A §101 Greek Tragedy in Three Acts

Hello all,

For those of us who have spent the better part of the last decade waiting for someone — anyone — to clean up the §101 mess that the Supreme Court created in Alice twelve years ago, the last six months felt like a Sorkin script. New characters. Real plot. Hope, even. Then last Monday, the Supreme Court — for the 30th-odd time since Alice — declined to do its job. The script revealed itself for what it always was: a Greek tragedy.

What just happened (and almost happened) matters enormously for anyone who owns, finances, brokers, or asserts patents. The short version: one of the two great sources of patent validity uncertainty in this country has been brought under control for the first time in over a decade. The other one — runaway §101 jurisprudence from the Federal Circuit, with the Supreme Court’s tacit blessing — was supposed to be the second shoe to drop. It didn’t. And the only legislative path left runs through a Congress whose two most important players just announced they’re walking out the door come November.

A similar multipronged battle is brewing on the injunctive relief side in the US with the legislative and executive branch of the US government trying to undo the eBay decision. More on this below.

Finally, I comment on the surprising announcement earlier this week that Fortress Capital was acquiring IP Value and its portfolio of some 20,000 patents and what it means for the industry.

As usual, while I focus on the macro picture here, we track everything happening in this space. For a more frequent news fix, you can follow me on LinkedIn, where I post almost daily on noteworthy developments. Links to recent posts are available here.

 Happy reading!

 Louis

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Act I: The First Shoe Drops (Squires Tames the PTAB)

Let’s start with the good news, because there’s not much of it coming and I’d hate to spoil the mood too early.

For more than a decade, patent owners lived under a two-front war on their assets. On one front, the Federal Circuit applied an ever-expanding “abstract idea” exception under §101 that swallowed entire technology categories whole — by some counts, software and business-method patents faced invalidation rates exceeding 60% in Federal Circuit appeals post-Alice. On the other, the PTAB instituted IPRs at rates above 65% and killed roughly 80% of the claims it reviewed at final written decision, giving infringers a cheap, fast, low-evidence way to gut any patent they didn’t feel like paying for. The PTAB was correctly nicknamed the “patent death squad” by then-Chief Judge Rader. It was an honorific that stuck because it was accurate.

Then John Squires arrived.

Confirmed September 18, 2025 by a razor-thin 51-47 Senate vote, the new USPTO Director did something his predecessors had been unwilling or unable to do: he picked up the dial labeled “discretionary denial” and turned it up to eleven. He announced he would personally decide every IPR institution — then proceeded to deny petitions at a rate approaching zero. Of his first 34 institution decisions, 34 were denials. Patently-O called it “the Era of No.” The patent bar called it many other things, most of them unprintable in a newsletter that gets forwarded to clients.

The market noticed. PTAB petition filings dropped 64.2% year-over-year in Q1 2026 — down to 131 petitions, a historic low. By February 2026, the overall institution rate had collapsed from roughly 65% to around 37%, a 43% reduction. The IPR system, while not technically dead, was demoted from “primary defense tool” to “exceptional remedy you might get if you ask very nicely and check several new discretionary boxes.” (One of those new boxes, courtesy of Squires’s March 2026 memo, asks whether you manufacture in the United States. Welcome to industrial policy via institution decision.)

Predictably, defendants pivoted. Ex parte re-examination filings surged as petitioners sought an alternative track to challenge patents without triggering Squires’s discretionary denial framework. That surge was short-lived: Squires recently moved to impose similar gatekeeping standards on ex parte re-exams, signaling that the USPTO’s new posture is systemic, not limited to IPRs. The “kill the patent first, pay royalties never” playbook is getting progressively harder to execute.

Some IPR institutions have resumed — the May 14 Magnolia Medical v. Kurin decision was the latest precedential framework — but the overall direction is unmistakable. After thirteen years of being the place patents went to die, the PTAB is now, for the first time, a forum where a patent owner has a genuine fighting chance. This was the first shoe. It dropped with a satisfying thud.

Act II: The Second Shoe That Wasn’t

(USAA, Squire’s Quiet §101 Revolution, and the Supreme Court’s Latest Cop-Out)

The other front — the §101 front — was supposed to be next. And for a brief moment, it actually looked like it might be.

Quietly, in parallel to his IPR work, Squires was doing something equally consequential on the eligibility side. On September 26, 2025, sitting on the Appeals Review Panel, he sua sponte vacated a PTAB §101 rejection of a Google/DeepMind ML patent in Ex parte Desjardins, calling the rejection “troubling.” The decision was designated precedential on November 4 — only the second precedential PTAB §101 decision in the agency’s history. (The first was Ex parte Mewherter in 2013. Yes, it has been that long.) A USPTO memo followed on December 5, announcing MPEP revisions.

