Patent Issues in U.S. Law: Reform, USPTO Policy, and AI

Patent issues in U.S. law right now cluster on four fronts: bipartisan reform bills in Congress that would rewrite what can be patented and how patents are challenged, a sharp USPTO turn against post-grant validity reviews, unsettled treatment of artificial intelligence in both inventorship and eligibility, and a run of court decisions reshaping generic drug liability, design patents, and software claims. Taken together, the changes lean toward strengthening patent holders and raising the cost of challenging or designing around issued patents.

Reform Bills Moving Through Congress

Three bipartisan bills reintroduced in May 2025 form the core of the current legislative push. Each targets a different pressure point, and each would shift leverage toward patent owners.

Patent Eligibility Restoration Act

The Patent Eligibility Restoration Act (S. 1546 / H.R. 3152) would rewrite Section 101 of the Patent Act, the provision that governs subject-matter eligibility. Under current law, Supreme Court decisions in Alice Corp. v. CLS Bank (2014) and Mayo Collaborative Services v. Prometheus Laboratories (2012) created judicial exceptions that have made it hard to patent software, AI methods, and certain diagnostic tests. PERA would replace those judicial exceptions with five defined statutory exclusions, including mathematical formulas not part of a technical invention, purely mental processes, and unmodified natural materials. Senators Thom Tillis and Chris Coons lead the bill in the Senate, with Representatives Kevin Kiley and Scott Peters carrying the House version.¹

PREVAIL Act

The Promoting and Respecting Economically Vital American Innovation Leadership Act (S. 1553 / H.R. 3160) targets the Patent Trial and Appeal Board, the tribunal where issued patents can be challenged. PREVAIL would require anyone filing a PTAB challenge to show a “real interest” in the patent, restrict multiple challenges to the same patent, and force challengers to choose between the PTAB and district court rather than pursuing both. It would also raise the PTAB’s burden of proof to “clear and convincing evidence,” the standard used in federal court.² The bill previously passed out of the Senate Judiciary Committee in an earlier Congress but has not advanced further since the May 2025 reintroduction.

RESTORE Patent Rights Act

The RESTORE Act (S. 708 / H.R. 1574) would reverse eBay v. MercExchange (2006), which made permanent injunctions discretionary in patent cases. Under RESTORE, a patent holder who wins an infringement case would get a rebuttable presumption in favor of a permanent injunction.³ As of mid-2026, the bill remains in the Senate Judiciary Committee with no further action.

A fourth bill, the Leadership in Critical and Emerging Technologies Act (S. 1833 / H.R. 3539), would set up a USPTO pilot program to speed examination of applications in AI, semiconductor design tools, and quantum information science, aimed at U.S. competitiveness with China.⁴

The USPTO Is Making Patents Harder to Challenge

Even without new legislation, the USPTO has been reshaping patent law by administrative action. Under Director John Squires, confirmed in September 2025, and Acting Director Coke Morgan Stewart earlier that year, the agency has made it substantially harder to challenge issued patents through inter partes review, the post-grant proceeding created by the America Invents Act in 2012.

The institution rate for IPRs fell from roughly 68% in 2024 to below 40% in 2025. By December 2025, Director Squires had personally instituted only 13 reviews while denying 113. A March 2025 memo centralized discretionary denial decisions under the Director’s personal authority, and new factors include a “settled expectations” presumption against challenging patents that have been in force six or more years. The number of Administrative Patent Judges dropped from about 230 to 180, with many reassigned to ex parte proceedings.⁵

In October 2025, the USPTO proposed formal rules that go further. Petitioners would have to stipulate they will not pursue any invalidity challenges in other forums if the PTAB institutes review, effectively forfeiting anticipation and obviousness defenses in district court. The proposal would also categorically bar IPR against claims that have already survived a validity challenge anywhere, regardless of whether new prior art exists, and would replace the discretionary Fintiv framework with a bright-line rule barring IPR if a district court trial is expected to conclude first.⁶

Critics warn the changes create a “one-and-done” regime in which patents that survive an early challenge become effectively immune to further review, giving significant leverage to patent assertion entities that could strategically pick weaker defendants to “validate” a patent.⁶ Former USPTO Director Kathi Vidal filed an amicus brief arguing that the “settled expectations” doctrine “protects the very patents most likely to be invalid.”⁷ Multiple mandamus petitions challenging the Director’s approach at the Federal Circuit have been denied, including cases involving Motorola Solutions, Intel, and Kahoot.⁸

