Understanding the Fundamentals of Freedom to Operate
Freedom to Operate (FTO) is not as complex as it may sound. An FTO will yield information necessary to consider before bringing your invention to market. Invest some time reading about the fundamentals of freedom to operate and you’ll have the knowledge necessary to move forward in full confidence with your invention or other forms of intellectual property.
Patenting an invention is an important first step in preventing competitors from using the same idea for financial gain. However, obtaining a patent is only one piece of the puzzle. A patent empowers the inventor to prevent competitors from making, using, selling, offering for sale, or importing into the United States the claimed invention. Despite this, there may still exist other patented technologies that could preclude the patent owner from bringing their product to market.
The claims of any patent ultimately dictate the scope of the patent and define any legal protections. As a result, businesses or inventors analyze competing intellectual property portfolios to better understand the market landscape for any future commercialization.
An FTO search could save you millions in patent litigation, literally. The average cost of patent litigation is between 2.3 to 4 million dollars per suit, a huge expense that most businesses cannot withstand. Invest your resources in an experienced intellectual property attorney (IP attorney) at the outset of product development and you may be able to prevent costly litigation in the future. Your potential investors will feel much more confident knowing you’ve done your due diligence to prevent such costly and unnecessary litigation.
There is a risk that the potential commercialization of a new product might be impeded by a competitor that already has a similar technology or product on the global market. As a result, businesses tend to obtain a freedom to operate, indicating the potential for commercial production, use, and marketing of the product or even a process that does not infringe any third party intellectual property rights.
During an FTO search, an IP attorney will identify not only issued patents, but pending patent applications as well that may overlap with your invention. An experienced patent attorney will help you identify such material as well as provide their legal opinion as to whether your invention will infringe claims of patents and patent applications.
The FTO search and study also provide an opportunity to identify opportunities as well as potential limitations for the patent in question. This means that, despite a potential overlap in an existing patent, your patent attorney may be able to use this information to more tactfully draft your patent application to avoid such overlap.
Furthermore, patents will eventually expire at the of their term and your ability to enforce them will be lost. The protection provided by a utility patent lasts twenty years from the filing date. Once this period expires the patent becomes part of the public domain and the corresponding invention can be used by any party.
Identifying Potential Risks
FTO analysis performed near the beginning of the product cycle presents businesses with the opportunity to modify the product or process design, presumably traversing claims of infringement prior to investing capital toward development or commercialization.
The FTO analysis commences with an analysis of the invention. The focus is on the product, process, or component in the context of what is novel and how those new elements compare to what is already patented or considered “prior art.” The analysis determines if existing licenses are applicable or have the potential to be applicable in the context of a patent infringement lawsuit. Furthermore, the analysis can extend to identifying components under an agreement or developed by competitors that might include legal clauses about indemnification for financial remuneration in the event of a business using IP that is already legally protected.
The FTO search should also include “non-patent literature”, expired patents, and any published pending applications that have yet to register. Your IP attorney will also analyze the information revealed during the FTO search to provide an opinion as to any future challenges and mitigate any potential risks.
What Is a Freedom to Operate Analysis?
An FTO search is an essential component of identifying legal barriers that stand in the way of bringing a product, component, or process to the market. The purpose of the search is to identify such legal liabilities to avoid any future infringement issues. If the search reveals no similar technology or products have been patented, and there is an opportunity to sell the invention in the designated geographic area, freedom to operate may be available.
Once your commercialization plan is conceived, it is prudent to start with an FTO search. Even if you can only provide a description of the value proposition, it is in your interest to meet with an IP attorney for FTO analysis. An FTO analysis gauges the scope of the commercial protections, ultimately mitigating risk in the context of the law or decreasing the risk of infringement by third parties that hold the rights to potentially overlapping patents. The analysis provides a comprehensive view of all third-party patent and intellectual property rights that may prevent the commercialization of your product.