The downstream effect was immediate. Dennis Crouch at Patently-O confirmed what the prosecution bar was already whispering: the §101 reversal rate in ex parte appeals roughly doubled from a baseline of 8-12% in early 2025 to a new equilibrium around 20%, with individual judges who had reversed §101 rejections in 0-4% of cases pre-Squires now reversing them in 60-80% of cases. The Director hadn’t issued a guidance memo. He hadn’t needed to.

The Federal Circuit Said: Not Our Problem

The trouble is that the USPTO’s house is not where most of the action happens. While Squires was loosening the eligibility screws at the agency, the Federal Circuit was tightening them in court. Recentive Analytics v. Fox Corp. (April 2025, precedential) — the court’s first ML eligibility decision — invalidated four patents at the pleading stage, holding that applying established ML methods to a new data environment is categorically ineligible. Then, in rapid succession: U.S. Patent No. 7,679,637 LLC v. Google (Fed. Cir. Jan. 2026) invalidating a web-conferencing patent at the pleading stage; GoTV Streaming v. Netflix (Feb. 9, 2026), where Judge Taranto used §101 to overturn a jury verdict (yes, a jury verdict); and Innovaport v. Target (Feb. 6, 2026), wiping out all 55 asserted claims across six patents.

Holland & Knight gave this divergence a name: “A Deliberate Split Between Examination and Enforcement.” The USPTO is treating §101 as a coarse threshold filter — as Congress intended. The Federal Circuit is using it as a substantive validity weapon, before discovery, without expert testimony, sometimes after a jury verdict. For patent owners, this is genuinely perverse. A patent that survives prosecution under Squires’s new framework may face heightened §101 risk in litigation, because the gap between issuance standards and enforcement standards has never been wider. (One imagines the defendants’ bar reading the Desjardins memo and immediately drafting more aggressive motions to dismiss for the patents flowing out the other side.)

USAA Was the Best Vehicle in a Decade. Cert Denied.

Enter USAA. Not the silly Gronk commercial, but the remote check-deposit cases that the Federal Circuit invalidated in June 2025 — wiping out jury verdicts totaling $223 million — gave the patent bar what looked like the perfect Supreme Court vehicle. The question presented was clean. Goodwin Procter’s William Jay (a serious Supreme Court advocate) filed the petition January 14, 2026. The American Intellectual Property Law Association filed an amicus in support. When PNC waived response and the Court demanded one anyway on January 29, that was the signal: for the first time in 30-something §101 cert denials, at least one justice was paying attention. Could this finally be the time SCOTUS cleans its mess?

On May 18, the judges decided that cleaning was definitely beneath them and denied cert. Justice Alito took no part. A commenter on an IPWatchdog post summarizing the decision put it bluntly: “USAA’s petition was well done. The Federal Circuit’s §101 jurisprudence is totally off the rails and SCOTUS will do nothing to fix it.”

Thirty-something cert petitions. Thirty-something denials. At some point this stops being an oversight and becomes a policy. The Supreme Court created this mess in Alice by inventing a test it never bothered to define, handed the Federal Circuit twelve years of free rein to figure out what “abstract idea” meant, and has declined every invitation to clean up its own work. That is not confusion. That is a choice and trying again in the future will just resemble the definition of insanity.

Act III: PERA, the Lame Ducks, and the Lobbyists

Which brings us to Congress — and the third act, which is where Greek tragedy turns from grim to actually unbearable.

The Patent Eligibility Restoration Act (PERA), reintroduced May 1, 2025 (S.1546 / H.R.3152), is by any honest reading an elegant fix. It eliminates the judicial exceptions the Supreme Court invented out of thin air, provides a narrow, defined list of statutory exclusions, and returns §101 to the threshold-filter role Congress intended in 1952 — exactly what Squires has been building from the agency side, and exactly what the Supreme Court is congenitally unable to provide. It is the most sensible piece of patent legislation introduced in a generation. It is also, in all likelihood, dead on arrival.

Big Tech has spent the better part of a decade ensuring that §101 remains exactly as confused, weaponizable, and patent-owner-hostile as it currently is. A 12(b)(6) motion costs a few hundred thousand dollars. A reasonable royalty trial costs $10 million. If you can kill a patent at the pleading stage with a one-paragraph “abstract idea” argument — and provide a convenient off-ramp for judges who’d rather not wrestle with claim construction — why on earth would you want Congress to take that tool away? PERA would take it away. So PERA must die. The lobbying dollars deployed against it are, by patent-law standards, staggering.

