Discretionary Denials at the PTAB: Strategic Insights for Petitioners and Patent Owners in a Shifting Landscape
Jennifer Robichaux Carter, Zacharias Shepard
Key Takeaway: The PTAB has returned to a more flexible and discretionary approach to denying post-grant proceedings, reintroducing the Fintiv factors and adding new considerations such as settled expectations and USPTO workload. These changes significantly raise the stakes for both petitioners and patent owners, making timing, procedural posture, and strategic planning more important than ever.
A set of recently issued memoranda by United States Patent and Trademark Office ("USPTO") officials has re-energized the debate around discretionary denials in post-grant trials at the Patent Trial and Appeal Board ("PTAB"). In February 2025, the USPTO rescinded former USPTO Director Kathi Vidal's Interim Procedure for Discretionary Denials Memorandum ("Vidal Memo"). A few weeks later, Chief Administrative Patent Judge Scott Boalick issued guidance on the recission ("Boalick Memo"), and Acting Director Coke Morgan Stewart issued an interim memorandum explaining processes for the PTAB's Workload Management("Workload Memo"). Together, these memoranda indicate that the PTAB is once again leaning into its authority to deny institution based on parallel litigation and resource constraints. These changes demand patent stakeholders in all technology fields to recalibrate their approach to post-grant strategy. This article analyses the new discretionary denial framework, drawing on recent decisions and emerging trends to guide IP stakeholders to make informed, strategic choices.
Patent Obviousness in the AI Era
Key Takeaway: As AI becomes more prevalent in innovation, stakeholders are divided on whether it should raise the skill level of a "person having ordinary skill in the art" (PHOSITA), potentially making more inventions obvious and harder to patent. The PTO's approach to this issue will have significant implications for patentability standards and the value of future patents.
The proliferation of artificial intelligence ("AI") presents complex challenges for intellectual property, especially within patent law. In particular, the obviousness inquiry under 35 U.S.C. § 103 may be susceptible to disruption by advances in AI technology. A key factor in determining whether a patent is obviousness or not over the prior art is the level of skill of a "person having ordinary skill in the art" ("PHOSITA"). As AI increasingly bolsters the innovation process, some stakeholders argue that this level of skill should increase, thereby rendering more inventions obvious—others disagree.
Recognizing this, the United States Patent and Trademark Office ("PTO") issued a Request for Comments ("Request") in April 2024 regarding "the impact of the proliferation of artificial intelligence on prior art, the knowledge of a person having ordinary skill in the art, and determinations of patentability." 89 Fed. Reg. 34217. The Request asked for public input on several key questions, including how AI might impact the level of skill of a PHOSITA. Id. at 34220.
This Month: Our Take on AI
Court Finds AI Training a Fair Use, But Distinguishes Library of Pirated Works: In a closely watched case at the intersection of copyright law and artificial intelligence, a federal court in the Northern District of California has delivered a decision with significant implications. The court ruled that Anthropic's process of using copyrighted books to train its AI model, Claude, was a "quintessentially transformative" fair use. Judge William Alsup reasoned that, much like a human writer learns from reading, the AI was not merely copying the works but using them to learn how to create something new and different. This finding provides a potentially strong defense for AI companies utilizing copyrighted content for training purposes.
However, the court's ruling was not an unqualified victory for the AI industry. The judge found that Anthropic's separate conduct of downloading and storing pirated books to create a central library was not a fair use. The court distinguished this act from the AI training, stating that the purpose of creating the library was simply to acquire content without payment. This development highlights that while the use of works for AI training may be protected, the underlying acquisition and retention of those materials, particularly if pirated, carries legal risk. You can read more about the decision here: "Court Finds Fair Use for AI Training, But Distinguishes Library of Pirated Works".
State AI Moratorium Looks to Survive the Senate: A controversial provision in the draft reconciliation bill that prevents states from enforcing state AI laws has survived the U.S. Senate Committee on Commerce, Science, and Transportation and is on track to be included in the Senate version of the reconciliation bill. The moratorium does not directly preempt local AI regulation but forbids states from enforcing "any law or regulation...limiting, restricting, or otherwise regulating artificial intelligence... entered into interstate commerce" for 10 years following the enactment of the One Big Beautiful Bill Act. Baker Botts is actively tracking this development and will continue to update its clients as we get clarity on the final version of the bill. You can read more about the development here: "Senate parliamentarian green lights state AI law freeze in GOP megabill."
2025 Intellectual Property Chambers USA, Legal 500 US, and IAM Patent 1000 Rankings
Our Intellectual Property lawyers and professionals have a deep commitment to exceptional client service. We are pleased to announce that the hard work and successes, on behalf of our clients, have been well recognized in Chambers USA, Legal 500 US, and IAM Patent 1000 again this year.
In Chambers USA, the Baker Botts IP Department received 11 practice rankings and 15 individual lawyer rankings across key jurisdictions and specialty areas. Notably, the firm received seven new or elevated rankings, including three new California recognitions and two new rankings in the highly competitive Patent Trial and Appeal Board (PTAB) category, underscoring the firm's growing national footprint and strength in cutting-edge IP litigation and prosecution.
The Baker Botts IP Practice continues its upward trajectory in the Legal 500 US 2025, earning four Tier 1 rankings and expanding its overall footprint across both practice areas and individual lawyer recognitions.
This year's IAM Patent 1000 guide highlighted the Firm across multiple jurisdictions, awarding Baker Botts practice rankings in Litigation, Prosecution, and Transactions across key U.S. regions, including Texas, New York, California, and Washington, D.C., as well as an international ranking in the United Kingdom.
With sincere appreciation, we want to thank you for supporting our lawyers and trusting the Baker Botts team with your legal matters. Please click the following title links to view a full list of rankings: Chambers USA, Legal 500, IAM Patent 1000.
AI Counsel Code Podcast
In the episode, "AI Legal Challenges in Fair Use and Model Training," Maggie Welsh and Joe Cahill discuss the latest report from the Copyright Office on fair use in AI model training. The report delves into the use of copyrighted works during AI development and considerations around copyright infringement and fair use. Key topics include data collection, training processes, and the complexities of licensing in AI. The nuanced legal landscape requires careful analysis of specific cases, emphasizing the importance of understanding both the technology and legal precedents. Listen to the full episode here.
June 2025 Intellectual Property Report Recap
In case you missed it, here is a link to our June 2025 Intellectual Property Report that looked at:
- Navigating SEP Disputes Before the ITC: Strategy, Standards, and the Reach of Anti-Suit Injunctions
- May 2025 Update: Patent Apportionment: Anything You Say in a License Agreement May Be Used Against You in a Court of Law
- Navigating Global Approaches to Artificial Intelligence Regulation
- Forging Clarity: A Framework for Navigating AI Regulation
- This Month: Our Take on AI
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