Guest Post by QED: Not-so-Great, Settled Expectations
. . . not to be confused with a novel by Charles Dickens
Note to Readers — This is the third anonymous guest post by QED. If you’re interested in posting your own guest post (anonymous or attributed) here, don’t hesitate to reach out to me via LinkedIn or email. — Tom
Guest post by QED
“Ask no questions, and you’ll be told no lies.”
― Charles Dickens, Great Expectations
The first of the “settled expectations” mandamus petitions finally landed at the Federal Circuit. See In re Sandisk, Case 25-152. Unlike “Great Expectations,” the 164- year-old novel by Charles Dickens that continues to spawn movie and TV miniseries adaptations to this day, the settled expectations story will be remembered mostly for how bad it is. Sandisk is the fifth in the series of mandamus petitions challenging the USPTO’s supercharged, hyperactive use of discretionary denials in the last four months. This particular petition is unique in that, in addition to challenging the retroactive application of the new settled expectations rule, it makes a strong case that settled expectations is so far outside the statute that it cannot be applied even prospectively.
Settled expectations, of course, refers to the ancient doctrine that patents 6 or so years old are entitled to a free pass at the USPTO. This threshold is elusive; it can be shorter or longer depending on additional facts, but, aside from that, it’s convenient to call it the “6-year threshold” or “6-year rule.” Whatever it’s called, it comes out of nowhere. It is apparently based on the then-Acting Director’s idea of obtaining balance, level-setting, and bringing the pendulum “back to the middle” of something. Sandisk tells it differently:
The USPTO failed to justify its post-hoc imposition of “settled expectations.” It never even attempted “a reasoned explanation” for imposing that new rule retroactively.
Indeed, it failed to address any relevant consideration. It never acknowledged that the rule did not exist before the IPR petitions were filed or before the patents grew too “old”—let alone “displayed awareness” of a changed position. It mentioned no effect on Petitioners or “reliance interests.” It never articulated when “settled expectations” arise, leaving stakeholders to scour dozens of decisions to divine some pattern.
And the agency ignored a basic logical defect at the rule’s core. Patentees had no “settled expectation” that old patents were immune from challenge until the USPTO decreed it.
Sandisk Petition at 20 (citations omitted and cleaned up).
Attempts to justify the USPTO’s result-oriented use of discretion to drive the institution rate down to well under 50 percent are either disingenuous or naïve. For example, we’ve seen attempts to rationalize the 6-year settled expectations rule by analogizing to the 5-year limit to challenge trademarks or the six-year limitation on patent damages. But these rationales are flimsy, as should be obvious to anyone capable of putting their biases aside and thinking critically. Lawyers, for example. The reality seems to be that 6 is a good number for denying a sufficient number of those petitions that weren’t already being ensnared by the aggressive application of Fintiv. As Sandisk explains:
The USPTO has unwound Congress’s work and categorically excluded an entire body of patents from review—immunizing “old” patents less than a third of the way into their lifespan.
Sandisk Petition at 38. The only people who could possibly think they are the beneficiaries of “great expectations” are the patent monetizers. Take this recent article:
[T]he U.S. Patent & Trademark Office (USPTO) has charted a bold course—rewriting the rules and testing the bounds of its authority to effectively transform inter partes review (IPR) proceedings, once seen by some as a “death squad” for patent owners, in favor of patent owners.
* * *
[F]or the first time since the PTAB’s establishment, an IPR petition is more likely to be denied than it is to be granted. Since Director Stewart’s appointment, a solid majority of PTAB denials are discretionary (nearly 80%) as compared to denials on the merits.
Recognizing settled expectations for what it really is—an unexpected gift—the authors provide the following recommendation to plaintiffs:
Patent owners, and particularly those in the high-tech space, should consider how long the patents to assert have been in force and try to include older patents in any enforcement campaign. Where a potential patent for assertion is on the cusp of enjoying “settled expectations” (e.g., 4-5 years old), consider waiting another year or two before initiating an enforcement action, wherever possible. (emphasis added)
The authors no doubt believe this is timely, insightful advice and it is. If you are worried about your 4-5 year old patent’s quality, wait a year or two before suing. Settled expectations is so utterly unexpected and ultra vires that practitioners post articles on how to obtain them.
