Role of Freedom to Operate Search in Product Development.

Patents play a crucial role in protecting ones IP rights. A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. When a company or individual launches a product in a new market particularly in technology sectors where there is extensive patenting, there is a high risk that commercialization may be blocked by a competitor who holds a patent for a technology used in that product. If this scenario comes to fruition, then the infringing party might suffer huge financial losses, for example they could be asked to stop the launch or to compensate the patent holder. Freedom to operate is the capacity to operate in a given jurisdiction without infringing on another’s intellectual property rights.

What is Freedom to Operate (FTO) search?

Freedom to operate search is also known as patent clearance search, a Right to use search, and a Freedom to practice search.  The goal of freedom to operate search is to determine whether your product or process, regardless of whether that product or process actually exists or is still under development (or just an idea), would infringe existing patents. This type of patent search evaluates the patent landscape for any protected technology that would keep you from using your invention freely. Otherwise, you may be committing IP infringement without knowing it. Freedom to operate analysis determines whether a product used, or a process performed by an entity is infringing on any claim of an active patent.

For example, a company A wants to launch a motorcycle in the market with a new engine, for which they have filed several patents after a patentability search. However, the company did not conduct a freedom to operate study considering that positive patentability study was sufficient for proceeding with the launch. It was later sued by a company B as one of its patent had a broad claim found to be infringed by an essential component of the A motorcycle engine, and the court instructed A to stop their launch and motorcycle manufacturing, due to which A suffered heavy losses. If the company A had done a freedom to operate search, they could have avoided these financial losses.

An FTO search is part of the due diligence that organizations should complete before applying for a patent. Ideally, a patent clearance search is also conducted at earlier points in the innovation process to ensure IP and R&D resources are allocated efficiently and effectively.

While performing a freedom to operate analysis, there are certain restrictions (patent limitations) which are usually followed such as:

• Date Restrictions: A period of 20 years is taken into account to capture the active patents in results.
• Jurisdiction/Region Restrictions: Only those regions are included where the company or inventor wants to manufacture, sell or import this product or process.
• Document Restrictions: Only patents are searched for FTO.

An FTO search focuses only on active patents, not non-patent literature. Although, expired or abandoned patents could be used to gain valuable insights regarding the patent trends and markets. While an absolute guarantee of freedom to operate will never be attainable, there are ways of minimizing the risks that can save a company significant resources.

How FTO search is different from Patentability search?

Patentability Search and a Freedom to Operate Search may seem similar but actually they are quite different.

In patentability search the analysis must cover all publications, including patent prior art and non-patent literature, to determine whether the product or process at issue is novel, non-obvious and can be patentable. An FTO search, on the other hand, emphasize its search solely on patents, since it is only active patents that give the holder(s) the right to pursue litigation.

When should we conduct a Freedom to Operate search?

A Freedom to operate search should be carried out during the research and development stage of a process or product. It is recommended that you should conduct an FTO search in the early stages of the product cycle to

• Avoid unnecessary costs and the wasted allocation of resources.
• Reduce the risk of future litigation.

An FTO search conducted early can help you to design-around before heavy investments may be sunk in to the product or process. During a freedom-to-operate search, all aspects of the development and manufacturing processes must be covered. It may be possible that your commercial product does not infringe any patent but the manufacturing process might.  Every change in the product design and manufacturing process must be considered for the FTO analysis because any of these changes could lead to potential infringement problems.

Benefits of a Freedom to Operate search:

• Product Launch: The relevant results from the FTO search will allow you to device marketing and pricing strategies. You can avoid any potential infringement by not launching your product in the jurisdiction where one or more features of your product might infringe on a competitor’s patent. You can also redesign the product to avoid infringement.
• Infringement Allegations:  An FTO search can help you in protection against “willful infringement” charges by showing an attempt at due diligence.
• Instill confidence in Investors:  Conducting an FTO search will show that you take IP rights very seriously and do not want the risk of being sued for infringement. It will mitigate investor’s concern about the risk of infringement. They will be more likely to support your business if they know you have conducted a thorough FTO search.
• IP insurance: Insurance that covers IP infringement claims will likely require you to do a freedom-to-operate search before launching a product. Not doing so could invalidate the insurance.
• Protecting technology: If the FTO search reveals there are no patent prior arts that block you access to the market and your new invention meet the patentability criteria, you can consider protecting your novel idea with a patent. This option enables you to negotiate licensing deals or other favorable arrangements with other companies/competitors.
• Identification of NPEs: NPEs OR Non Practicing Entities are person or companies who own patent or patent rights and do not commercialize or practice their patented invention. Their main goal is to enforce their patents through licenses or litigation. FTO search helps to accurately identify the NPEs (Non-Practicing Entities) to prevent businesses from infringing on their patents. It has become crucial to identify these NPEs as a rapid rise in infringement litigation by these entities has been recorded.

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