a Glance

The proposed amendments to 37 CFR §42.108 are, in short, designed to:

• Require stipulations from petitioners not to pursue invalidity under §§ 102/103 in other venues if IPR is instituted. (§42.108(d))
• Prohibit institution of IPRs against claims that have survived validity challenges in district court, ITC, or prior USPTO proceedings. (§42.108(e))
• Prohibit institution if a district court trial or ITC initial or final determination will occur, more likely than not, prior to the final written decision in the instant IPR challenge. (§42.108(f))
• Disallow second bites at the apple, unless “extraordinary circumstances” exist—such as bad faith or statutory changes and providing the threat of sanctions and attorneys’ fees for frivolous or abusive petitions. (§42.108(g))

The proposed amendments represent a significant departure from current jurisprudence.

The new requirement for petitioners to provide binding stipulations goes well beyond the current estoppel provisions of §315(e) and the current practice of Sotera stipulations. The new stipulation requirement would: (i) be triggered based on institution rather than a final written decision; and (ii) appear to foreclose any validity challenges under §§ 102/103, not just those raised or that could have been raised in the IPR. As set forth in a Prior Post, the Federal Circuit recognizes the limits on §315(e) estoppel and allows certain 102/103 validity challenges in the district court—the proposed rules threaten to foreclose these alternative challenges.

The prohibition on subsequent challenges goes beyond §325(d) by providing a mandatory bar to IPR institution if the claims were upheld under §§ 102/103 in district court, ITC, or prior USPTO proceedings. Nothing is left to the discretion of the panel based on relevant circumstances.

The parallel-proceedings prohibition does more than codify Fintiv’s discretionary factors. Instead of applying discretionary denial, the proposed regulation strictly prohibits institution when a parallel proceeding on validity is expected to resolve before the Patent Trial and Appeal Board’s (PTAB’s) deadline for a final written decision. Also, the “more likely than not” standard closes the door to institution even where uncertainty in timing, potential delays, or the possibility of a stay exists.

The “extraordinary circumstances” exception is sharply limited under the proposed rule and would allow a second IPR challenge only in rare cases like prior bad faith or major legal shifts—no longer for new evidence or prior error.

The intent is plain and the effect severe: once a claim has already faced a validity challenge, further access to the IPR process is sharply restricted. As a result, IPRs will no longer serve as a meaningful alternative to more expensive district court litigation in cases where prior challenges have been mounted, effectively closing the door to PTAB review for many parties.

Where Is the Fairness?

The USPTO claims the new rules promote fairness. But what happens when someone else’s “first bite” at challenging a patent was, well, just plain bad?

Under the draft rule, if a prior court or USPTO proceeding failed to invalidate a claim, later petitioners are out of luck. The process is “one and done”—but what if the first challenger:

• Settled early without properly responding to patent owner responses and the final written decision is based on one-sided arguments;
• Failed to marshal the best prior art or arguments due to resource constraints or word-count limits;
• Presented poor expert analysis or legal argument; or
• Simply botched the challenge due to lack of skill or experience?

The consequences are clear. A subsequent party who may have superior resources, stronger art, or a better perspective on the claims could be forever barred from seeking PTAB review. In effect, every patent challenged once must be presumed finally adjudicated, regardless of the quality of the prior proceeding. Subsequent challengers are effectively barred from choosing their own counsel and experts, choosing their own art, and crafting their own challenges. They are instead stuck with decisions they played no part in.

But fairness to the USPTO in this instance does not translate to fairness to the targets of litigation campaigns. This shift is particularly concerning in the context of non-practicing entities (NPEs), who are notorious for filing large numbers of lawsuits and leveraging early settlements. Their business model frequently relies on asserting patents of questionable value against numerous defendants. Under the proposed “one and done” rules, if a patent troll’s claims survive an initial, potentially superficial challenge, or are settled before petitioner replies are filed and still reach final written decision, subsequent defendants will most likely be deprived the opportunity to seek their own IPR. This will embolden abusive litigation tactics and allow dubious patents to remain untested, putting a heavy burden on innovators and legitimate businesses facing repeated, specious claims.

