USPTO’s New PTAB Discretion Policy Marks a Major Shift for U.S.-Manufactured IP

The Policy Marks a Turning Point Across Multiple Industries

On March 11, 2026, U.S. Patent and Trademark Office (USPTO) Director John Squires issued a memorandum that significantly reshapes the landscape for inter partes review (“IPR”) and post‑grant review (“PGR”) proceedings. In this new guidance, Director Squires directs the Patent Trial and Appeal Board (“PTAB”) to weigh U.S. manufacturing activity—both by the patent owner and the accused infringer/challenger of the patent—when deciding whether to institute an AIA trial.

The memo roots this shift in broader national‑security and economic concerns. The USPTO points to decades of offshoring in electronics and computer manufacturing and cites federal studies identifying serious vulnerabilities in the U.S. microelectronics and ICT supply chains.

But the memo is also part of a larger, unmistakable pattern: the PTAB has become a significantly more patent‑owner‑friendly forum over the past year. Companies that rely on the PTAB to defend against infringement suits—especially those without a U.S. manufacturing footprint—should pay close attention.

The New 2026 Memo: A Shift with Industrywide Consequences

Squires’s March 2026 memo adds a new layer for discretionary denial: U.S. manufacturing footprint as a discretionary factor.

When deciding whether to institute an IPR or PGR, PTAB must now consider whether accused products are made in the United States, whether the patent owner’s competing products are made in the United States and whether the petitioner is a small business sued for infringement.

This change is both economically motivated and strategically significant. It effectively increases the defensive power of patent owners with domestic operations—and decreases the value of PTAB challenges for companies whose manufacturing is primarily overseas.

Industries Most Likely to Feel the Impact

While the technology sector is the most obviously and immediately impacted by this shift, it is far from the only one. The industries most exposed share the same traits: global supply chains, high patent intensity and frequent PTAB litigation.

• Semiconductors and Microelectronics: The memo explicitly cites studies of vulnerabilities in the microelectronics industrial base, making this industry a central target of the policy. Companies with U.S. wafer‑fab or packaging operations will now command stronger defensive positions, while petitioners relying on overseas foundries may struggle.
  
• Telecommunications and Networking Equipment: Telecom infrastructure is intertwined with the electronic and computing offshoring trends highlighted by the USPTO. As a result, companies with U.S. assembly or component production will be better positioned to defend patents from PTAB review.
  
• Consumer Electronics: As the memo notes, many electronics manufacturers have moved offshore over the past decades. Companies producing smartphones, wearables and IoT devices overseas may now see reduced ability to use IPRs as a strategic defense tool.
  
• Automotive and EV Manufacturing: With EV batteries, power electronics and advanced sensing systems frequently patented and often manufactured abroad, automakers relying on global supply chains may face steeper PTAB challenges, while those investing in U.S. assembly and component plants gain strategic benefit.
  
• Aerospace and Defense Electronics: National‑security considerations loom large in the memo’s rationale, strongly suggesting enhanced protection for domestically produced aerospace, avionics and defense‑electronics technologies.
  
• Medical Devices: Medical‑device litigation frequently includes PTAB challenges. Where manufacturing is domestic, companies will benefit from an additional layer of protection; where it is offshore, petitioners and patent owners may find themselves at a structural disadvantage in obtaining relief at the PTAB.
  
  

A Year‑Long Trend Toward Stronger Patent‑Owner Protections

Director Squires’ memo builds on a series of structural and substantive shifts that have steadily tightened access to PTAB review.

1. Proposed rules that sharply limit ability to challenge patents at PTAB

In October 2025, the USPTO proposed new rules that would materially narrow when IPRs may proceed. These include requirements for petitioners to stipulate they will not pursue §102/103 invalidity in district court or the ITC if they seek institution; bars on institution when claims have already survived scrutiny in other forums; and discouraging institution when parallel litigation is likely to conclude first.

2. Director‑level control over every institution decision

Since late 2025, the director—not PTAB panels—has been solely responsible for deciding whether to institute each IPR and PGR. Early FY2026 data show a 51% institution‑denial rate, the highest in years.

3. The rise of “settled expectations” as a potent denial tool

In 2025, Acting Director Coke Morgan Stewart introduced “settled expectations” as a standalone basis for discretionary denial. Initially applied mostly to older patents, the doctrine has expanded to younger patents supported by substantial investment or reliance.

Taken together, these developments reflect a PTAB increasingly focused on protecting established patent rights and limiting repetitive or late‑stage challenges.

Conclusion: A System Rebalanced Toward Domestic Production and Patent Stability

The 2026 Squires memo, viewed in context with the proposed rules, director‑controlled institution decisions and the settled‑expectations doctrine, marks a decisive evolution in PTAB policy. The USPTO is unambiguously steering AIA trials away from their earlier petitioner‑friendly posture and toward a system that:

• Favors U.S. manufacturing and domestic supply chains,
  
• Strengthens reliance interests for established patents, and
  
• Restricts serial, duplicative or late‑stage validity challenges.

For companies in sectors where offshoring is common—and PTAB strategy has long been central—this shift calls for immediate reevaluation of patent‑enforcement, litigation and manufacturing strategies. Firms with domestic production stand to gain a substantial tactical advantage; those without it may need to reassess the reliability of PTAB as a defensive forum.

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This document is intended to provide you with general information regarding the USPTO’s new PTAB policy. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.