Prosecution costs are also up. January 2025 brought a 7.5% across-the-board patent fee increase, and a new Continuing Application Fee took effect on January 19, 2025, adding surcharges of $2,700 on continuation applications filed six to nine years after the earliest benefit date and $4,000 for those filed nine or more years later. Small entities pay $1,080 and $1,600, respectively. If an applicant files a continuation without paying, the USPTO drops the priority claim without an explicit notification, and the applicant must file a corrected Application Data Sheet and pay within four months to reinstate it.⁹

AI Inventorship and AI Patentability

Artificial intelligence raises two separate patent questions. The first is whether an AI can be named as an inventor. The answer is settled: it cannot. The Federal Circuit held in Thaler v. Vidal (2022) that the Patent Act’s use of “individual” refers to natural persons, and the Supreme Court declined to hear the appeal.¹⁰ Stephen Thaler’s parallel attempts to list an AI system called DABUS as an inventor also failed in the United Kingdom, Australia, and New Zealand.¹¹

In November 2025, the USPTO rescinded its February 2024 inventorship framework. The 2024 guidance had treated AI as a potential co-inventor equivalent, allowing patents if a human made a “significant contribution” to an AI-assisted invention. The revised guidance rejects that framing and classifies AI strictly as a tool, analogous to laboratory equipment. Inventorship now turns on the traditional standard: a human must conceive the invention, regardless of the AI’s role. The revision was issued pursuant to Executive Order 14179, signed in January 2025.¹²

The second question — whether AI-related inventions clear the eligibility bar — has become more permissive. In September 2025, Director Squires issued a precedential decision in Ex parte Desjardins that reversed a PTAB rejection and held that claims directed to an AI training machine were patent-eligible. The decision found the PTAB had evaluated the machine learning claims at “too high a level of generality” and that the specification’s disclosure of specific technological improvements, including reduced computer storage and multi-task efficiency gains, amounted to a practical application under Alice.¹³ The decision came through the rarely used Appeals Review Panel and has been incorporated into the Manual of Patent Examining Procedure.¹⁴

Legal commentators have described the current environment, shaped by Desjardins and an August 2025 USPTO memo reaffirming permissive eligibility guidance, as the most favorable window for AI patent applications in at least fifteen years. One important caveat: the Federal Circuit has expressly declined to adopt USPTO eligibility guidance and continues to apply the two-step Alice framework in litigation. A patent that sails through examination can still face a hostile reception in court.¹⁵

Recent Court Decisions

Hikma v. Amarin (Supreme Court, 2026)

On June 4, 2026, the Supreme Court issued a unanimous decision in Hikma Pharmaceuticals USA Inc. v. Amarin Pharma, Inc., resolving a closely watched case on whether generic drug makers can be liable for induced infringement through “skinny label” marketing. Justice Jackson, writing for the Court, held that Amarin failed to plausibly allege that Hikma took “active steps” to encourage infringement. The Court found that Hikma’s labeling, patient leaflets, and statements calling its product a “generic equivalent” reflected standard industry practice and FDA labeling compliance, not affirmative encouragement of infringing use.¹⁶ The ruling clarifies that ordinary distribution activity and truthful descriptions of therapeutic equivalence do not, by themselves, amount to induced infringement.¹⁷

USAA v. PNC Bank (Federal Circuit, 2025)

In a pair of June 2025 decisions, the Federal Circuit invalidated several USAA patents on mobile remote check deposit technology, wiping out a $218.5 million damages award against PNC Bank. Applying the Alice framework, the court concluded that the patents were directed to the abstract idea of “depositing a check using a handheld mobile device” and that the claimed steps — capturing an image, transmitting it wirelessly, running optical character recognition, and updating balances — were routine processes on general-purpose hardware.¹⁸ The decisions signal that digitizing established banking activity on a mobile platform, without a concrete technological improvement, is not patentable subject matter.¹⁹

LKQ v. GM (Federal Circuit En Banc, 2024)