The congressional picture is, to put it generously, mixed. Senator Thom Tillis (R-NC) — PERA’s lead Senate sponsor and chair of the Senate IP Subcommittee — is retiring in 2026. That is a genuine loss. Representative Darrell Issa (R-CA) — chair of the House IP Subcommittee — is also retiring; less mourned by patent owners, given that Issa was a principal architect of the AIA and has been a reliable obstacle to reform throughout. So we simultaneously lose a champion and a denier, and neither one has any incentive to do anything other than exactly what they want between now and January. That could go either way. Lame-duck chairs who are genuinely free from fundraising pressure can occasionally surprise you. A bill that doesn’t move before they leave, however, starts over in the next Congress — and their successors will arrive with clean slates, fresh lobbying relationships, and no personal investment in their predecessors’ unfinished business.

PERA has been introduced — in some form — in 2019, 2022, 2023, and now 2025. It has died quietly in committee each time. After the Supreme Court’s May 18 denial in USAA, the lame-duck window is the only reed we have left. It is a thin one.

What to Tell Patent Owners (Practical Guidance)

Enough Greek tragedy. Here is what you actually need to do.

1. Treat the USPTO and the courts as two separate §101 systems — because they are. Desjardins is real and is working at the agency level. But the moment a patent enters litigation, you are back in the Federal Circuit’s world. Never develop a false sense of confidence because the USPTO agreed with you on §101 — the examining corps and the Article III courts are now operating from materially different playbooks.

2. Audit your portfolio against the stricter standard — the court standard, not the agency standard. For each significant asset, ask: does this claim frame the invention as a concrete technological improvement, or does it read in result-oriented functional language (“allowing,” “configured to enable,” “is able to”) that the Federal Circuit has now flagged? Does the specification contain “how it works” disclosure that can survive a pleading-stage motion to dismiss? Continuations can fix claim language — they cannot fix a thin specification. Draft to the standard the courts will apply.

3. File continuation claims with technical-improvement framing now, while the window is open. The USPTO is in a more permissive §101 posture than it has been in a decade. If you have pending families with unused continuation rights, this is the moment to file claims with explicit technical-improvement framing, supported by Subject Matter Eligibility Declarations (SMEDs) — applicant declarations explaining why the claims constitute a specific technical improvement — and §1.132 declarations (expert affidavits submitted during prosecution to rebut examiner rejections) where the specification permits. Both are working in ways that would have been unthinkable two years ago.

4. In litigation: pick your venue, front-load your technical narrative, and anticipate the 12(b)(6) motion. File in venues with more measured §101 practices. Front-load specification citations and technical-improvement arguments in the complaint itself — do not assume you will reach claim construction before §101 is decided. You probably won’t.

5. Separate your PTAB risk from your §101 risk when valuing patents — they are now diverging. For the first time in over a decade, PTAB exposure on issued patents has dropped meaningfully while §101 exposure in litigation has not. Buy-side diligence models that discount both risks together — as most still do — now overstate risk on patents that have cleared their primary IPR vulnerability window and understate risk on patents whose value depends on surviving an eligibility motion. Price them separately.

6. Diagnostic and life sciences claims: file the composition AND the method. PERA may or may not pass. Mayo and Myriad are still good law. Composition-of-matter claims for novel reagents and test kits remain materially more survivable than method claims for the underlying diagnostic. File both. Hedge.

7. For ML/AI portfolios: the Recentive doctrine is now black-letter law. Applying generic ML to a new data environment, without claiming a specific technical improvement to the model itself, is categorically ineligible. Evaluate ML-heavy portfolios accordingly. Well-drafted claims reciting specific architectural choices, training-method improvements, or model-level innovations are in a more defensible position. Most pre-2023 ML patents, unfortunately, were not drafted that way.

The Bottom Line

Half a victory is, depressingly, still a victory. The PTAB has been brought to heel for the first time since the AIA was enacted in 2012 — and patent owners should not undervalue that. Portfolios that were essentially un-financeable two years ago are financeable today. That changes a great deal about how this market operates.

But the other half — the §101 reform that would make U.S. patents fully enforceable again — remains stuck. The Supreme Court has confirmed, for the 30-something time, that it has no intention of fixing what it broke in Alice. The Federal Circuit has confirmed it will continue using §101 as a substantive validity weapon at the pleading stage. And the only legislative path forward depends on two lame-duck chairs successfully moving a bill against the most well-funded lobbying campaign in patent-law history, in less than a calendar year.