The reality is that mounting a successful IPR challenge is an art as much as a science. Current word and page limits, both at the PTAB and in district courts, often force challengers to strategically triage their arguments. Important references and compelling lines of attack may be omitted or underdeveloped—not because they lack merit, but simply due to restrictive filing constraints. This means that even strong invalidity arguments can end up neglected, increasing the risk that an incomplete or inadequate challenge will become the final word on a patent’s validity.

Also, the proposed approach overlooks the reality that the USPTO sometimes makes errors. Patent examination and review is a highly complex and sometimes subjective process. The USPTO is given limited resources to evaluate validity, whether during original examination, or in reexamination or IPR. Errors may arise due to misinterpretation of the art, misleading arguments presented by the patent owner, or other circumstances. Barring subsequent challenges even where such error occurs hardly results in fairness and eliminates the system’s ability to correct those mistakes.

In short, the new rules are hardly fair. Once any party has tried and failed—no matter the reason for failure—the patent effectively gains enhanced immunity from further IPR scrutiny. Patent defendants are once again placed in the box they were in before Congress provided the IPR as an efficient and effective means to challenge validity.

Quiet Title Versus Patent Quality?

The USPTO claims that by limiting repeat challenges, it aims to restore “quiet title” and enhance reliability in patent grants. Yet, this comes at the cost of potentially allowing questionable patents to survive without sufficient opportunity for review. A strong patent system depends not just on quiet title, but on the ongoing opportunity to correct errors, especially when substantive arguments were never fully aired.

The proposed “one and done” regime’s insistence that a second challenge is almost never warranted may comfort patent owners and reduce APJ workloads, but it risks harming public confidence in the system. Especially for non-parties to the first action, there is little justice in being bound by a proceeding over which they had no control.

This raises difficult questions: Is the USPTO’s primary motive truly efficiency and fairness, or is it institutional fatigue? The agency has been criticized (sometimes unfairly) for improper examination, poor identification of prior art, and the issuance of “bad patents.” The USPTO is resource constrained and examiners are given limited time to search for and apply the best art in what is a very complex and difficult process. Recognizing that such challenges can lead to mistakes, Congress established the IPR process as a mechanism to correct errors that inevitably arise in the complex examination and post-grant-review processes. The proposed rules, however, close the door on further correction once a single proceeding (even a flawed one) is completed.

Shifting, Not Solving, the Efficiency Dilemma

The USPTO frames these proposed rules as a solution to enhance efficiency within the patent system. However, by drastically curtailing access to IPR review after a single challenge, the USPTO is not eradicating inefficiency—it is simply shifting the burden back to district courts. Rather than streamlining the overall process, the new rules risk funneling all subsequent validity disputes into district court litigation, which is universally recognized as costlier, slower, and more procedurally complex than PTAB proceedings. This would increase the load on federal courts, increase litigation expenses for all parties involved, prolong the resolution of patent validity questions, and embolden patent assertion entities.

In effect, the USPTO would make its own operations smoother, but at the expense of the broader system. By closing the door to additional IPR review, the USPTO isn’t eliminating duplicative litigation; it is merely redirecting it, leaving innovators, businesses, and the courts to absorb the complications and expenses that follow.

Where There is a System, it will be Gamed

There is a risk that serial plaintiffs and NPEs will exploit the new rules to produce outcomes that are contrary to the intent of the IPR system. For example, consider the following scenario, which could play out under these rules. A patent owner files suit against a low-resourced and inexperienced defendant in a forum like the Western District of Texas, where courts routinely set trial dates as early as 18 months after filing. By declining to settle, the plaintiff can ensure that the trial date remains on calendar, triggering and maintaining the parallel litigation bar.

