USPTO Adds New Discretionary Institution Considerations for AIA Proceedings

On March 11, 2026, the United States Patent and Trademark Office (USPTO) issued a memorandum titled Additional Discretionary Institution Considerations - U.S. Manufacturing and Small Business Use of AIA Proceedings directed to Patent Trial and Appeal Board (PTAB) users. The memorandum explains additional considerations the Director will take into account when deciding whether to institute America Invents Act (AIA) proceedings, specifically inter partes review (IPR) and post-grant review (PGR).

Background and policy rationale

The memorandum states that, in setting standards for instituting IPR and PGR, the AIA requires the Director to consider the effect of those standards on the economy, the integrity of the patent system, the efficient administration of the USPTO, and the USPTO's ability to timely complete proceedings.

It further describes a policy context in which substantial segments of the United States manufacturing base, particularly in electronics and computer industries, have moved overseas, and it references government studies that, according to the memorandum, highlight economic and national security damage associated with that trend.

The memorandum links these developments to the Director's statutory obligation to consider effects on the economy and the integrity of the patent system.

The memorandum also notes that some stakeholders have asserted that the availability of IPRs and PGRs is important to protect American manufacturers and small businesses, while stating that offshoring trends have continued notwithstanding the broad availability of these proceedings for fifteen years. It further states that many frequent users of IPR and PGR are large companies that have publicly disclosed they do not have a significant existing U.S. manufacturing presence and are not taking concrete steps to invest in American manufacturing.

Citing USPTO work identifying frequent IPR petitioners, the memorandum states that these facts and data raise a question about whether the current institution framework appropriately weighs the interests of entities that invest in domestic production.

The statutory framework in plain language

The memorandum addresses institution decisions, meaning the Director's decision whether to start (institute) an IPR or PGR proceeding, by describing additional discretionary considerations that may be raised in discretionary briefing. In other words, beyond the merits of a patentability challenge, the memorandum signals that certain real-world economic and stakeholder considerations may be relevant to whether a proceeding is instituted.

The three discretionary factors the Director will consider

The memorandum encourages parties to identify relevant facts in their discretionary briefing to help the USPTO assess whether AIA proceedings provide a tactical advantage to companies that neither manufacture in the United States nor make American manufacturing investments. It also encourages petitioners, including small businesses that have been sued for infringement, to identify themselves, helping the USPTO understand how frequently small businesses use IPRs and PGRs to defend against infringement claims.

When determining whether to institute IPR and PGR proceedings, the memorandum states that the Director will consider the following three factors.

1. Whether accused products are manufactured in the United States

The first factor is "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."

Practical example (illustrative): If an accused product is assembled in the United States, or if the accused product is tied to a documented investment in U.S. manufacturing operations, the parties should be prepared to present those facts in a discretionary briefing because the memorandum identifies them as relevant to the institution's discretion.

2. Whether the patent owner's competing products are manufactured in the United States

The second factor is "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."

Practical example (illustrative): If a patent owner sells a competing product and can show that it is manufactured in the United States (including through U.S.-made components, as discussed below), the memorandum indicates that this information is relevant to the Director's discretionary institution analysis.

3. Whether the petitioner is a small business sued for infringement

The third factor is "whether the petitioner is a small business that has been sued for infringement of the patent at issue."

Practical example (illustrative): If a petitioner qualifies as a small business and is defending against an infringement suit involving the patent, the memorandum indicates the petitioner should identify itself as such in discretionary briefing because the Director will consider that status.

How the USPTO will evaluate U.S. manufacturing presence

The memorandum states that, in evaluating the extent of manufacturing or manufacturing investments in the United States, the Director will consider not only final product assembly in the United States, but also the extent to which components are made in the United States and the extent to which products made in the United States are sent for further processing outside the United States.

Practical example (illustrative): A party addressing the first or second factor may wish to describe (i) where final assembly occurs, (ii) where key components are manufactured, and (iii) whether U.S.-made items are exported for additional processing, because the memorandum identifies each of these as relevant considerations.

Method claims: identifying the "relevant product."

For method claims, the memorandum states that the relevant products for purposes of the memorandum are the devices used to carry out the method. It provides an example: for claims directed to a method of operating a computer, the relevant product would be the computer.

How the memorandum addresses "small business" status

Consistent with that approach, the memorandum encourages small-business petitioners who have been sued for infringement to identify themselves in discretionary briefing to help the USPTO better understand small-business use of IPRs and PGRs.

Practical implications for stakeholders

For patent owners

The memorandum's framework suggests that patent owners may wish to be prepared to present facts about whether their competing products are manufactured in the United States, including information about U.S. assembly, U.S.-made components, and any further processing outside the United States.

Where relevant, patent owners may also address the extent to which accused products are manufactured in the United States or tied to U.S. manufacturing investments, because the memorandum identifies that as a discretionary factor.

For petitioners (including large and frequent filers)

Because the memorandum encourages parties to identify facts relevant to whether AIA proceedings provide a tactical advantage to companies without U.S. manufacturing or investment, petitioners may wish to address their manufacturing footprint or investments to the extent those facts bear on the identified factors.

Petitioners may also need to address manufacturing facts about the accused products (including component sourcing and further processing) because the memorandum states that those details will be part of the evaluation of the U.S. manufacturing presence.

For small businesses defending against infringement claims

The memorandum expressly encourages petitioners who are small businesses and have been sued for infringement to identify themselves, and it states that small business status is one of the discretionary factors the Director will consider.

Because the memorandum references both Small Business Administration size standards and reduced patent fee eligibility standards as relevant considerations, small businesses may wish to be prepared to address those criteria in the facts they present.