Know-How 103 / How to check your product or service launch for freedom-to-operate?
Ekrem Ayhan Çakay
12/13/2021
When a firm plans to develop and sell a new product or service, one of the biggest risks is that a competitor having a patent for a technique contained within that product would prevent commercialization. This is especially true in technology areas where patenting is common. This is why many companies attempt to obtain their "Freedom to Operate (FTO)" early on, i.e., to ensure that the commercial manufacturing, promotion, and usage of their innovative product, process, or service does not infringe on others' intellectual property rights.
FTO analysis can be beneficial to an IP strategy. It enables a corporation to detect, analyze, and manage risk while also discovering areas where patent coverage is thin or non-existent, resulting in opportunities. Otherwise, persons whose industrial property rights have been violated have the right to demand from the court the to stop the infringement, to compensate for financial and emotional damage, to confiscate products that constitute infringement or require punishment, and tools such as devices and machinery that are exclusively used in their production.
Invariably, a FTO analysis begins with a search of the patent literature for granted or pending patents, followed by a legal opinion on whether a product, process, or service may be considered to infringe on any patent(s) owned by others. While there can never be an ultimate guarantee of freedom to operate, there are techniques to reduce risks and save a company money.
In other words, your company can reduce the risk of future lawsuits and minimize excessive money by doing FTO research before creating and marketing a new product or acquiring a new company. FTO analysis performed early in the product development cycle allows enterprises to either adjust the design to avoid infringement or take a license before the point of no return. With the help of Techin2B platform, you can request an evaluation regarding your FTO issues both legally and technically as seen in Figure 1.
Figure 1
Driving Factors of Your Decision
Factor#1 In terms of the company's value, it should be regarded the product or service that is being introduced or purchased. What is the current or anticipated revenue? Is this a product with a high profit margin or one with a low profit margin? If a patent-infringement lawsuit goes to trial, products with a high margin or volume are more likely to result in large damages awards. Televisions and cell phones are examples of products in this category. If a corporation only has a limited amount of money to spend on clearance, things can at least be rated in order of value.
Factor#2 What is the size and saturation of the market? What is the number of rivals offering the product, and what is the history of the participants in that field? Is the field highly litigious as the television and cell phone industries, or do non-competitors (also known as nonpracticing entities, or NPEs) pose the biggest threat? In either instance, the patents in those lawsuits should be included in the FTO analysis.
Factor#3 While the company can, and should, require indemnification clauses in supplier agreements, indemnification may not provide enough protection. Unexperienced companies eager for the company’s business may be quick to agree to an indemnification clause while underestimating or not fully appreciating the risks of patent infringement.
Factor#4 Before conducting an FTO analysis, a corporation should consider how it will deal with the data. Is it the company's goal to stay out of court at all costs? Is it willing to abandon the new product, service, or acquisition if the results are negative?
Negative FTO Strategies
If a patent search reveals that one or more patents restrict a company's ability to operate, it must decide how to proceed. If the blocking patent is found to be legitimate, the following choices are available:
Option#1 Purchasing the patent or obtaining a license to use it. Licensing is acquiring written permission from the patent owners to use the patented technology for specific purposes, in specific markets, and for a specific period. The ease of such an agreement will be primarily determined by the proposed license's terms and conditions. While there is a risk of losing autonomy, and the patent holder will likely want a lump sum payment and/or recurring royalties, it may be the most straightforward way to pave the way for the commercialization of a novel product or service.
Option#2 Cross-licensing. This requires two or more companies trading licenses to be allowed to use patents owned by the other. A corporation must have a well-protected patent portfolio that is valuable to potential licensing partners to cross-license.
Option#3 Inventing around. The invention can also be "invented around." This involves directing research or making improvements to a product or method to avoid infringing on other people's patents. If a process patent restricts freedom to operate, for example, a corporation may be able to devise an alternative procedure to get a comparable result and therefore commercialize the idea without having to pay a license fee to someone else.
Option#4 Patent Pool. This is a technique in which two or more companies working on related technologies pool their patents to create a patent clearinghouse. The patent pool formed by Sony, Philips, and Pioneer for inventions required to meet with certain DVD-Video and DVD-ROM standard standards is a well-known example.
Positive FTO Strategies
If a patent search reveals that there is no blocking patent restricting a company's ability to operate, it must decide how to proceed. The following choices are available:
Option#1 Patent application. Business owner may wish to seek patent protection for the new technology rather than keeping it as a trade secret to ensure a greater degree of freedom to operate.
Option#2 Collaboration with dependent patent owners. Patent does not grant the right to market the protected technology; rather, it grants the right to prevent others from doing so. While the distinction may appear little, it is critical. For example, a third party may have a patent that covers the same subject matter as the first company's patent.
Option#3 Defensive publishing. There are a variety of reasons why a company might want to avoid patenting an invention, including expense and the possibility that the innovation does not fit the patentability criteria. Businesses sometimes utilize "defensive publishing" or technical disclosure as an alternative. This contrasts sharply with keeping it a trade secret. Defensive publishing means releasing an invention to the general public in order to prevent others from patenting it. The disclosure should be made in a well-known technical journal.
Legal Assistance
Many persons looking for FTO may find the process to be way too lengthy and time-consuming. Using the services of an expert attorney can assist you in obtaining the information you require. Several essential pieces of information may be reviewed by an attorney, including:
- Jurisdictions
- IP rights
- Expiration dates
- Whether the claims issued are valid and how they are construed
Because of the existence of prior art, claims are frequently found to be invalid. A public presentation or publication about the patent application's claims would be considered prior art. The application examiner may have overlooked earlier art that an attorney could uncover. Even neglecting to identify the inventor might result in a patent or application being declared invalid.
Due to the definitions provided in the patent specification, a claim may be considered to include one action but not another. During the examination process, a patent applicant may agree to certain things that could change the claim.
With the help of TLS.IP Professionals, you can get fast and reliable FTO strategy and research services both legally and technically.
References
https://www.wipo.int/wipo_magazine/en/2005/05/article_0006.html
https://www.upcounsel.com/freedom-to-operate#legal-assistance-for-fto-opinions