Imagine That IP Law Blog

When Acting USPTO Director Coke Morgan Stewart denied institution in Dabico v. AXA Power IPR2025-00408  Paper 21, much of the commentary focused on the result. But the more consequential development lies in her reasoning. The Director grounded her decision on the patent owner’s “settled expectations,” emphasizing that the challenged patent had been in force for nearly eight years. According to Stewart, upending the rights vested during that period would be inequitable and an inefficient use of the Office’s resources. In her words, “actual notice of a patent or of possible infringement is not necessary to create settled expectations.” Id, 3. That single sentence reshapes how the Office views late-stage validity challenges and raises the bar for instituting inter partes reviews (IPRs) against mature patents.

The concept of “settled expectations” is not entirely new, but its elevation to a primary factor under 35 U.S.C. § 314(a) signals a meaningful shift. Until recently, the USPTO’s discretionary denials focused heavily on the Fintiv factors, which hinge on the status of parallel district court litigation. Stewart’s decision in Dabico, however, relies instead on timing and the broader equities at stake. The Director emphasized that the older a patent is, the more reliance interests it accumulates, not only for the patent owner but for the public and marketplace as well. She explained that issued patents, and even 18-month published applications, are publicly available and indexed through searchable systems, meaning the public is deemed to have constructive notice. In her view, challengers cannot credibly argue that they were unaware of a patent’s existence or that they should be entitled to a post-grant proceeding years after issuance simply because they lacked actual notice.

Stewart likened the settled-expectations doctrine to the six-year limitation on damages codified in 35 U.S.C. § 286. While she stopped short of setting a firm threshold, her reasoning suggests that patents in force for six years or more are increasingly likely to trigger a discretionary denial unless the petitioner can make a compelling case. In Dabico, the Director noted that although Patent Owner’s arguments under § 325(d) were unpersuasive, the equitable considerations favoring discretionary denial far outweighed any rationale for review. Importantly, she also criticized the petitioner for failing to explain why an IPR would be an appropriate use of Office resources, highlighting a burden that petitioners must now expect to meet.

These principles were echoed in Stewart’s remarks just one week earlier at the IPBC Global 2025 conference. Speaking to an audience of in-house counsel, practitioners, and policymakers, Stewart declared that through the new PTAB processes, the Office is trying to send a message to stakeholders—do not wait to file an IPR. (see Gene Quinn, Stewart Says USPTO Wants Early Validity Challenges, Not Late IPRs, (IPWatchdog).  She urged parties to use third-party submissions of prior art during prosecution and to make use of post-grant review (PGR) within the statutory nine-month window after issuance. Stewart expressed concern that too many petitioners are waiting until infringement litigation is filed before challenging the validity of what they view as erroneously issued patents. This, she explained, is not how the Office wants its resources to be used. Stewart’s message was clear: validity concerns should be raised early, during examination or shortly thereafter, not ten or more years into a patent’s life.

From a policy perspective, Stewart’s emphasis on PGRs signals a movement toward a system that more closely resembles the opposition process of the European Patent Office (EPO). Similar to the EPO opposition procedure, which provides a nine-month window to challenge the validity of a European patent centrally, the USPTO's PGR pathway is designed to promote early, centralized review before infringement disputes arise. The underlying rationale is the same: provide a defined, early-stage mechanism to clean the register of weak patents while still preserving procedural fairness and public notice. Stewart’s remarks suggest that the USPTO wants to reorient its post-grant regime to serve that early corrective function, not to operate indefinitely as a last-ditch tool for litigation defendants.

For petitioners

For companies that frequently find themselves targeted in infringement suits, this shift has real strategic consequences. It is no longer sufficient to react defensively once a lawsuit is filed. Instead, companies must consider proactive patent monitoring as a core part of their IP risk management program. Just as brand owners routinely monitor the trademark register for newly filed marks that may pose a conflict, product companies and innovators should now consider investing in monitoring services that track recently issued patents in their technical fields. Many commercial services can flag patents by assignee, classification, or claim scope. Early identification of potentially problematic patents can allow in-house counsel to review the prosecution history, evaluate available prior art, and—if warranted—prepare a timely PGR petition. By acting within that nine-month window, petitioners will not only avoid discretionary denial but also benefit from the broader grounds for challenge available in PGRs, including §§ 101 and 112.

For Patent Owners

Patent owners, for their part, should view the Director’s focus on settled expectations as a new tool in their defensive arsenal. As the Office increasingly weighs reliance interests in deciding whether to institute review, patent owners should be ready to document how their patent has shaped commercial decision-making. For example, demonstrating that the patented technology was incorporated into a product line, served as the basis for licensing agreements, or influenced business investment decisions can help establish the type of reliance the Director referenced in Dabico. Furthermore, patent owners should point out that the public has long had constructive notice of the patent, particularly if the issued claims have not materially changed since publication. If the patent has been the subject of marketing, press releases, or product literature, this can further strengthen the argument that the patent holder—and by extension, the market—had settled expectations regarding the validity and enforceability of the claims.

Conclusion

Ultimately, Stewart’s decision in Dabico and her accompanying public statements represent a coherent and deliberate policy. They underscore that the PTAB is no longer a forum for belated error correction but rather part of a front-loaded system designed to ensure patent quality early. “Settled expectations” is no longer a rhetorical device—it is fast becoming the standard by which late IPR petitions are measured and, more often than not, denied. Anyone developing a PTAB strategy must now weigh not just the strength of the prior art, but the age of the patent and the equities surrounding it. In today’s environment, timing isn’t everything, but it may be dispositive.