It is at this point that your business can develop and bring the product to market without any worry of a potential IP infringement lawsuit or invalidity challenge. It is in the interest of every business to avoid such legal battles as patent infringement suits have the potential to bankrupt your business and delay the commercialization of your product.
What Does A Freedom to Operate Search Cost?
The cost of an FTO search may range between $5,000-$100,000 based on the complexity of the technology combined with the geographic scope and jurisdiction. However, the investment in an FTO search is worth every penny as it has the potential to help your business avoid costly litigation in the future and identify any licensing opportunities.
What Are Examples of Freedom to Operate
FTO analysis has the potential to save you or your business millions of dollars over time. Consider the FTO agreement signed by Enzon Pharmaceuticals, Micromet AG, and Cambridge Antibody Technology in the fall of 2003. The pharmaceutical companies inked a cross-license agreement that is non-exclusive. The parties secured significant freedom to operate through this legal action, empowering each to use and share parts of their patented technologies, ultimately enabling them to perform research and create products for use in diagnostic and therapy contexts.
Such cooperation in the form of an FTO agreement proved mutually beneficial for each of the three businesses, guaranteeing their components, processes, and inventions do not legally infringe on the intellectual property rights of the others. The heads of each of these three companies agreed it is better to establish an FTO agreement than run the risk of time-consuming, costly, and frustrating patent infringement litigation. The agreement maximized each company’s freedom to operate without the worry of financial penalties stemming from IP infringement litigation.
Another example is when Ranbaxy, an India based pharmaceutical business, identified a patent owned by another Big Pharma competitor, Apotex. The patent was identified when planning the debut of cefuroxime axetil across the United States. The process to make the antibiotic drug was the same as that claimed by Apotex within its patent.
The FTO analysis showed Ranbaxy pinpointed a single unique component within the manufacturing process. Ranbaxy utilized acetic acid in the form of a polar organic solvent, yet the phrase used within the patent was “sulfoxides,” ultimately setting the stage for Ranbaxy to prevail in the legal battle through the granting of a declaratory judgment. In the end, Ranbaxy secured the freedom to operate as desired.
Creating an Effective Freedom to Operate Strategy
The nuances of your FTO strategy have the potential to pave a clear path toward developing, producing, and selling an invention. Fail to develop an FTO strategy and move forward unknowingly you will risk stumbling over hurdles that set your business back hundreds of thousands or even millions of dollars and potentially years of time. Your IP attorney’s guidance proves invaluable in developing the subtleties of your FTO strategy. Meet with our IP attorney and you’ll find there are several unique strategies for risk mitigation in the context of patents and bringing products to market.
The risk mitigation best for your business might not be optimal for the next business or inventor. Even the idiosyncrasies of the overarching industry shape patent risks and FTO strategy. Your IP attorney will analyze the risks of existing patents related to the value proposition and determine if securing a patent or cross-license will empower you to launch the invention without the looming threat of a potentially financially devastating patent infringement lawsuit.
Everything from the fine details of the technology including any features, functionality, and methods of use to global jurisdiction plays a vital role in researching and drafting your FTO. The goal is simple: ensure your product does not infringe on anyone’s intellectual property rights. However, if clearing such hurdles is not possible, the aim should be to mitigate any known risks through licensing and co-existence agreements.
Freedom To Operate vs Patent Search?
There is a distinction to be made between FTO and a patent search, also known as a “prior art search.” A prior art search for patentability gauges if the product is novel or inventive in the context of previous inventions, published applications, and non-patent literature. This search differs from the potential use of a product in the context of commercialization and whether the commercial activity infringes on the rights of use, ultimately addressing the overarching issue of freedom to operate. In short, FTO and patentability have different objectives.
Speak To An IP Attorney About Your Freedom to Operate
The steps you take to protect your intellectual property prior to commercializing a product plays a significant role in determining the trajectory of your business. You owe it to yourself and your investors to do your due diligence before commercializing your product.
Schedule a free consultation with one of our IP attorneys today to learn more about FTO, patent protection, and the nuances of intellectual property law.