Subsequently, when the plaintiff asserts those same patents against major industry players, those better-resourced, more experienced defendants could be barred from initiating IPRs because the initial trial is likely to occur before any IPR process could reach a final decision. As a result, only the first, limited-resource defendant has the opportunity to pursue PTAB review. All subsequent defendants could be foreclosed from seeking IPR relief, regardless of the merits of their invalidity defenses. This dynamic is especially concerning where the initial defendant is unable to fully develop arguments or present the best prior art, effectively binding all future litigants to a single, potentially inadequate and flawed validity challenge.

Rather than streamlining the review of patent quality, these rules risk enabling the protection of low-quality patents, undermining the original purpose of IPR as an effective safeguard against improperly granted claims.

Where Do We Go from Here?

Most would agree that there are merits to having practical, common-sense limits on serial IPR challenges. But the USPTO must strike a truer balance in achieving that objective. The proposed rules threaten to virtually eliminate the opportunity for nuanced judgment or discretionary decision-making in the institution of IPRs, substituting rigid mandates for the panel’s sound evaluation of individual case circumstances.

This rigid framework prioritizes administrative efficiency over robust scrutiny. At minimum, the rules should allow for renewed IPR challenges where there is material new art or evidence, or where errors or other deficiencies arose or occurred in the prior challenge.

If the goal is to ensure only “quality” patents survive, mechanisms for correcting bad grants—even after an imperfect challenge—must remain robust.

Nothing is set in stone. The application and impact of these proposed rules is subject to ongoing developments, including future court decisions, PTAB precedent, and potential changes in the final regulatory text. Parties should watch for updates and consult qualified counsel to assess how evolving law and agency guidance may affect their rights and strategies.

How it Works

The USPTO’s internal AI tool will generate the ASRN by searching the application text against multiple U.S. and foreign databases, ranking up to ten documents for relevancy. Shortly after pre-examination processing, the ASRN is issued to the applicant, providing insight into the potentially relevant prior art uncovered—but requiring no response.

This will give the applicant an opportunity to assess prior art issues before substantive examination. Applicants are not required to respond to the ASRN, but may opt to file a preliminary amendment to place the application in better condition for examination. Applicants may also request deferral of examination or file a petition for express abandonment and seek a refund of certain fees if prosecution is no longer desired.

How to Participate

Applicants filing original, noncontinuing, utility patent applications between October 20, 2025, and April 20, 2026, can participate in the program by submitting a petition (Form PTO/SB/470) and the then-current petition fee set forth in 37 CFR 1.17(f) with the application filing. The application must be filed electronically using the USPTO’s Patent Center, and the application must conform to the USPTO requirements for DOCX submission upon filing. Finally, the applicant must be enrolled in the Patent Center Electronic Office (e-Office) Action Program to participate.

International applications entering the national stage in the US, plant applications, design applications, reissue applications and continuation applications are not eligible.

Potential Benefits

The clearest benefit of this program is the opportunity for applicants to see potentially relevant prior art before substantive examination proceeds. For patent owners operating in crowded technology spaces, this may mean fewer surprises and an earlier ability to refine claim strategy. Receiving an automated prior art report enables applicants to refocus the claims before substantive examination, potentially heading off costly additional cycles of prosecution. It also creates a pathway for quick decision-making: if the ASRN reveals insurmountable prior art, applicants may opt for express abandonment and seek a refund of the search and any excess claims fees.

What Applicants Need to Know

The ASRN is limited to a maximum of 10 references, which will be listed in order of relevance as ranked by the AI tool. Typically, if the AI tool actually uncovers the best art, the top handful should be sufficient. But whether the AI tool finds the best references—or at least those as good as the examiner will find—remains to be seen.

At this stage, AI technology is still nascent and not without error. As of this writing I have tested several AI search tools and have been somewhat disappointed with the results. While these AI tools may uncover some nuggets, they are often hit-or-miss, returning irrelevant references and making poorly reasoned combinations of prior art that fail to meet legal standards for combinability. These tools can be useful, but still require a fair amount of human oversight to achieve good results. Thus, the references returned with the ASRN may be mixed or questionable value. I plan to test this pilot program myself to see whether there is value in the preliminary results. 

