Two major technology companies are testing the limits of appellate procedure in an escalating fight with the US Patent and Trademark Office (PTO) over its use of discretionary denials in patent review proceedings.

In June, SAP America Inc. and Motorola Solutions Inc. petitioned the US Court of Appeals for the Federal Circuit for writs of mandamus to overturn recent PTO decisions denying inter partes review (IPR) challenges without reaching the merits. The companies argue that the PTO’s retroactive application of new discretionary review factors violates the Constitution and the Administrative Procedure Act (APA).

The Federal Circuit’s response could redefine boundaries between agency discretion and appellate oversight—an issue of growing concern as AI and software patents play an increasingly central role in infringement litigation and innovation strategy.

Both companies had filed their IPR petitions, complete with stipulations that they would not assert overlapping invalidity arguments in court, under PTO guidance issued during the Biden administration. But in March 2025, acting Director Coke Morgan Stewart implemented a new interim process reinstating and expanding discretionary review criteria previously advanced during the Trump administration.

Those criteria—such as the “settled expectations of the parties”—have led to an uptick in discretionary denials. According to the PTO, 59 petitions were denied on these grounds since May, while only 38 advanced to the merits review stage.

Legal experts see a likely surge in mandamus petitions. Giri Pathmanaban, a partner at Cleary Gottlieb, said there’s a “100%” likelihood of further actions, even acknowledging the extremely narrow legal pathway mandamus provides. The Supreme Court has described it as a “drastic and extraordinary” remedy, available only where no other adequate means of relief exist.

Despite that, supporters argue there’s little alternative. “It’s just flushed down the toilet for reasons you couldn’t have possibly predicted,” said Joe Matal, a former acting PTO director. Matal, who filed amicus briefs for industry groups backing the petitions, likened the denials to arbitrary procedural gamesmanship. “Mandamus is pretty much it,” he added.

Not all agree. Scott Hejny, a partner at McKool Smith, said the Federal Circuit is likely to reject the constitutional challenges since defendants can still argue invalidity in district court. He pointed to what he sees as a broader ideological divide between the PTO’s current leadership and the Federal Circuit, which has historically trimmed large patent awards and provided a more favorable venue for patent challengers.

The dispute comes amid ongoing friction over discretionary denial policy. Under former PTO Director Andrei Iancu, the agency in 2020 formalized procedures allowing the Patent Trial and Appeal Board (PTAB) to reject IPRs based on factors unrelated to patent validity. Although that approach was later softened by Biden appointee Kathi Vidal in 2022, Stewart’s new policy signals a return to broader agency discretion.

Frustration with traditional litigation paths also appears to be a factor in the mandamus strategy. A previous lawsuit brought by Apple, Google, and others challenging the Iancu-era rules has bounced between district and appellate courts for years without resolution. “Any process that takes four years is almost useless,” Matal said.

The PTO has until July 14 to respond to SAP’s petition. Its decision could determine whether the Federal Circuit will take a broader look at agency authority—or let this discretionary shift stand without judicial review.