In May 2024, the Federal Circuit overruled the long-standing Rosen-Durling test for design patent obviousness. The old test required a challenger to find a primary reference that was “basically the same” as the claimed design before considering secondary references. The court replaced it with the flexible Graham factor analysis used for utility patents, aligning design patent law with the Supreme Court’s KSR decision.²⁰ Design patents will be easier to challenge as obvious now that challengers no longer have to clear the near-identical-prior-design threshold. Design patent filings grew from under 20,000 in 2001 to over 50,000 in 2022, and historically only about 4% of applications drew obviousness rejections, so the shift is expected to raise invalidation rates in both prosecution and litigation.²¹

Patent Assertion Entities and Litigation Trends

Patent assertion entities, sometimes called patent trolls, hold patents not to make products but to collect licensing fees or pursue infringement suits. According to Stanford’s Non-Practicing Entity Litigation Database, PAEs account for nearly 80% of software patent litigation, though practicing entities have a higher win rate in court.²²

PAE litigation rose 15 to 20% between the first two quarters of 2025 and the same period in 2024. Commentators attribute the surge to the collapse in PTAB institution rates: as administrative challenges get harder, defendants face costlier district court fights where PAEs hold more leverage.²³ If the RESTORE Act passes and permanent injunctions become the default remedy, settlement pressure will intensify further.

Defendants have leaned on procedural tools in response: challenging PAEs for failure to comply with patent marking under 35 U.S.C. § 287 (which can bar damages), moving early to dismiss on eligibility grounds, and building the record for fee-shifting motions under 35 U.S.C. § 285.²³

Pharmaceutical Patent Strategies

The pharmaceutical sector produces some of the most contentious patent fights. Brand-name drugmakers have become sophisticated at extending effective monopoly periods well beyond the 20-year nominal patent term.

“Patent thickets” involve filing dozens or hundreds of patents around a single drug. The top 12 best-selling drugs have an average of 143 patents filed and 69 granted, with 56% of filings occurring after FDA approval. Novo Nordisk’s semaglutide products (Ozempic, Wegovy, Rybelsus) have 320 patent applications and 154 approved patents, an estimated 49 years of monopoly protection. “Evergreening” — patenting minor changes like dosage or formulation tweaks — enabled AbbVie’s Humira to maintain a 20-year monopoly generating $200 billion in revenue. “Product hopping,” in which a manufacturer discontinues a brand-name drug just before generic entry to move patients onto a new patent-protected version, occurs for roughly half of all small-molecule drugs.²⁴

Reverse-payment or “pay-for-delay” settlements, in which brand-name manufacturers pay generic competitors to stay off the market, have been an FTC target for years. The FTC estimates the practice costs consumers roughly $3.5 billion annually.²⁵ The FTC has also challenged improper listings in the FDA’s Orange Book, the database generic manufacturers must navigate to bring competing products to market, issuing challenges to more than 200 listings in 2025 alone. Bipartisan bills in the 119th Congress would limit the number of patents that can be used in litigation, require manufacturers to select a single patent for claims, and improve coordination between the FDA and USPTO.²⁴

Standard-Essential Patents and FRAND Disputes

Standard-essential patents cover technologies such as 5G, Wi-Fi, and video codecs that industry standards require everyone to use. Patent holders typically commit to license them on “fair, reasonable, and non-discriminatory” (FRAND) terms, but defining FRAND in practice has become one of the most contested areas of global patent litigation.

SEP litigation filings in the United States nearly doubled from 118 in 2014 to 223 in 2024, and PAEs now account for over 40% of SEP disputes.²⁶ In April 2026, the USPTO and Department of Justice issued a joint statement supporting the availability of injunctive relief in SEP cases, and the USPTO launched a dedicated SEP Working Group in late 2025.²⁷

One of the most prominent global SEP fights is Optis Cellular Technology v. Apple. The UK Court of Appeal set a FRAND rate of $0.15 per device for Optis’s 4G portfolio, resulting in a $502 million lump-sum order against Apple. Apple has appealed to the UK Supreme Court, with a hearing scheduled for late June 2026. The case raises fundamental questions about whether UK courts should set global royalty rates and how parallel proceedings elsewhere should factor in. Acer, Intel, Qualcomm, and the Fair Standards Alliance have intervened.²⁸

