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Manufacturing Matters: The USPTO’s New Discretionary Institution Factors

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USPTO institution decisions are no longer just about prior art. Over the past year, the Director has steadily expanded discretionary institution analysis to account for broader policy considerations, and the latest change makes manufacturing activity and small business status relevant to whether an inter partes review (IPR) or post grant review (PGR) will be instituted at all. In short, where products are made and who is seeking review now matter at the institution stage.

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What the Director Will Now Consider at Institution

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On March 11, 2026, USPTO Director John Squires issued a <a href="https://www.uspto.gov/sites/default/files/documents/Additional_Discretionary_Institution_Considerations_US_Manufacturing_and_Small_Business_Use_of_AIA_Proceedings.pdf" target="_blank" rel="noreferrer noopener">memorandum</a> titled “Additional Discretionary Institution Considerations, U.S. Manufacturing and Small Business Use of AIA Proceedings.” The memorandum directs the Office, when deciding whether to institute IPRs and PGRs, to consider three non-merits factors:

Whether products accused of infringement are manufactured in the U.S. or tied to investments in U.S. manufacturing;

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Whether products made, sold, or licensed by the patent owner that compete with the accused products are manufactured in the U.S.; and

Whether the petitioner is a small business that has been sued for patent infringement.

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These considerations move institution analysis well beyond novelty and obviousness and squarely into questions about products, markets, and economic impact.

A Domestic Industry-Like Concept, Without the Label

For patent owners, the manufacturing focus will feel familiar. At a high level, it resembles the domestic industry requirement applied by the International Trade Commission (ITC), which requires a patentee to show a domestic industry relating to articles protected by the asserted patent, typically through significant U.S. investment in plant and equipment, labor, or exploitation of the patent through engineering or research and development.

The USPTO is not importing the ITC framework wholesale, and the memorandum does not create a formal domestic industry requirement for PTAB proceedings. But the resemblance is difficult to ignore. The Director is expressly interested in where relevant products are made and where investments occur, and that information may now influence whether a petition is instituted at all.

Read this way, the memorandum introduces a potentially patent owner friendly basis for discretionary denial. A patent owner that manufactures competing products in the U.S., or has made meaningful domestic investments tied to the asserted patent, may be better positioned to argue against institution, particularly where the accused products are manufactured abroad.

The memorandum also emphasizes the manufacturing footprint of the accused product itself, asking whether the product is made in the U.S. or tied to U.S. manufacturing investments. What the memorandum does not clearly say is how that fact will cut in practice.

Domestic manufacturing by an accused infringer could support institution on the theory that America Invents Act proceedings protect U.S. businesses from weak patents. Or it could simply serve as another data point in a broader policy balance that has yet to be fully articulated. For now, the Director appears to be signaling that this information matters, while reserving flexibility on how it will be weighed in close cases.

The third factor is more direct. The Director expressly invites petitioners who are small businesses sued for infringement to identify themselves, using Small Business Administration size standards and the USPTO’s small entity fee rules as reference points. That invitation strongly suggests that small business status may weigh in favor of institution when IPR or PGR is used as a defensive tool.

The larger point is conceptual. Post grant proceedings have traditionally focused almost exclusively on whether a claimed invention is new or nonobvious. This memorandum underscores that institution decisions are now also about the products patents protect, the products they allegedly cover, and the economic behavior the patent system is encouraging.

This memorandum fits squarely within a year-long pattern. Under Director Squires, discretionary denial is no longer peripheral; it is central. Parties on both sides should expect institution decisions to turn not only on prior art, but also increasingly on manufacturing footprints, business realities, and broader policy considerations. Manufacturing evidence now belongs in institution briefing.

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