Litigation Update — IPRs and U.S. Manufacturing Activities | June 22, 2026
A recent U.S. Patent and Trademark Office decision shows how the agency now decides whether to take up patent challenges, and what that means for companies that manufacture in the United States. The case, Tesla v. Bulletproof Property Management, involved seven patents covering vehicle gear-selection controls asserted against Tesla.
The Dispute
Bulletproof Property Management, the patent owner, sued Tesla for infringement in district court across all Tesla models. Tesla responded by petitioning for inter partes review (IPR), a faster administrative process for challenging a patent’s validity. Bulletproof asked the USPTO to exercise its discretion to deny the petitions, keeping the validity fight in court rather than before the patent office.
Discretionary Denial Considerations – Tesla was the clear winner
Bulletproof leaned on three familiar arguments for denial. First, it claimed “settled expectations,” pointing to Tesla’s prior knowledge of the patents and a two-year delay before challenging them. The Director was unpersuaded: Tesla challenged all seven patents within that two-year window, and the patents had not been in force long, the oldest having issued only in 2024.
Second, appealing to the Director’s disdain of utilizing the IPR process as an “add-on”, Bulletproof argued that the parallel district court litigation should block the IPR proceedings. But that litigation had no scheduled trial date. More important, Tesla stipulated that it would not raise in any other forum any invalidity ground it could reasonably have raised in the IPR. This stipulation is broader than the typical Sotera stipulation, since Tesla also agreed not to use its system art in any other proceeding.
Third, Bulletproof asserted the petitions relied on prior art (a reference called Joos) that the patent examiner had already considered. The Director disagreed, noting Tesla paired Joos with new references and that the examiner appeared to have overlooked key teachings. On these arguments alone, the Director concluded, discretionary denial was not appropriate.
A New Factor: U.S. Manufacturing
The decision’s most notable feature is what came next. Director Squires applied additional considerations from a March 11, 2026, Memorandum he authored titled, “U.S. Manufacturing and Small Business Use of AIA Proceedings” (“March Memo”). The memorandum reflected the Director’s view that AIA reviews, such as IPRs, are meant to protect America’s leadership in innovation. Concerned that much manufacturing has moved overseas, he directs the office to weigh whether the accused products are made, or backed by investment, in the United States. Petitioners and patent owners alike may invoke the factor, which is likely to favor the party with evidence of U.S. manufacturing and investment.
Tesla supplied substantial proof of its U.S. footprint: factory locations and headcounts, “Made in America” industry awards, federal safety reports, SEC filings, projected expenditures, and even social-media posts documenting its investment in U.S.-based manufacturing. Bulletproof, contended that 30% to 40% of the accused products’ components were foreign-sourced but offered no supporting evidence. The Director found the manufacturing evidence not decisive on its own, yet concluded it “further demonstrate[d]” that the IPR should proceed.
The Bigger Picture: Director Squires’ Vision
This is one of two recent opinions in which Director Squires cited the March Memo. In Magnolia Medical Technologies v. Kurin, Director Squires discussed various factors considered by the Office when determining discretionary denial during AIA reviews, including his reasoning about the new manufacturing factors.
In Director Squires’ view, IPRs were intended as an alternative to litigation. In reality, however, he believes IPRs are too often used as an add-on to gain litigation leverage, with more than eighty percent of Board proceedings running alongside litigation over the same patent. He also questioned the claim that AIA review protects American manufacturers and small businesses, noting data that most petitions come from a handful of market-dominant filers, some tied to non-US based entities.
Magnolia drives the point home. A jury had already found the challenged patent not invalid. Petitioner attempted to raise anticipation and obviousness positions it was precluded from bringing in district court. The Director saw that as using the Office “as a repeat challenge or second bite at the apple to undo its litigation loss.” He found that use “difficult to square with Congress’s intent,” and denied institution.
Practical Takeaway
Tesla illustrates how the manufacturing factor may affect discretionary denial. The Director did not treat Tesla’s U.S. manufacturing evidence as dispositive, but found that it “further demonstrate[d]” that denial was unwarranted. The decision confirms that, when properly raised and supported, U.S. manufacturing and investment may weigh for either the petitioner or the patent owner in the discretionary denial analysis.
About Brooks Kushman P.C.
Founded in 1983, Brooks Kushman P.C. has built a national reputation as a premier intellectual property and technology law firm. We accomplish this with the understanding that the most effective IP solutions come from putting great minds together – our clients and our own. With offices across the country, we forge strong relationships with corporations, small to medium-sized businesses, and leading universities across the country.
Brooks Kushman counts a number of Fortune 100 Corporations across a variety of industries among its clients. Our attorneys have a deep understanding and broad range of experience in a variety of industries and technologies, including automotive, AI & data, automation, consumer electronics, manufacturing, medical device, computer technology, aerospace, chemicals, biotechnology, retail, food & beverage, green technology, fintech, and more. We are also recognized by leading legal publications and rankings, including, Best Lawyers, Law360, Intellectual Asset Management, Managing Intellectual Property, and World Trademark Review. For more information, please visit www.BrooksKushman.com.
