PTAB Expands Settled Expectations Doctrine
New York, NY, June 23, 2025
On June 18, 2025, the USPTO issued a 4-page decision in Dabico Airport Solutions Inc. v. AXA Power ApS. (No. IPR2025-00408), Paper 21, denying institution of inter partes review based on Patent Owner’s “settled expectations” regarding the challenged patent that had issued nearly eight years earlier.
The decision is noteworthy because the USPTO granted discretionary denial based on settled expectations even though neither the Patent Owner nor Petitioner briefs on discretionary denial mentioned settled expectations or the issue date of the challenged patent. Patent Owner’s 67-page brief requesting discretionary denial exclusively argued denial pursuant to 35 U.S.C. § 325(d), i.e., based on the fact that the same or substantially the same prior art and/or arguments were previously presented to the Patent Office. Paper 10. Petitioner’s 40-page opposition focused on rebutting that argument. Paper 17. In the Decision, Acting Director of the USPTO, Coke Morgan Stewart, acknowledged that “Patent Owner’s arguments regarding 35 U.S.C. § 325(d) are unpersuasive.” Paper 21, 2.
Nonetheless, the USPTO noted that considerations in favor of discretionary denial, particularly settled expectations, outweighed the counterarguments, stating: “In particular, the challenged patent has been in force almost eight years, creating settled expectations.” Paper 21, 2. The USPTO noted that there is “no bright-line rule on when expectations become settled” but that “the longer the patent has been in force, the more settled expectations should be,” analogizing the approach to the six year statute of limitations for infringement damages. Paper 21, 3.
The USPTO reached this conclusion even though the parties did not address settled expectations or whether Petitioner had notice of the challenged patent. The USPTO justified its decision by noting that Petitioner is “permitted to address all relevant considerations . . . bearing on the Director’s Discretion” (citing the Memorandum for Interim Processes for PTAB Workload Management (at 2-3)) and that “‘[p]arties are encouraged to address any fact or circumstance they believe bears on whether the Office should or should not institute trial” (citing FAQ 20 of the FAQs for Interim Processes for PTAB Workload Management). Paper 21, 2 (emphasis in original) (see discussion of these new policies in our May 13, 2025 client alert).
Thus, regarding settled expectations, this decision seems to place the burden on petitioners to “not only to respond to patent owner’s arguments but also to identify reasons not to exercise discretion to deny institution.” Id. (emphasis in original). Petitioners should also provide “persuasive reasoning why an inter partes review is an appropriate use of Office resources.” Id. at 3.
With respect to notice, the USPTO reasoned that, because published patent applications and patents “are almost always publicly available to provide notice to the public, other inventors, competitors and commercial interests[,] . . . actual notice of a patent or of possible infringement is not necessary to create settled expectations.” Id.
The Dabico decision takes the settled expectation doctrine one step further than the recent decision in iRhythm Techs., Inc. v. Welch Allyn, Inc., Nos. IPR2025-00363, IPR2025-00374, IPR2025-00376, IPR2025-00377, and IPR2025-00378, Paper 10, discussed in our June 13, 2025 client alert. The iRhythm decision raised the important question of whether a defendant in district court litigation can reasonably expect to have one year after the filing of a Complaint to file a petition for IPR (35 U.S.C. § 315(b)) if defendant knew about a patent-in-suit (or pending application) well before hand. The Dabico decision suggests that the Petitioner need not have long-term knowledge of the challenged patent for there to be settled expectations, which seemingly places a burden on petitioners to file early petitions on patents or explain why they did not do so, regardless of whether the Patent Owner raises settled expectations in a request for discretionary denial. Placing a burden on Petitioner to address arguments that are not raised in Patent Owner’s discretionary denial brief is arguably also inconsistent with the USPTO’s statement that if the Patent Owner does not file a brief in support of discretionary denial then the USPTO will only consider the merits. See FAQ 22 of the FAQs for Interim Processes for PTAB Workload Management.
In addition, the Dabico decision, like the iRhythm decision, places petitioners in the unenviable position of having to choose between: (a) filing a petition early to avoid discretionary denial, but potentially creating issues with respect to standing for appeal; or (b) waiting to file a petition and facing potential settled expectation challenges.