The IPR Door Is Open — But You Have to Follow the Rules

Authored by Babak Akhlaghi on July 8, 2026.  On June 15, 2026, USPTO Director John A. Squires issued a decision that every founder holding patents should read carefully.

Bulletproof Property Management, LLC — a small IP enforcement company with no products and no manufacturing — sued Tesla over seven automotive patents. Tesla responded with seven inter partes review (IPR) petitions. Bulletproof asked the Director to deny institution through discretionary denial.

The Director said no. All seven IPRs proceed to the merits.

From the outside, this looks like a big company using process as a weapon. Seven IPRs against one small patent owner. That’s the narrative you’ll see if you skim the headlines.

But that’s not what happened here.

The system worked exactly as designed. The rules were followed. The factors were evaluated. The outcome was institution. And if you’re a founder who has ever worried that the IPR system is rigged against you, or that the door to challenging issued patents has effectively closed, this decision is proof that you’re wrong.

The door is open. It just has to be done fairly.

What Actually Happened

Bulletproof Property Management holds a portfolio of automotive patents. They don’t make cars. They don’t manufacture anything. Their business model is enforcement and licensing — what some people call a non-practicing entity.

That model is completely legitimate. Universities do it. Individual inventors do it. You can commercialize your patents in three ways: make and sell the product, license the technology, or enforce your rights against accused infringers.

Bulletproof chose enforcement. They sued Tesla across seven patents simultaneously.

Tesla responded with seven IPR petitions. Bulletproof filed a request for discretionary denial, arguing three main points:

1. Parallel district court litigation — under the Fintiv factors, the Director should deny institution because there’s already a trial scheduled in district court.

2. Prior art already considered — the key prior art reference (Joos) was previously presented to the Office, so there’s no substantial new question of patentability.

3. Settled expectations — Tesla had prior knowledge of the patents and delayed in challenging them, so Bulletproof has developed settled expectations around validity.

The Director rejected all three arguments.

Why the Fintiv Argument Failed

The Fintiv factors are supposed to prevent duplicative proceedings. If a district court trial is already scheduled and moving forward, why should the USPTO spend resources on an IPR that might arrive at a different conclusion?

That’s the theory. But Tesla dismantled it strategically.

First, the originally scheduled trial date in the district court litigation had been vacated. No trial was currently scheduled. That alone weakens the Fintiv concern significantly.

Second, and this is the move most practitioners miss, Tesla stipulated that it would not advance in the parallel litigation any ground that reasonably could have been raised in an IPR, and any other ground based on a combination of system art with any prior art reference asserted as the basis of a ground in each IPR.

Read that again. Tesla took the strongest argument off the table entirely.

The Director wrote: “The absence of a scheduled trial date and Petitioner’s broad stipulation reduces the concern of inconsistent outcomes or significant duplication of efforts, and allows this AIA review to function as an alternative to the co-pending litigation.”

IPRs are meant to be an alternative to district court litigation, not something in parallel. Tesla understood that. They managed the sequencing. They never let the district court litigation get enough traction to become a Fintiv problem.

If you’re a petitioner, your strategic litigation starts way before your IPR filing. If you challenge claims in district court and later change your mind, saying “I’m going to challenge this in an IPR instead,” you’ve already lost. The patent owner will argue duplication. The USPTO will likely agree.

You only get one bite at the apple. Choose your forum correctly from the start.

Why the Prior Art Argument Failed

Bulletproof argued that Joos, the key prior art reference used in all of Tesla’s grounds, was previously presented to the Office. It was cited in an Information Disclosure Statement (IDS) during prosecution of the child applications.

On the surface, that sounds like a closed door. The examiner saw it. The patent issued. Move on.

But Tesla made a much more surgical argument.

First, they showed that in the prosecution of the parent patent (US 11,932,230 B1) — which is relied on for earliest priority by each of the other challenged patents — Joos was not identified by the examiner or presented to the Office at all.

Second, in the child applications where Joos was cited in an IDS, the examiner never actually applied it in any rejection.

Third, and this is the part most practitioners will walk right past, Tesla went to the examiner’s reasons for allowance, found exactly what the examiner said was missing from the prior art, and then showed that Joos actually teaches that very feature.

The Director wrote: “Petitioner persuasively argues that the examiner overlooked certain teachings in Joos that appear to disclose allowable subject matter of the challenged claims. Thus, Petitioner demonstrates that the Office erred in a manner material to the patentability of the claims.”

That’s the move. You’re not just saying the art wasn’t considered. You’re proving it, using the examiner’s own words against the record.

If you’re building an IPR petition and the patent owner argues that your prior art is cumulative because it was cited in an IDS, go find the reasons for allowance. Show where the examiner identified the features that supposedly distinguish the claims from the prior art. Then show where your prior art actually teaches those exact features.

