USPTO Announces Additional Discretionary Denial Considerations Focusing on U.S. Manufacturing Presence and Small Business Status

As Honigman has previously reported, over the past year the U.S. Patent and Trademark Office has made significant changes to the discretionary denial process in inter partes and post-grant review proceedings. Honigman’s prior alerts about the changes to the discretionary denial process are available here and here, and its alert regarding the Federal Circuit’s first rejection of challenges to these new processes is available here.

On March 11, 2026, USPTO Director John A. Squires issued a new memorandum introducing additional considerations for discretionary denials.  These new considerations focus on the parties’ U.S. manufacturing activities and small business status. Director Squires’ memorandum expresses his belief that the America Invents Act obligates the USPTO to consider the effect of institution standards on the economy and the integrity of the patent system.

Accordingly, the Memorandum states that when determining whether to institute IPR and PGR proceedings, the USPTO will now 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; and
3. Whether the petitioner is a small business that has been sued for infringement of the patent at issue.

The memorandum directs parties to address not only final product assembly in the United States, but also the extent to which product components are domestically manufactured and whether U.S.-made products are sent abroad for further processing. For method claims, the relevant products are the devices used to carry out the method. Finally, in assessing small business status, the Director will consider all relevant facts raised by the parties, including the Small Business Administration’s size standards under 13 C.F.R. 121.801–805 and 37 C.F.R. 1.27(a).

Honigman continues to closely monitor all USPTO activities and announcements. If you have questions about the March 11, 2026 memorandum or other changes at the USPTO, please contact one of Honigman’s Intellectual Property attorneys.