After years of resistance from the United States Patent and Trademark Office (USPTO) toward AI patent applications, the patent outlook for AI-related inventions in 2026 appears to be promising thanks to recent changes at the USPTO under Director John A. Squires.
On Sept. 22, 2025, the USPTO swore in Squires as its 60th director. Since taking office, he has implemented changes impacting AI-related patent applications, underscoring both the importance of AI and the USPTO’s role in safeguarding these foundational technologies. While the USPTO does not have the authority to create or change laws, under Director Squires’ leadership the agency has issued numerous press releases and memoranda recalibrating the USPTO’s examination procedures and overall approach to AI-related inventions within the existing legal framework. Additionally, putting this recalibration into practice, Director Squires overturned a Patent Trial and Appeal Board (PTAB) decision that held an improvement to AI models to be patent ineligible, signaling a shift in how patent claims directed to AI will be treated under the new leadership.
The latest changes and developments at the USPTO relevant to AI are outlined below, along with a discussion of their implications for AI patent applications in 2026.
- The Kim Memo (Aug. 4, 2025): Deputy Commissioner for Patents Charles Kim issued a memo to patent examiners in technology groups relating to software-related arts, including AI and machine learning, with reminders and key considerations for assessing subject matter eligibility for AI-related inventions. The memo details guidance to examiners with respect to the two-step framework outlined under the Manual of Patent Examining Procedure (MPEP) Section 2106 for patentable subject matter analysis. With respect to Step 2A, Prong One of the Patentable Subject Matter framework, examiners often reject software and AI-related claims for “reciting a mental process,” meaning the method could be performed in an individual’s mind. However, the Kim memo reminds examiners that the mental process grouping is “not without limits” and that examiners are not to expand this grouping in a manner that encompasses claim limitations that cannot practically be performed in the human mind. As many machine learning algorithms process volumes of data and perform calculations and operations that cannot practically be performed in the human mind, adherence to the guidance under the Kim memo may now result in claims directed to such inventions being classified as patent eligible. With respect to the considerations under the Step 2A, Prong Two of the Patentable Subject Matter framework, whether the claim integrates a judicial exception into a practical application and specifically whether a claim improves technology or a technical field, the memo reminds examiners to consult the specification to determine whether the disclosed invention improves technology or a technical field, and evaluate the claim to ensure it reflects the improvement disclosed in the specification. Accordingly, preemptively drafting AI and software applications to include specific details in the specification of how the claimed invention improves the technology or technical field and reflecting these improvements in the claims may better position such applications to avoid or overcome future patentable subject matter rejections. As a final point, the memo reminds examiners that, “if it is a ‘close call’ as to whether a claim is patent eligible, they should only make a rejection when it is more likely than not (i.e., more than 50%) that the claim is ineligible” and further that “a rejection of a claim should not be made simply because an examiner is uncertain as to the claim’s eligibility.”
- Director Squires Issues the First Two Patents of His Tenure (Sept. 23, 2025): Within the first few days of his tenure at the USPTO, Director Squires held a signing ceremony, signing two patents into issuance. While Director Squires could have selected any technology for this symbolic gesture, the first two patents he chose for issuance were in the field of distributed ledger/crypto technologies, including an AI engine, and in the field of medical diagnostics. The USPTO press release regarding the ceremony noted that the director selected two patents in areas that often face questions about patent eligibility. During the signing ceremony, Director Squires explained that, “[f]rom crypto and AI to quantum computing and diagnostics, the marketplace is filled with breathtaking opportunities for invention and investment” and explained, “the patents I signed today represent applied and patent-eligible technologies driving the frontiers of knowledge.” With this, Director Squires emphasized a renewed focus at the USPTO on AI, crypto, quantum computing, and diagnostics as “technical fields.”
- Ex parte Desjardins (Sept. 26, 2025): Director Squires joined Valencia Martin Wallace, Acting Commissioner for Patents, and Michael W. Kim, Vice Chief Administrative Patent Judge, to author an opinion of the Appeal Review Panel (ARP), vacating a PTAB decision rejecting claims relating to machine learning as patent ineligible. The ARP appears to have convened to publicly convey a unified message with respect to the treatment of claims involving machine learning. Regarding the question of whether the claim integrated a judicial exception into a practical application under Step 2A, Prong Two of the Patentable Subject Matter framework, the ARP confirmed that claims directed to “an improvement in the functioning of a computer, or an improvement to other technology or technical field are patent eligible.” The ARP explained that “the Specification, which the Appellant cites, identifies improvements in training the machine learning model itself,” and that while “such an assertion in the Specification alone is insufficient to support a patent eligibility determination, absent a subsequent determination that the claim itself reflects the disclosed improvement,” “[h]ere, however, we are persuaded that the claims reflect such an improvement.” The ARP went on to map several improvements from the specification to the claim language to conclude that “[w]e are persuaded that constitutes an improvement to how the machine learning model itself operates, and not, for example, the identified mathematical calculation.” The ARP’s analysis is consistent with that set forth in the Kim memo, which reminds examiners to consult the specification to determine whether the disclosed invention improves technology or a technical field. The ARP continues with a clear message for the PTAB and the USPTO at large, stating that “[c]ategorically excluding AI innovations from patent protection in the United States jeopardizes America’s leadership in this critical emerging technology.” The ARP noted further that “under the panel’s reasoning, many AI innovations are potentially unpatentable-even if they are adequately described and nonobvious-because the panel essentially equated any machine learning with an unpatentable ‘algorithm.’” As a final point, the ARP explained that Sections 102, 103, and 112 are the appropriate tools to limit patent protection to its proper scope and that these statutory provisions should be the focus of examination. It can be reasonably inferred that the ARP is sending a message with this concluding point that examiners are not to use Section 101 as a primary gatekeeping mechanism to limit patent protection for AI-related inventions.