Examiners often possess deep expertise in their assigned art units and have accumulated personal collections of highly potent art over their lengthy tenures. These “go-to” references are often uncovered based on human intuition and years of hard work, rather than searchable metadata or textual similarity. Thus, the AI system generating the ASRN may overlook these highly relevant references. Consequently, applicants may still encounter more significant or challenging prior art in the first Office Action than what appears in the automated report.

Tactical and Strategic Considerations

Any preliminary amendment to address results of the automated search should be submitted as soon as possible to reduce the likelihood that the amendment interferes with preparation of the first Office Action. Teams should establish protocols for prompt ASRN review and clear criteria for preliminary amendments, abandonment, or examination deferral.

As with any new process, in-house counsel and portfolio managers should weigh the strategic fit before participation and monitor outcomes as real-world experience with the program accumulates. Teams contemplating the pilot program should weigh whether the value of obtaining an early prior art report aligns with their portfolio management goals. For example, in fast-moving sectors where fast, strategic pivots matter, the program may offer a real advantage by streamlining prosecution. While there may be additional cost associated with reviewing the references and filing a preliminary amendment, that cost may be offset by fewer rounds of Office Actions before allowance.

Early search results from the ASRN may also assist with foreign filing decisions, which often need to be made before receiving a substantive Action in the U.S. If the ASRN reveals prior art that poses a major hurdle, applicants may decide to forgo foreign filings and avoid the accompanying expenses. Absent such insight, applicants are often forced to make these costly decisions without knowing the prior-art landscape, just to preserve their priority date. Conversely, when proceeding with foreign filings, the ASRN may enable you to refine your claims from the outset, increasing your chances of a more efficient prosecution abroad.

Final Thoughts

The USPTO’s Automated Search Pilot Program provides the potential for up-front insight into relevant prior art, allowing applicants to make more informed early decisions and streamline prosecution. While it may bring the opportunity for greater efficiency and cost savings, its true value will depend on the relevance of the AI-located references. If the Program lives up to its promise, it will allow applicants to make informed decisions up front to avoid unnecessary rounds of examination. But with a limited reference count and uncertainties associated with an AI-generated prior-art search, whether the Program translates into real benefits will not be known until we have had a chance to road-test the Program.

The Broader Context: IPR Estoppel Boundaries

As discussed in my earlier article on this case, “A Line in the Sand: Federal Circuit Bounds IPR Estoppel in Ingenico v. IOENGINE”, the Federal Circuit clarified the scope of IPR estoppel under 35 U.S.C. § 315(e). Particularly, the Federal Circuit clarified that (i) grounds not based on patents or printed publications (e.g., grounds based on device art and the like) are not within the scope of IPR estoppel; and (ii) IPR estoppel does not preclude a petitioner from relying on the same patents and printed publications as evidence in asserting a ground that could not be raised during the IPR, such as that the claimed invention was known or used by others, on sale, or in public use. That decision drew significant attention for its interpretation of how and when patents and printed publications may be used as part of an invalidity defense in district court proceedings without running afoul of IPR estoppel.

With the denial of rehearing, the Federal Circuit cements its panel ruling as the controlling interpretation of IPR estoppel in this context. Practitioners should take note: unless and until the U.S. Supreme Court intervenes or en banc review is granted in a future case, the bounds of IPR estoppel as articulated in Ingenico v. IOENGINE remain operative.

Looking Forward

For parties navigating patent disputes, this decision underscores the critical importance of developing a comprehensive strategy for IPR and district court proceedings. The Federal Circuit’s stance limits avenues for raising validity challenges not presented during IPR, placing a premium on thorough front-end diligence. Patent challengers should continue to identify alternative invalidity theories for district court proceedings but keep in mind that patents and printed publications may reinforce those defenses.

