Follow The Current

Hello all,

July is supposed to be the quiet month. Instead, inside of three weeks we got a UK Supreme Court judgment reopening the question of who gets to price a patent pool, a European injunction that millions of Disney+ subscribers noticed on their own television sets, the abrupt exit of the most consequential USPTO official of the decade, and a data set showing that the entire validity-challenge industry quietly moved house while everyone was watching the front door.

I went looking for the thread connecting them and found it faster than I expected. Not one story in this issue is about anybody changing their behavior. Every single one is about somebody changing their address.

We start in Alexandria, where Coke Morgan Stewart cleaned out her desk on Monday after eighteen months spent rebuilding the PTAB in her own image — and where the architecture she built will now be maintained by people who did not draft it. Then to the numbers, which are extraordinary: IPR petitions at an all-time low, ex parte reexams at an all-time high, and a validity-challenge industry that did not shrink so much as emigrate. From there to Capitol Hill, where PERA reached full committee at last and where Senator Tillis, counting the days until January, has started handing the drafting pen to his opponents. Then across the Atlantic to London, where the Supreme Court just handed Tesla the keys to a rate-setting mechanism that patent owners spent a decade building for themselves — a lesson in careful-what-you-wish-for that deserves to be framed. And we finish in Düsseldorf, with the only patent story this month that your neighbors could see from the couch.

As I have often written, this system does not reform. It reroutes. The only question worth asking each quarter is where the water went.

As usual, while I focus on the macro picture in this newsletter, I want to remind everyone that we track everything happening in this world on a daily basis on LinkedIn, where the breaking news lives.

 Happy reading!

 Louis

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Settled Expectations, Unsettled Office

Coke Morgan Stewart emailed USPTO executive staff on Monday to say she was leaving for the private sector within days. Eighteen months ago, almost nobody outside the Madison Building could have picked her out of a lineup. She departs as arguably the most consequential USPTO official of the decade — and she never once held the top job on a permanent basis.

Recall the sequence. She took over as Acting Director on January 20, 2025, having already spent a decade inside the agency (Associate Solicitor, Counsel to the Director, Acting Chief of Staff) before a detour through Regent Law, the Virginia AG’s office, and O’Melveny. That institutional muscle memory mattered enormously. “We reached terminal velocity early,” she told IPWatchdog — and for once the aviation metaphor was earned.

On February 28, 2025, she rescinded the Vidal memo and brought NHK-Fintiv back from the dead. On March 26, she bifurcated institution, pulling discretionary questions onto the Director’s desk before any panel got near the merits. In June she conjured “settled expectations” out of whole cloth — the notion that a patent left unchallenged long enough acquires something close to squatter’s rights against an IPR. By July she was restricting the prior art that could supply claim limitations. Petitioners’ counsel spent the summer of 2025 refreshing the Director Review docket the way the rest of us refresh election returns.

The numbers are the tell. Average institution rates fell from roughly 65% in October 2024 to about 37% by February 2026 — a 43% collapse, per the USPTO’s own April 8 “USPTO Hour.” Roughly 600 discretionary decisions have issued since March 2025. Patently-O clocked stretches where the rate touched zero. Agree with the policy or not, that is the fastest reversal of an administrative regime any of us have witnessed in this business.

When Squires was confirmed in September, the obvious guess was that she would be quietly sidelined. Instead, he formally delegated the program back to her on September 30, then took institution decisions personally in October. She spent her last ten months as the intellectual engine of a machine somebody else was steering.

So what actually changes? Less than the hand-wringing suggests. The architecture is Squires’ now, signed in his own hand, and he has shown zero appetite to unwind it — his July 22 proposal to unmask the real parties in interest behind ex parte reexams is the same war, just a different trench. The pro-patentee tilt is structural, not personal.

What we lose is the advocacy — and the timing is unkind. The courts have already declined to interfere. In Apple v. Squires (February 13, precedential), Judge Taranto held that §314(d) bars review of non-institution decisions and that the NHK-Fintiv factors are a “general statement of policy” exempt from notice-and-comment rulemaking. The Federal Circuit has since turned away at least a dozen mandamus petitions on the theme — Motorola, SAP, Google, Samsung, SanDisk, Intel, Lenovo, and In re Kahoot! in February. The APA challenge never lost on the merits; it never got a hearing.

