Before last week, few had heard of KSR International or Teleflex, companies with interests in patents for automotive pedals. In a case bearing their names, the Supreme Court has made these names familiar to the patent bar, if not the general public. As a result of this case, there will likely be fewer patents, but the value of those patents that can withstand review should increase.

KSR International held a longstanding patent for the pedal system for motor vehicles. Teleflex held a license for a subsequent patent, titled “Adjustable Pedal Assembly With Electronic Throttle Control.” Each company sued the other for patent infringement.

A patent is a grant for a certain number of years of exclusive intellectual property rights for an invention. How can more than one patent holder have exclusive rights for the same invention? The Supreme Court helped answer that question in KSR International v. Teleflex. The Supreme Court held that the patent licensed by Teleflex was an “obvious” combination involving KSR’s underlying patent, and thus not separately patentable.

Under pre-existing law and precedent, companies could and would file multiple patents for various modifications of the same innovation. Some patent protection was given to inventions that failed to show real innovation or real progress, and patents for original inventions were consequently deprived of their full value. The Patent Office and courts followed tedious standards that permitted patents that were sometimes derivatives or variations of other patents.

The Supreme Court ruling in KSR International v. Teleflex modifies, but does not reinvent, those standards. Under KSR, initial patents for an invention will likely be more defensible to encroachment by “obvious” modifications or combinations. The details of how the Patent Office and lower courts will interpret obviousness are far from settled. The new standards will neither end nor reduce patent litigation, but they shift the likely outcome to be more favorable to an original patent holder and less favorable to minor or obvious modifications. Indeed, at least in the near term, patent litigation may expand as more existing patents are challenged and as the value of surviving patents increases.

The decision in KSR is part of a pattern in recent years of the Supreme Court both affirming the discretion of Congress to write laws to protect and enhance intellectual property as well as recognizing the underlying value of initial property rights. Eldred v. Ashcroft is in a similar vein.

During the next few years, KSR will lead to a winnowing of patents: fewer will be granted, and many that have previously been granted can more easily be challenged. Many corporations have vast portfolios of patents whose application and value must now be reassessed. Some portfolios will be more valuable under KSR, others less. Moving forward, corporations with truly breakthrough inventions stand to capture even more of the value of those innovations than in the past.

Many countries have no formal patent protection, and many others have patent laws that are unenforceable. Not so in America. The authority for Congress to offer patent protection for inventions is part of the Constitution. The details of patent law have evolved, but America has long been a center of both innovation and enforceable patents.

For more than a century, America has led the world in the number of patent applications and patent grants. Other countries, notably Korea and China, are rapidly increasing their patenting activities. The number of patents, however, is not an exact measure of invention or innovation activity because some innovations are never patented while other innovations can lead to multiple patents. KSR addresses this latter condition and consequently will likely reduce both the number of patent grants and applications in America.

Clarifying patent law is important to our economy. From medicine to nanotechnology to optics, scientists and engineers from around the world flock to America to conduct research and to innovate. Partly, they come because we have leading research institutions. Partly, they come because America is a far more pleasant place to live than many other countries. Partly they come because patents under our economic system reward clever people for their innovations. The Supreme Court appears to be trying to make that incentive a little clearer.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He is organizing the seminar series at the Hudson Institute. He can be reached at hfr@furchtgott-roth.com.