That disarms the cumulative art argument completely.

Why the Settled Expectations Argument Failed

Bulletproof argued that Tesla had prior knowledge of the patents and delayed in challenging them, so Bulletproof has developed settled expectations that the patents are valid.

The Director wasn’t convinced.

All of the challenged patents issued between 2024 and 2025. Tesla filed IPR petitions within two years of issuance.

The Director wrote: “The challenged patents have not been in force for a significant period of time (all challenged patents issued between 2024 and 2025), and, accordingly, Patent Owner has not developed strong settled expectations that favor discretionary denial as to these patents.”

Two years is not enough.

If you’re a founder planning to monetize your patents through enforcement, timing matters. Let your patents mature before you assert them. The longer a patent has been in force, the harder it becomes to institute an IPR against it.

Patience is strategy.

The New Factor: U.S. Manufacturing

Here’s where this decision introduces something genuinely new.

The Director weighed the fact that Tesla manufactures the accused products in the United States as an affirmative factor supporting institution.

That’s not a standard Fintiv factor. That’s a policy lever from a March 11, 2026 USPTO memorandum titled “Additional Discretionary Institution Considerations – U.S. Manufacturing and Small Business Use of AIA Proceedings.”

The justification for IPRs has always been that they help small businesses and protect U.S. manufacturing. But when Director Squires read out fifteen years of history, the data told a different story.

Seventy percent of IPR petitioners are large companies. Many of those companies’ public filings show that they don’t have significant manufacturing investment in the U.S. The very products they sell are often made abroad.

That’s a policy problem. Key manufacturing has moved outside the U.S. over the past 10 to 15 years, and it’s affected America’s leadership in AI, machine learning, blockchain, and semiconductors.

So the USPTO issued new guidance: when making discretionary denial decisions, the Office will consider U.S. manufacturing and small business status.

In this case, Tesla provided evidence that it manufactures the accused products in America. Bulletproof alleged that the products “comprise 30% to 40% of components sourced in foreign countries,” but provided no supporting evidence.

The Director sided with Tesla. “Petitioner’s evidence of U.S. manufacturing is more persuasive and further demonstrates that discretionary denial in these proceedings is not appropriate.”

If you’re a petitioner and you manufacture in the U.S., that’s now a live argument in your favor. Use it.

What This Means for Founders

There are two narratives about the IPR system. The first — that it was weaponized by large corporations filing serial, stacked challenges to grind down smaller patent owners — was largely true. That’s a legitimate grievance, and it’s why the USPTO introduced new guardrails.

But the second narrative — that the IPR door has now effectively closed — is wrong. And this decision is proof.

The door is open. But there are ground rules. You have to follow them.

If you’re a petitioner:

• Manage the sequencing of your litigation. Don’t let district court proceedings create a Fintiv problem. Stipulate early and broadly that you won’t raise IPR-eligible grounds in parallel litigation.

• If the patent owner argues your prior art is cumulative, go to the examiner’s reasons for allowance. Show where the examiner said the prior art doesn’t teach a specific feature. Then show where your prior art actually does teach that feature.

• If you manufacture in the U.S., make that argument explicitly. Provide evidence. The new policy guidance makes it a live factor.

• File early. Don’t wait years after a patent issues. Two years is borderline. One year is better.

If you’re a patent owner planning to enforce:

• Let your patents mature before you assert them. The longer they’ve been in force without challenge, the stronger your settled expectations argument becomes.

• Don’t assume that because you cited prior art in an IDS, it’s been “considered” in a way that prevents IPR institution. If the examiner never applied it in a rejection, it can still be fair game.

• If you’re not manufacturing in the U.S. and you’re going after a company that is, you’re swimming upstream against new policy guidance.

This Is a Setback, Not a Loss

For Bulletproof, this decision is a setback. It’s not a loss.

The IPRs now proceed to the merits. Tesla has to prove that the prior art actually renders the claims unpatentable. That’s not a foregone conclusion.

If Bulletproof survives these IPRs, those patents emerge stronger than before. They’ve been tested. They’ve been challenged by a well-resourced opponent with top-tier counsel. And they survived.

At that point, Tesla faces higher royalty terms. The patents have been validated through adversarial review.

But the lesson for founders is this: the system works when you follow the rules. The Director evaluated the factors. The factors didn’t favor discretionary denial. The IPRs were instituted.

Was the system broken before? In some ways, yes. Serial challenges by well-funded petitioners were a real problem. But this decision shows the guardrails are working. A large company followed the rules — and the door opened.

There gotta be some ground rules. And this decision is an excellent reminder that these ground rules are alive and well.