New USPTO Memorandum Adds Domestic Manufacturing and Small Business Factors to PTAB Institution Analysis

On March 11, 2026, U.S. Patent and Trademark Office (USPTO) Director Squires issued a memorandum (2026 memo) to all Patent Trial and Appeal Board (PTAB) users titled “Additional Discretionary Institution Considerations — U.S. Manufacturing and Small Business Use of AIA Proceedings.”^[1] In the 2026 memo, the director adds three new factors in determining whether to institute inter partes review (IPR) and post-grant review (PGR) proceedings.^[2] The factors focus on domestic manufacturing and the use of these proceedings by small businesses.^[3] The memo applies immediately to all pending IPR and PGR proceedings in which the due date for the patent owner’s discretionary brief has not yet elapsed.^[4] Patent owners, petitioners with domestic manufacturing ties, and small business petitioners should take note.

History of Discretionary Institution at PTAB

Under the framework established on March 26, 2025, by then Acting Under Secretary of Commerce for Intellectual Property and Acting USPTO Director Stewart in his memo (2025 memo) titled “Interim Processes for PTAB Workload Management,” decisions on whether to institute IPR and PGR proceedings are bifurcated between (i) discretionary considerations and (ii) merits and other non-discretionary statutory considerations.^[5] In the 2025 memo, Acting Director Stewart included a non-exhaustive list of relevant considerations that may be raised in a discretionary briefing.^[6] The relevant considerations included, but were not limited to: whether the challenged claims have already been adjudicated; whether there have been changes in the law or new judicial precedent; the strength of the unpatentability challenge; the extent of reliance on expert testimony; the settlement expectations of the parties; compelling economic, public health, or national security interests; and any other considerations bearing on the director’s discretion.^[7]

New Discretionary Factors

In the 2026 memo, Director Squires invokes the statutory mandate of the America Invents Act (AIA) as the basis for the new factors.^[8] The memo begins by stating, “In setting forth standards for instituting inter partes review (‘IPR’) and post-grant review (‘PGR’), the America Invents Act (‘AIA’) requires that the Director consider the effect of those standards on the ‘economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings.’”^[9] Director Squires argues that it is this obligation that requires the current discretionary framework to be reexamined in light of shifting economic and national security realities.^[10]

Those realities, as the memo documents them, are a well-established trend.^[11] The memo notes that, over recent decades, large segments of the U.S. manufacturing base (particularly in electronics and computing) have moved offshore.^[12] It cites studies by the Departments of Commerce and Homeland Security that highlight significant economic and national security damage this shift has caused.^[13] The memo argues that, despite broad availability of both IPR and PGR, the offshoring trend has not reversed.^[14] The memo further observes that many of the most frequent petitioners are large corporations that have publicly disclosed they lack meaningful domestic manufacturing presence and are not taking steps to build one.^[15]

It is against that backdrop that the memo introduces three new discretionary factors.^[16] The memo provides that the director will consider:

(1) “The extent to which any products accused of infringement in a parallel proceeding are manufactured in the United States or are related to investments in American manufacturing operations.”

(2) “The extent to which any products made, sold, or licensed by the patent owner that compete with the accused products are manufactured in the United States.”

(3) “Whether the petitioner is a small business that has been sued for infringement of the patent at issue.”^[17]

The 2026 memo further briefly addresses how each factor is to be applied.^[18] For manufacturing, it specifies that the analysis goes beyond final assembly and that parties should address where components are sourced and whether U.S.-made products are sent abroad for further processing.^[19] For method claims, the memo provides that the relevant product is the device used to carry out the method.^[20] For small businesses, the memo states that the director will apply the Small Business Administration’s (SBA) size standards under 13 C.F.R. §§ 121.801 through 121.805 and the reduced patent fee eligibility criteria under 37 C.F.R. § 1.27(a).^[21]

Practical Considerations

It is yet to be seen how these new factors are to be applied. It is also unclear how the consideration of these new factors would affect the overall reduction of IPR and PGR institution rate given the prior PTAB objective of workload management. Nevertheless, the following practical observations can be considered:

• Reconsideration of patent infringement defense strategies. A party accused of patent infringement, but who was discouraged from filing an IPR or PGR petition by the decreased institution rates, may reconsider such a decision and lean more towards filing a petition with the PTAB in addition to only raising invalidity defenses in the courts.
• Uncertainty about weighting. It is not yet clear how much weight these new factors will carry relative to the existing factors established in the March 2025 memo. Parties should not assume that a favorable domestic manufacturing posture will guarantee institution (or denial of institution). These are discretionary factors, not categorical rules.
• Strategic implications for patent owners. Patent owners whose products are made in the U.S. and who are facing an IPR or PGR petition should proactively gather and present evidence of their domestic manufacturing operations (e.g., component sourcing data, supplier information, and investment records) as early as the discretionary briefing stage. Waiting to raise these facts could be a missed opportunity.
• Strategic implications for petitioners. Petitioners with accused products manufactured in the U.S. or tied to domestic manufacturing investment should address this proactively in their discretionary briefing. Conversely, petitioners who lack any domestic manufacturing presence should be aware that this factor may weigh against institution and should consider whether other factors can be leveraged to offset these new factors.
• Small business opportunity. Small business petitioners sued for infringement who qualify under SBA size standards or the USPTO’s reduced fee eligibility criteria should identify themselves as such and present the relevant facts in their discretionary briefing. This is a meaningful new avenue for small businesses that may have previously been deterred from filing PTAB petitions due to costs or strategic uncertainty.
• Review pending matters immediately. Given that the memo applies immediately to all proceedings in which the patent owner’s discretionary brief due date has not yet elapsed, clients with active IPR or PGR proceedings should immediately review whether upcoming deadlines are affected and consult counsel about whether to supplement or adjust their discretionary briefings.