Freedom to Operate (FTO)

The freedom to operate search is beside the prior art search the most often conducted patent search. Whenever a company is developing or planning to launch a new product there is always a risk that commercialisation may be blocked by someone else who holds an IP right for any kind of technology incorporated within that product. The freedom to operate strategy usually consist of two parts, the search analysis itself and the clearance report (legal opinion). The analysis incorporates the real search, however the clearance report summarizes the results, often conducted and provided by patent attorneys.

In a case of infringement, the owner of that IP right might (and possibly will) claim compensation and will try to hinder the commercialization of the product. Those legal disputes are of high financial risk and might additionally frighten (potential) customers of the company.

That’s why companies should use phase gate models in their development process to constantly monitor and follow up on technical developments to secure their “freedom to operate” and to ensure that the commercial production and marketing of their product, process or service does not infringe on any other already existing IP rights.

Freedom to Operate Search

A freedom to operate or infringement search begins by searching for issued or pending patents and thereafter analyzing the claimed scope of protection to get a legal opinion whether the product, process or service is potentially infringing on any patents owned by others.  

The search should be done comprehensively to avoid missing out patents of interest. However, the search can be restricted to:

• technical area of interest e.g. by IPC or CPC classifications  
• IP rights that are in force or pending. Non active IP rights can be neglected
• the last 20-25 years (depending on the technology area): Patens usually have a term of protection for 20 years. The additional e.g. 1 year takes the priority period into account.
• the countries of commercialization: If the product will only be sold in one country (e.g. Sweden), the search can be restricted to Swedish IP rights (patent, trademarks, designs,…) to European IP rights and to (worldwide) PCT applications. Other countries can be neglected as there is no risk of infringing IP rights from these countries.

Due to 18 months’ time between application and publication date or e.g. potential errors in databases the freedom to operate search can by nature never be 100 % accurate. Also, there is always a risk of overseeing important IP rights.

Hence there is never absolute guarantee of a “freedom to operate”, but a comprehensive freedom to operate search will mitigating the risk and save both resources and money.

Costs of a Freedom to Operate Search

The FTO analysis can either be conducted in house (in the R&D department) or by a patent lawyer. The costs of an FTO analysis may vary a lot as they are usually proportional to the number of reviewed documents. Typical FTO analysis might cost between 5.000€ to 20.000€. The effort (and cost) is always directly proportional to the required level of detail, hence the economic value of the potential commercialisation of the product should be known and well balanced with the costs of the FTO search. 

Options if a potential patent is blocking commercialisation

If the analysis finds patens that might block the development or commercialisation of the product there are mainly following ways of action:

• The blocking patent can be purchased or licensed 
• Cross-licensing agreements are also a common solution to be able to use certain patents owned by others
• Finding a work around is another option to avoid infringing patents 
• Performing an invalidation search in order to invalidate and get the patent revoked. There might be prior art describing the patented technology that was never found at the time of examination

Options if no other patent of risk is found

If a search does not find any patent blocking the way to the market,

• it might be possible to patent the technology in order to ensure the own freedom to operate and block other parties in the market
• publishing the technology, so called defensive publication, can also secure the right to act and at the same time prevent others to patent the technology
• avoid publishing anything and start production and commercialization of the product  is a valid (but risky) strategy as well.

Difference between freedom-to-operate search and prior art search

A prior art search will be conducted to determine whether an invention is new (novel) and incorporates an inventive step. The question if third party rights are potentially infringed is not addressed. This is why prior art searches can be performed in a much narrower approach and have a different objective than freedom to operate searches.

For more details see prior art search.