Totality of the Circumstances: Tesla's Blueprint for Beating Discretionary Denial
On June 15, 2026, Director John Squires denied Bulletproof Property Management, LLC's request for discretionary denial of seven IPR petitions filed by Tesla, Inc., clearing the way for the Board to reach the merits. Bulletproof sought denial based on co-pending litigation, Tesla's reliance on prior art already before the examiner, and settled expectations from delay. Tesla countered and relied on its U.S. manufacturing. The decision, designated as informative, Tesla, Inc. v. Bulletproof Property Management, LLC, IPR2026-00204 et al. (Paper 14), is a useful roadmap for petitioners facing a discretionary denial fight.
Tesla pointed out that the trial date originally scheduled in the co-pending litigation “has recently been vacated, leaving no currently scheduled trial,” and stipulated that it would not pursue, in district court, any ground that reasonably could have been raised in an IPR, nor any ground combining system art with any reference asserted as a basis for a ground in the petitions. The Director found that the absent trial date, together with the breadth of the stipulation, sufficiently reduced the risk of inconsistent outcomes to let the IPRs function as an alternative to the litigation, citing Magnolia Medical Technologies, Inc. v. Kurin, IPR2026-00097, Paper 17 (Director May 14, 2026) (precedential).
Bulletproof next argued that Joos, the reference relied on for every ground, had already been presented to the Office. Tesla countered that its grounds do not rest on Joos alone: two other references, Bettger and Bayer, had never previously been presented, each combined with Joos. Tesla also showed that the examiner overlooked teachings in Joos bearing on the very subject matter identified as allowable during prosecution. In the parent patent, Joos was never identified by the examiner or presented at all; in the child patents, it appeared only in an information disclosure statement and was never applied in a rejection. The Director agreed that Tesla had shown the Office “erred in a manner material to the patentability of the claims.”
Bulletproof also argued it had settled expectations given Tesla's prior knowledge of the patents and delay in challenging them. The Director rejected this on the facts: all seven patents issued in 2024 or 2025, and Tesla filed a petition against each within two years of issuance. Because the patents had not been in force for long, Bulletproof had not developed settled expectations.
Finally, the Director weighed Tesla's evidence under his March 11, 2026 Memorandum on U.S. Manufacturing and Small Business Use of AIA Proceedings. Tesla showed it manufactures the accused products domestically. Bulletproof asserted, without evidence, that the products “comprise 30% to 40% of components sourced in foreign countries.” The Director found Tesla's documented evidence more persuasive.
Taken together, the Director cited six circumstances as important to denying discretionary denial:
- 1. No trial date. There was no trial date scheduled in the co-pending litigation; the original date had been vacated.
- 2. Broad stipulation. Tesla stipulated broadly against pursuing, in district court, any ground raisable in the IPRs or combining system art with the asserted references.
- 3. Examiner Error. Tesla showed the examiner overlooked Joos teachings material to the reasons for allowance, establishing examiner error.
- 4. One to Two Year-old Patents. The patents had only recently issued (2024-2025), and Tesla filed within two years of issuance, undercutting settled expectations.
- 5. Petitioner’s U.S. Manufacturing. Tesla's evidence of U.S. manufacturing outweighed Bulletproof's unsupported foreign-sourcing assertion.
Taken as a whole, this decision confirms that institution is not foreclosed merely because litigation is pending or some art was already of record. Where the totality of the circumstances favors the petitioner on trial scheduling, stipulations, new art, settled expectations, and manufacturing evidence alike, discretionary denial may be the exception, not the rule.
Tesla, Inc. v. Bulletproof Property Management, LLC, IPR2026-00204 et al. (PTAB June 15, 2026) (Paper 14) (Director Squires).
The author is a patent trial lawyer and member of the Intellectual Property Litigation Group at Stradling Yocca Carlson & Rauth LLP. Stradling represents inventors, patent owners, and technology companies in patent licensing and litigation in U.S. District Courts and before the United States Patent and Trademark Office, including IPRs and EPRs pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949-725-4151 or GCordrey@stradlinglaw.com.