So the fight moved upstairs. Two cert petitions are now pending — Google v. VirtaMove (No. 25-1230) and Kahoot!’s — both asking whether an agency may invent a six-year statute of repose that Congress declined to write. The Court has called for a government response, due August 12, with both likely headed to the long conference in late September. Kahoot! is the cleaner vehicle: its patent was under six years old when the petition was filed, and the Office measured age from its own decision date rather than the filing date. Stewart walks out of the building three weeks before somebody else has to defend her arithmetic in writing.

Two safe predictions. First, no successor has been named, and the pendency numbers will be someone else’s headache by Labor Day. Second, Stewart resurfaces on the patent owner side of the table within a quarter, at a billing rate that makes her government salary look like a rounding error.

Nobody stays at terminal velocity forever.

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The Water Finds Another Crack

Unified Patents dropped its first-half report on July 9, and buried in it is the structural story of 2026. IPR petitions fell to 57 in Q2 — an all-time quarterly low, down 83.8% year over year. First-half PTAB petitions totaled 201, against 732 a year ago.

Before anyone in my camp uncorks anything, read the other column. Ex parte reexamination requests hit 336 in Q2, breaking the record of 330 set back in 2012. First-half requests reached 594, up 162.8%. Reexams now account for 74.7% of all post-grant filings, up from 23.6% twelve months ago.

The demand for invalidation did not evaporate. It relocated.

I have argued in this space for years that the IPR experiment should be put out of its misery, and I stand by every word. But let us be honest about where the traffic went. Ex parte reexam has no standing requirement, no real-party-in-interest disclosure, no estoppel worth the name, and no three-judge panel — just one examiner, and a requester who can stay anonymous indefinitely. As a patent owner, you may find you preferred the devil you knew.

The Office has noticed. Its July 22 proposed rule would require reexam requesters to name their real parties in interest, explicitly citing the flood of requests aimed at patents already through IPR. Comments close August 21.

The other number worth marking: district court filings fell 18.4% to 1,921, and NPE share slipped to 48.6% in Q2 — the first quarter below half since Q1 2018.

Fewer suits, fewer IPRs, record reexams. That is not a system calming down. That is a system rerouting around its own plumbing, and the water always finds the cheapest crack.

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Pera Gets a Bigger Room

PERA has finally graduated from the IP Subcommittee to the full Senate Judiciary Committee. On July 14, the committee held the bill’s first full-committee hearing — “From Genes to Machines: the Patent Eligibility Debate” — nine months after the subcommittee took its turn last October, and roughly four years into the eligibility-reform project generally. In this Congress, that qualifies as brisk.

The witness list was scrupulously balanced, which is Washington for “nobody has the votes yet.” Andrei Iancu and Sue Peschin of the Alliance for Aging Research argued for the bill; Dr. Debra Leonard of the Association for Molecular Pathology and the CCIA’s J. John Lee argued against. Iancu made the case he has been making since he ran the Office. Leonard made hers rather more memorably: “I became a physician to practice medicine, not to practice law.”

The entire fight now sits on one clause. PERA excludes an “unmodified human gene” from eligibility, then restores eligibility for genes isolated, purified, enriched, or otherwise altered by human activity. Critics say the exception swallows the rule and quietly reopens Myriad. Supporters say it codifies it. Both cannot be right, and Senate drafting has resolved subtler ambiguities than this one.

Here is the news. Senator Tillis blinked — on purpose. He told the room that “several innovations will not come to be in this jurisdiction if we don’t recognize some of the modern challenges that we have,” then turned to Leonard and asked her to send him language that would preserve Myriad in her view. Handing your loudest opponent the pen is not a concession born of weakness; it is a man counting days. Tillis announced in June 2025 that he would not seek reelection, and his term ends January 3, 2027. He would rather pass a slightly smaller PERA than bequeath a perfect one to a successor who has never heard of Alice.

One clarification worth making, since the shorthand has been sloppy: the accommodation is aimed at clinical labs, pathologists, and patient groups — not pharma. Big biotech has been in PERA’s corner from the start.

Chairman Grassley’s read was less encouraging: many members are “still studying the bill,” and no markup has been scheduled. In an election year, that sentence does a lot of work.