PERA’s real virtue, at this point, may simply be the historical record it has created: twelve years of clear, bipartisan documentation that the Supreme Court invented a test it never defined and handed the Federal Circuit the keys to a runaway train. If the Court ever does revisit eligibility — and eventually the political pressure may force it to — PERA’s drafting work will be sitting there as a ready-made template. The Court made this mess. The Court can clean it up.

In the meantime: take the half-victory. Audit your portfolios. File the continuations. Pick your venues carefully. And watch PERA’s path through committee this fall — not because I think it’s going to pass, but because if by some political miracle it does, the entire calculus of U.S. patent enforcement changes overnight.

That would be a hell of a third act.

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Are We Headed for an eBay Sequel?

On May 17, Judge Gilstrap in the Eastern District of Texas handed down his ruling in Collision Communications v. Samsung Electronics — and the patent owner community got a masterclass in the difference between good rhetoric and good outcomes. Collision had won a $445.5 million jury verdict for willful infringement of wireless patents originally developed by BAE Systems for military use. The USPTO and DOJ had filed a joint Statement of Interest arguing that non-practicing entities should not be categorically barred from injunctive relief — a genuine and welcome policy statement from the executive branch. Gilstrap agreed with the principle, writing that patents don’t come with a “gold seal” for practicing entities and merely a “silver seal” for NPEs. And then he denied the injunction anyway, because Samsung argued the sales ban would hurt U.S. jobs and supply chains. Public interest, it turns out, is a very comfortable place to park a verdict-proof defendant.

The parallel to the §101 disaster is uncomfortable to ignore. That story also had two tracks: an executive branch nudging the courts toward a more sensible reading, and Congress perpetually “almost” passing the Patent Eligibility Restoration Act. Now we have the RESTORE Patent Rights Act — a genuinely meaningful bill that would restore the pre-eBay rebuttable presumption of injunctive relief — moving through Congress on a wave of bipartisan goodwill, while the courts produce nuanced middle-ground opinions that change the rhetoric without changing the math. A $445 million willful infringement verdict didn’t clear the bar. Ask yourself what will.

If RESTORE passes, patent valuations go up — meaningfully, across the board, because injunctive relief availability is one of the single most important drivers of patent value. If it doesn’t, we will be writing this same article in 2036, citing some other case where the government tried, the court half-listened, and the large-scale infringer walked away with a license it never negotiated. The eBay tax has been running for twenty years. Time to repeal it.

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Building a Bigger Fortress…

Fortress Investment Group announced it has acquired IPValue Management Group, one of the more prominent IP licensing platforms, through funds managed by Fortress affiliates. Financial terms were not disclosed — a phrase that, in this industry, usually means “quite a few zeroes were involved.” IPValue will continue operating under its existing senior leadership team, which is either reassuring or a polite way of saying Fortress is keeping the engine running while it figures out what to do with the car.

IPValue manages licensing for over 20,000 patents across semiconductors, memory, displays, networking, and IT devices, and has reportedly returned more than $2 billion to its partners. That’s a serious licensing engine — not a side project. The new ownership gives IPValue greater access to capital to pursue a broader set of opportunities and offer more flexibility to its partners. Translation: more fuel for the rocket.

Here’s where it gets interesting. IPValue CEO John Lindgren — a well-known and well-respected figure in the licensing world — has been vocal and proud about IPValue’s track record of closing deals without resorting to litigation. In an industry not exactly known for its genteel negotiating style, that’s a genuine differentiator. So what happens now that Fortress — an organization with, shall we say, a rather more assertive posture toward enforcement — is holding the keys? The pessimistic view is that the Fortress halo effect complicates IPValue’s “let’s be reasonable” opener. The optimistic view — and frankly the more likely one — is that Fortress’s litigation firepower makes IPValue’s licensing outreach more persuasive, not less. Nothing sharpens a licensee’s focus quite like knowing the patient, reasonable licensing shop just got acquired by someone with a very large litigation budget and a history of using it.

Industry observers have flagged semiconductors and FRAND/SEP licensing as areas to watch — one noted the deal could generate “quite a few headlines,” which, given Fortress’s track record, is a bit like predicting that a shark released into a koi pond will “generate some activity.”

Net/net: the patent monetization world just got a bigger, better-funded player at the table. Whether you view that as a feature or a bug probably depends on which side of a licensing demand letter you typically find yourself on.