The U.S. patent system is at a cross-roads. Despite helping to make the U.S. one of the most innovative and economically robust countries in the world, the system has been coming under increasing criticism for what some perceive as overly strong protection for patent holders. Detractors point to a variety of issues, but many discussions center around non-practicing entities (NPE’s) that allegedly acquire vague and weak patents and use them to leverage payment or licensing agreements from other businesses, especially smaller ones. Rather than promoting innovation, some argue that the patent system is now stifling it by giving these companies the power to sue promising startup companies into oblivion.
Though the debate is still far from settled, the U.S. Supreme Court recently handed down a decision that may help to limit vague patents. In early June, the Court in Nautilus v Biosig lowered the standard with which courts can invalidate vague patents. Previously, if a patent’s specifications could be interpreted in multiple ways, the patent was to be invalidated only if it was “insolubly ambiguous” and “amendable to construction”. Language for this test came from a 2001 case from the Federal Circuit, an appeals court one step below the Supreme Court.
However, in June, the Supreme Court unanimously rejected this standard in Nautilus. In its place, the Court outlined a newer and more stringent test. The Court held that a patent is invalid for indefiniteness if when read in light of the patent specification and the prosecution history, the patent claims “fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”
This new test will make it harder for patents to survive vagueness challenges. It is widely expected that a significant number of patents that would have survived an invalidity attack on vagueness grounds under the previous “insolubly ambiguous” test will be invalidated under the new test. Even taking into the Supreme Court’s observation that a modicum of uncertainty in the scope of patents is unavoidable, it is clear that the Court is demanding a higher standard of clarity and specificity in patents, so that the general public (such as other inventors) will be clearly informed as to what subject matter is blocked off by the patent.
What does this mean for innovators?
The worries about vague patents and the decision in Nautilus is a response to the ongoing debate about the proper amount of IP protection – too little protection means that there is less incentive to innovate, but too much protection may give certain players an unfair monopoly over the market. There are many who believe that NPE;s, or even large established companies, may use vague patents to chill out small startups or to extract payment from them. Even if the smaller company at the receiving end of this threat believed that the patent holder’s demand was weak or even frivolous, the costs of potential litigation may make it easier to just settle and pay a license.
Hopefully, Nautilus will help to lower the number of vague patents in the U.S. and make it easier for startups and entrepreneurs to discover the next great product.