Net/net: real progress, genuinely, and still perhaps a 30% shot this Congress. Watch for revised gene language in September. If a markup is not noticed by Halloween, PERA becomes someone else’s bill — and its author will be watching from the private sector, like everyone else.

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The Pool is Now Open

Earlier this week the UK Supreme Court handed down Tesla, Inc. v. InterDigital Patent Holdings, Inc. and Avanci LLC, [2026] UKSC 27 — and unanimously, which makes it worse for the SEP side. Lords Hamblen and Kitchin wrote; Sales, Briggs, and Burrows signed on without a murmur.

The holding is short enough to fit on a napkin: a SEP owner’s FRAND commitment to ETSI does not evaporate because that owner decides to license through a platform. Avanci gave no undertaking to ETSI and owns no patents, but it acts as agent for licensors who did and do. Tesla therefore has a serious issue to be tried, and the English courts have jurisdiction to hear it. The case goes back to the High Court, where a judge will be asked whether Avanci’s flat, non-negotiable $32 per vehicle for roughly 11,900 UK SEPs from some 67 licensors is FRAND. Tesla’s revocation claim against three InterDigital patents tags along.

Spare a thought for Lord Justice Arnold, who wrote exactly this in dissent in March 2025 and was outvoted by Phillips and Whipple. Vindication arrived sixteen months late, which in FRAND terms is practically same-day delivery.

Now the part nobody on the patent owner side wants to say out loud. This decision is the direct descendant of Unwired Planet. We spent five years applauding English judges for seizing the power to set global rates, because that power came bundled with an injunction and pointed at implementers. The machinery was never ideologically committed. This week the same jurisdictional reach got handed to the world’s most enthusiastic non-payer, and the applause has gone rather quiet. Be careful what you wish for — it may come back with a Delaware plaintiff attached.

Let me be blunt about what is actually at stake. The entire proposition of a pool is administrative peace: one number, one signature, no eighteen-month negotiation with 67 counterparties. If an English court can reprice that number, the pool discount stops being a bargain and starts being an opening offer. Avanci’s own value to its licensors was always that nobody had to litigate. That premise took a hit on Monday.

Two cautions, because this readership will raise them anyway. First, this is a jurisdiction ruling, not a rate ruling — Tesla has won the right to be heard, not the argument. Trial is years away, and $32 per car is not obviously extortionate for 5G. Second, the workaround is not exotic: as ip fray has been arguing for months, a pool can likely insulate itself by making genuine bilateral licenses available and never invoking the pool offer in a FRAND defense. Expect Avanci’s counsel to be redrafting terms within the month.

My predictions. Pool architecture gets restructured across the industry within twelve months, not just at Avanci. SEP holders accelerate their migration to the UPC and Munich, where injunctions are real and the judges are not auditioning to run global licensing markets. And implementers now have a London filing template that will be photocopied within the quarter.

Congratulations, everyone. We have made pooled licensing — the one part of the SEP world that was functioning — riskier than bilateral. Nothing less.

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Sorry About Your Picture Quality

On July 24, the UPC’s Düsseldorf local division handed InterDigital an injunction against Disney over EP 2 449 782, an HEVC video encoding patent. It is the second — Mannheim granted the first in June on EP 2 465 265. Disney must stop offering the infringing bitstreams, recall them, and account for everything back to December 2017. InterDigital posted €8 million in security and enforced.

Disney complied. Dolby Vision and 3D content vanished from Disney+ across eleven countries — Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal, Romania, and Sweden. The company then issued a public apology to its own subscribers: “We are disappointed that we have had to do this, and we share our customers’ frustration.”

Read that sentence again, because it is the most consequential thing that happened in patents this month. A multinational just told millions of paying customers that their picture quality got worse because it lost a patent case. Not a press release buried in an 8-K — a notice in the app.

This is what an injunction is for. It is the thing that makes a licensing conversation a negotiation rather than a collections call. American patent owners have not had access to it in any meaningful way since eBay in 2006, which is precisely why RESTORE exists and precisely why nobody in Washington is in a hurry.

Two years ago the standard objection to the UPC was that it was untested. Twenty-six months in, it has produced a pan-European recall order that consumers can see on their television sets. Meanwhile a US district court will award you an ongoing royalty and wish you well.

Europe built the leverage. We built a really good calculator…