In the arenas of technology and innovation, intellectual property—patents in particular—has always been a cornerstone of value creation and a shield against competition. For years, however, the strength of that shield was undermined by the Patent Trial and Appeal Board (PTAB) and its use of inter partes review (IPR), which created a period of uncertainty for patent holders. But the tide is turning. A significant shift in PTAB policy, marked by the rise of discretionary denials, is restoring faith in the U.S. patent system and making patents more valuable and strategically important than ever for investors and founders.
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The IPR process, introduced by the America Invents Act of 2011, was designed to be a more efficient way to challenge weak patents. In practice, it became a gauntlet that even the most innovative and well-drafted patents struggled to survive. This “patent death squad” reputation meant that investors often heavily discounted the value of a startup’s patent portfolio, viewing it as a fragile asset that could be easily invalidated. For founders, this created a strategic dilemma: Was the significant investment in securing patents worth the risk if they could be so readily challenged and overturned?
The turning point came with the PTAB’s increasing use of discretionary denials. Guided by the Fintiv factors, the board now regularly declines to institute IPR proceedings when a parallel patent infringement case is already proceeding in district court. This seemingly procedural adjustment has had profound market implications. By deferring to district court litigation, the PTAB is effectively preventing the “two-front war” that previously drained startups of capital and eroded patent certainty. The practice ensures that a patent’s validity will be decided in a single, more comprehensive legal forum, rather than being subjected to duplicative and often conflicting challenges.
This shift is a game-changer for the investment community. Venture capitalists and other investors can now look at a company’s patent portfolio with renewed confidence. A granted patent is no longer just a starting point for a lengthy and unpredictable administrative battle; it is a more durable asset. This increased certainty translates directly into higher valuations. Investors are more willing to fund companies with strong IP, knowing that those patents provide a more reliable competitive moat and a more secure foundation for market exclusivity. The risk of a patent being nullified through a low-cost administrative challenge has been significantly mitigated, making the entire proposition of investing in patent-heavy startups more attractive.
For founders, this new landscape makes the decision to invest in a robust patent strategy more straightforward and more critical. Patents are once again becoming the powerful strategic tools they were intended to be—not just for defensive purposes, but as offensive assets that can be used to secure market share, block competitors, and generate licensing revenue. Knowing that their patents are less likely to be summarily invalidated by the PTAB, founders can more confidently leverage their IP to attract funding, negotiate partnerships, and build long-term enterprise value.
In conclusion, the rise of discretionary denials at the PTAB is recalibrating the risk-reward equation for intellectual property. By reining in the scope of IPRs and reinforcing the primacy of district court litigation, this policy shift has made patents a more stable, predictable, and ultimately more valuable asset. For investors, this means greater security and higher potential returns. For founders, it means that investing in innovation and protecting it with strong patents is once again one of the most powerful strategies for building a successful and defensible business. The shield of patent protection, once perceived as brittle, is being reforged into something much stronger.
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