The USPTO’s goat rodeo* continues…
Consider that before March 26, 2025, when it was first announced by the “Interim Processes” memo, no one had ever heard of the settled expectations rule. On that date, the Acting Director announced that the parties should address, among other things, “settled expectations, such as the length of time the claims have been in force.” The first decision applying settled expectations was on June 6, 2025, where the Acting Director vacated institution and denied six petitions iRhythm Technologies v. Welch Allen, IPR2025-00363 et al., Paper 10 (Acting Director June 6, 2025).
Since iRhythm, about 140 petitions have been thrown out solely or in part due to settled expectations. Almost all of these were filed before the new rule was announced by memo. In total, over 300 petitions have been denied under the interim process based on Fintiv, settled expectations, and other new factors. As mandamus petitioners and amici have pointed out, the USPTO has accepted at least $23,750 per petition (more for PGRs and petitions challenging more than 20 claims), for a combined, unrecoverable fee capture of more than $7,000,000 from petitioners. There’s at least 10 times that in wasted costs. Yes, patent owners, their litigation funders and private equity investors celebrate, but consider that Congress’s intent to police patent quality when it matters most has been subverted and lengthy, government-granted monopolies cannot be challenged using Congress’s statutory scheme.
Moreover, these settled expectations and other retroactively applied “rules-by-website” have been enforced so chaotically that the USPTO has issued multiple FAQ versions, contradicted its own webinar statements (while admonishing petitioners for relying on them), and disregarded its own precedential decisions—all in service of an unprecedented disruption of Congress’s design:
The USPTO’s refusal to stay within statutory bounds and follow notice-and-comment procedures has produced turmoil; the agency unleashes a constantly shifting landscape of confusion and uncertainty in a process Congress designed to be controlled by statute and regulation. Anything the USPTO says today could be reversed via website post tomorrow (at the whim of a current or future Director). This makes informed decisions impossible for IPR petitioners, patent owners, and investors—with serious effects on patent transactions, licensing, and litigation.
Sandisk Petition at 38. Ironically, the chaos and subverting of Congress’s laws, as codified, is all ostensibly in service of Congress’s intent as understood by the Acting Director.
As of now, the Federal Circuit is sitting on three fully briefed petitions (SAP, Motorola, and Google) and two partially briefed petitions (HighLevel and Sandisk). More are inevitable until the court does something. Perhaps, the court was hoping that sanity would be restored before it was forced to make the USPTO do its job, but, along with the USPTO’s talent drain, the denials continue unabated—about 20 new denials per week.
…which ending to Not-So-Great, Settled Expectations?
What does the Federal Circuit do with the mess that it’s been handed? To be sure, the court has previously held the USPTO Director had broad discretion to deny petitions, but did it really expect this chaos and bald-faced subversion of Congressional intent? Its delay in addressing the first filed petitions suggests the court is looking for an appropriate and satisfying ending to all of these petitions.
In Great Expectations, the story’s protagonist is the beneficiary of great wealth and status from a mysterious benefactor. These “great expectations” all lead to great disappointment as none are fulfilled. In the end, even the wealth and status are lost. Charles Dickens famously struggled to find an appropriate ending and wound up replacing his initial sad ending with a hopeful one.
The sad ending here (setting aside the very sad but increasingly unlikely denial of mandamus) is for the CAFC to grant mandamus narrowly on the basis that all the rule changes, whatever their legality, could not be made retroactively. In this ending, the court tries to navigate its own precedent and dicta, but leaves unresolved, at least for now, whether the USPTO can continue to announce new rules by memo, evanescent FAQs, unreliable webinars, and new precedential decisions, as long as applied prospectively. After five years of Fintiv-driven uncertainty, and now six months of unconstrained chaos, the USPTO has demonstrated that it cannot be trusted with the power to make rules by decree.
Learning that his test audience found his first ending disappointing, Dickens rewrote the ending to be more hopeful. Despite loss of material wealth and status, the story’s protagonist has hope for the future.
The hopeful ending here is for the Federal Circuit to follow the advice of Sandisk:
The Court should direct the USPTO to reconsider institution solely under the statutory criteria, not the agency’s extra-statutory framework.
Sandisk Petition at 38. In other words, limit discretionary denials except where the statute or APA-compliant rules provide for it. Clarify that made up, ultra-vires rules that conflict with the statute are illegal and unconstitutional. This ending would not guarantee a return to normalcy—only accountable, responsible leadership could do that—but there would at least be reason to hope.
Great Expectations, Revised Ending