As Ingenico v. IOENGINE continues to shape estoppel jurisprudence, I will provide further updates on significant developments in this case and related patent litigation trends.

For a deeper dive into the Federal Circuit’s original ruling and its practical implications, please see my earlier analysis: A Line in the Sand: Federal Circuit Bounds IPR Estoppel in Ingenico v. IOENGINE.

Background

Optis Cellular Technology, LLC and related entities (“Optis”) sued Apple Inc. in the Eastern District of Texas, alleging infringement of five LTE alleged standard-essential patents (“SEPs”). Optis claimed various Apple products implementing the LTE standard infringe these patents, and that the parties had previously engaged in unsuccessful licensing negotiations and Apple refused to accept a license on fair, reasonable, and non-discriminatory (“FRAND”) terms as required by the relevant standards-development organization, ETSI, which Apple denied.

The Eastern Texas District Court’s first set of jury instructions asked, “Did Optis prove by a preponderance of the evidence that Apple infringed ANY of the [a]sserted [c]laims?” The jury initially found for Optis, awarding $506.2 million in damages as a reasonable royalty.

Apple moved for a new trial, arguing the jury did not hear evidence regarding Optis’s obligation to license the patents on FRAND terms. The District Court granted a retrial on damages only (not liability), resulting in a $300 million jury award. Apple and Optis cross-appealed on liability and damages respectively.

Issues

1. Did the single infringement question on the verdict form violate Apple’s right to a unanimous jury verdict for each patent?
2. Are claims 6 and 7 of the ’332 patent invalid as abstract ideas under 35 U.S.C. § 101?
3. Did the District Court properly construe claim 8 of the ’833 patent?
4. Does claim 1 of the ’557 patent invoke 35 U.S.C. § 112 (means-plus-function claim)?
5. Was the admission of the Apple-Qualcomm settlement agreement and related expert testimony error under Rule 403?
6. Should the original $506M damages verdict be reinstated?

Holding

• The Federal Circuit vacated both the infringement verdict and the retrial damages award, and remanded for a new trial on infringement and damages.
• The Court dismissed Optis’s cross-appeal to reinstate the original damages verdict.
• The Court reversed the District Court’s findings that (1) claims 6 and 7 of the ’332 patent were not directed to an abstract idea, and (2) claim 1 of the ’557 patent does not invoke means-plus-function claiming, were reversed.
• The Court affirmed the District Court’s construction of claim 8 of the ’833 patent.
• The Court held the admission of the Apple-Qualcomm settlement agreement and related expert testimony was an abuse of discretion and that this information should be excluded under Rule 403.
• The Court awarded costs to Apple.

Reasoning

Jury Verdict Form: The District Court abused its discretion by using a single infringement question across five patents, undermining Apple’s Seventh Amendment right to a unanimous jury verdict for each distinct cause of action. Each patent asserted raises a separate legal claim requiring its own finding.

Patent Eligibility (§ 101, ’332 Patent): The Federal Circuit found claims 6 and 7 are directed to an abstract mathematical formula, not patent-eligible subject matter. The Court reversed the District Court’s contrary ruling and instructed the District Court to review the inventive concept (Alice Step 2) on remand.

Claim Construction (’833 Patent): Affirmed. The claims do not require mapping signals from any particular starting point, and nothing in the specification or prosecution history mandated such a limitation.

Means-plus-function (’557 Patent): Reversed. The claimed “selecting unit” is a generic, non-structural term that invokes § 112; remanded for the District Court to determine if the patent specification provides adequate supporting structure.

Evidence (Apple-Qualcomm Settlement): The Apple-Qualcomm license agreement was minimally probative relative to FRAND damages, was not a comparable license, and admission of its large value was prejudicial to Apple and likely skewed the jury’s damages horizon. The District Court should have excluded the agreement under Rule 403.

Damages Verdict: Because the underlying infringement findings are vacated, neither damages award (including the initial $506M) can stand, and the Court dismissed Optis’s cross-appeal.