USPTO’s IPR Institution Rate Crisis — Plummeting from 65% to 37% in Seven Months

The U.S. Patent and Trademark Office’s Inter Partes Review (IPR) institution rate has undergone a dramatic collapse. In October 2024, the USPTO instituted approximately 65% of IPR petitions. By February 2026, that figure had plummeted to around 37%—a 43% reduction in just seven months. This seismic shift stems directly from policy changes implemented by USPTO Director John Squires, fundamentally altering the calculus for patent litigation strategy. Patent holders face significantly reduced invalidation risk, while competitors and accused infringers must now recalibrate their defense tactics.

The origin of the collapse traces to two critical policy interventions. In October 2025, Director Squires consolidated all IPR institution decisions under his authority. Simultaneously, the USPTO revived a strict requirement that IPR petitioners identify all real parties in interest (RPI) before petition filing—a measure explicitly designed to deter foreign state-backed entities from exploiting the IPR system. The second intervention followed in March 2026. The Director announced that patent examiners and Administrative Patent Judges would now consider whether products embodying the disputed patent are manufactured and sold in the United States as a discretionary factor in institution decisions. This domesticity-focused criterion represents an explicit tilt toward protectionist industrial policy.

The consequences ripple through the entire PTAB system. Appeal pendency at the Patent Trial and Appeal Board has evaporated—from an average of 28 months in May 2025 to just over 9 months by April 1, 2026. This compression indicates that far fewer IPR petitions are being filed and adjudicated, suggesting that accused infringers have largely abandoned IPR as a litigation countermeasure.

The institutional shift creates asymmetric incentives across patent litigation. Patent holders can now discount IPR risk substantially when evaluating settlement postures in infringement litigation. Conversely, accused infringers lose a potent lever. They must now rely on traditional invalidity defenses under district court Markman proceedings, ex parte reexamination, or post-grant review (PGR)—all slower, costlier, and less favorable than the streamlined IPR process. Foreign companies and those with overseas investors face an additional barrier: the RPI requirement and domesticity test make IPR itself inaccessible.

The deeper issue is one of institutional legitimacy. When discretion dominates institution decisions, predictability collapses. The IPR statute (35 U.S.C. § 314) grants the Director authority to deny institution on discretionary grounds, but that authority was historically wielded narrowly. The current approach inverts that balance—discretion is now the rule, not the exception. This uncertainty may chill legitimate patent challenges and reduce confidence in PTAB neutrality among foreign competitors.

Patent strategy must adapt to a fundamentally altered landscape. Patent prosecutors drafting claims for future enforcement must assume that IPR invalidation risk has largely evaporated—a significant change in the cost-benefit calculus for claim breadth. Litigants defending against infringement suits cannot rely on IPR as their primary attack vector. And policy advocates must grapple with a harder question: whether concentrated discretion in the Director’s office is consistent with rule of law principles that demand transparent, predictable standards for patent adjudication. This inflection point marks a decisive shift in the American patent system’s orientation—away from procedural neutrality and toward executive discretion calibrated to domestic industrial policy.