- The Subject Matter Eligibility Declaration (SMED) Memos (Dec. 4, 2025): Director Squires authored two memos, one to patent applicants and practitioners and one addressed to the Patent Examiner Corps, both relating to the practice of submitting a Subject Matter Eligibility Declaration (SMED). While declarations under Rule 132 are not new, the procedure outlined in these two memos supplies patent applicants and practitioners with a new tool for advancing patent applications relating to software and AI. SMEDs allow applicants to submit objective evidence and expert testimony to address rejections under 35 U.S.C. §101, particularly by demonstrating technological improvements by showing “how one of ordinary skill in the art would interpret a specification that describes a technological improvement to show that the claimed invention is patent-eligible subject matter.” The memo to the Patent Examiner Corps instructs that examiners must “carefully consider all of the applicant’s arguments and the evidence rebutting the subject matter eligibility rejection when evaluating the applicant’s response.” While optional, it appears that SMEDs may strengthen the prosecution record and may even bolster issued patents against future challenges. The memos suggest that the SMEDs should be filed separately from other declarations, ensuring a clear nexus to the claimed invention, and avoiding supplementation of the original disclosure. Applicants may consider SMEDs when facing eligibility rejections involving computer-implemented inventions, medical methods, or claims requiring unconventional technical arrangements.
- Advance notice of change to the MPEP in light of Ex Parte Desjardins (Dec. 5, 2025): The USPTO, under Director Squires, has provided advanced notice of changes to the MPEP in light of the now precedential ARP decision of Ex Parte Desjardins. The advanced notice emphasizes that forthcoming changes to the MPEP provide clearer guidance on subject matter eligibility under 35 U.S.C. § 101, including the importance to analyze subject matter eligibility “in terms of whether the claims were directed to an improvement in the functioning of a computer, or an improvement to other technology or technical field under longstanding Federal Circuit precedent.” Examiners will be expected “to consider existing precedent like Enfish, as discussed in MPEP § 2106, in addition to these updates when assessing eligibility under 35 U.S.C. § 101, particularly when evaluating claims related to machine learning or artificial intelligence.” Accordingly, the updates to the MPEP will include clarifications to eligible improvements, not just to “technology” but also to a “technical field” as per Federal Circuit and Supreme Court precedent as well as an explanation of Ex Parte Desjardins in the Two Prong analysis of Subject Matter Eligibility in 2106.04(d), subsection III, and the inclusion of Ex Parte Desjardins as examples in 2106.04(d)(1), 2106.05(a), and 2106.05(a) subsection I. These forthcoming changes send the message to the examiners that patent eligibility is not to be used as a primary gatekeeping mechanism of improvements of either AI technologies or related technical fields, in line with precedent such as Enfish, McRO, Visual Memory, and Finjan, as well as Ex Parte Desjardins. It is reasonable to conclude that an applicant’s citations during prosecution to such precedential decisions soon to be added to the MPEP will carry increased weight with examiners and that aligning claims and arguments with the rationales set forth in these decisions may be persuasive.
The spirit and direction of the foregoing memos and decisions should not come as a surprise as they align with comments from Director Squires during his hearing before the United States Senate Subcommittee on Intellectual Property. During his hearing, Director Squires emphasized the importance of maintaining expansive interpretations of Section 101 to support innovation in emerging technologies, with a focus on AI, fintech, and diagnostics, explained that Congress “chose deliberately broad terms—process, machine, manufacture, composition of matter—so that the law could accommodate technological revolutions unforeseen in their time,” and concluded that, “just as their words encompassed the telegraph, the telephone, and the airplane, so too must they encompass the blockchain, the quantum processor, and the diagnostic algorithm.” These principles are expected to guide the USPTO’s treatment of subject matter eligibility for at least the remainder of Director Squires’ tenure.
While it will take time to fully appreciate the weight and effect of the foregoing changes, all signs point to a seismic shift in how the USPTO treats AI-related patent applications. At a minimum, the updated guidance will hopefully improve predictability during prosecution of such patent applications and reduce overly broad §101 rejections consistent with Director Squires’ intent to avoid Section 101 being “wielded as bludgeons to exclude entire classes of invention, from financial technologies to artificial intelligence to diagnostics.” In Director Squires’ own words, “the USPTO is open for business—not only for the technologies of today, but especially for those of tomorrow.”