Courts across jurisdictions are increasingly asserting authority to set worldwide FRAND terms. German courts have reinforced a “security-centric” framework that penalizes implementers classified as unwilling licensees, and a 2025 CJEU ruling expanded the jurisdictional reach of national courts over European patents. Europe’s Unified Patent Court, now operational, has become a major venue: in 2025 it issued the first anti-interim-licence injunctions in InterDigital v. Amazon, imposed a penalty of up to €50 million on Amazon, and granted preliminary injunctions covering more than 20 countries in pharmaceutical cases.²⁹

Claim Construction and Patent Quality

A less visible but persistent issue runs underneath every patent dispute: interpreting the claim language that defines what a patent actually covers. Under 35 U.S.C. § 112(b), claims must “particularly point out and distinctly claim” the invention. In practice, that language is often ambiguous enough that reasonable judges disagree about its meaning, creating uncertainty for patent holders and for anyone trying to design around an existing patent.³⁰

During examination, the USPTO applies the “broadest reasonable interpretation” of claim terms to push applicants toward clearer language before a patent issues, using a lower ambiguity threshold than courts apply to issued patents on the theory that unclear language is better fixed during prosecution than in litigation.³⁰ Scholars have argued that much of the uncertainty stems not from genuinely vague drafting but from deeper policy disagreements among judges about whether to read patents literally or to stretch them to match the inventor’s apparent purpose, a divide no amount of better drafting can close on its own.³¹

1
U.S. Senate. Tillis, Coons, Kiley, and Peters Reintroduce Landmark Legislation to Restore American Innovation
2
U.S. Senate. Senators Coons, Tillis, Colleagues Introduce Bipartisan Bicameral Bill to Foster American Innovation
3
Congress.gov. S.708 – RESTORE Patent Rights Act of 2025
4
Congress.gov. S.1546 – Patent Eligibility Restoration Act of 2025
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IPWatchdog. Seismic Shift at USPTO: What Happened in 2025
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Federal News Network. USPTO Proposes Dramatic Restrictions on Patent Challenges Through Inter Partes Review
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Patently-O. USPTO Proposes Restrictions on Institution
8
Morgan Lewis. From Stewart to Squires: The PTAB’s First Year Reset in IPRs and PGRs
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USPTO. Quick Reference Guide to the Continuing Application Fee
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Congress.gov. Congressional Research Service – AI and Patent Law
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Federal Register. Inventorship Guidance for AI-Assisted Inventions
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USPTO. Revised Inventorship Guidance for AI-Assisted Inventions
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USPTO. PTAB Designates Precedential Appeals Review Panel Decision
14
Fish & Richardson. USPTO Adds Desjardins to MPEP Subject Matter Eligibility Guidance
15
UC Berkeley Center for Law and Technology. Analysis of Ex parte Desjardins
16
Supreme Court of the United States. Hikma Pharmaceuticals USA Inc. v. Amarin Pharma, Inc.
17
Proskauer Rose LLP. Supreme Court Reverses Federal Circuit in Hikma
18
U.S. Court of Appeals for the Federal Circuit. USAA v. PNC Bank, Nos. 2023-1639 et al.
19
U.S. Court of Appeals for the Federal Circuit. USAA v. PNC Bank, Nos. 2023-1778 et al.
20
U.S. Court of Appeals for the Federal Circuit. LKQ Corp. v. GM Global Technology Operations LLC, No. 2021-2348
21
Dentons. In LKQ Corp. v. GM
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Stanford Law School. Stanford NPE Litigation Database
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Maynard Nexsen. Patent Trolls: Seven Steps to Stop Them
24
The Commonwealth Fund. How Drugmakers Use the Patent Process to Keep Prices High
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National Library of Medicine. Pharmaceutical Patent Strategies and Competition
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LexisNexis IP. U.S. SEP Litigation
27
Fish & Richardson. Introduction to SEP and FRAND Issues
28
Supreme Court of the United Kingdom. Optis Cellular Technology LLC v. Apple Retail UK Limited, UKSC/2025/0144
29
JUVE Patent. Top 10 Patent Cases of the Year 2025
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USPTO. MPEP Section 2173 – Claims Must Particularly Point Out and Distinctly Claim the Invention
31
Yale Law Journal. The Interpretation-Construction Distinction in Patent Law