Freedom to operate (FTO) search is a study done to understand if a product infringes on any patent claims in a certain country. FTO studies give companies the confidence to commercialize a product in a region without violating claimed inventions.
Thomas Alva Edison made one of the earliest uses of an FTO search. Edison was searching for patents that his light bulb could violate. He discovered an earlier patent filed by Canadians Henry Woodward and Mathew Evans. The patent was on carbon filament in a non-oxidized environment. So Edison licensed the patent US181613A to avoid a legal challenge from them at a later date. Thus we know Edison as the inventor of the incandescent light bulb today.
How is an FTO search conducted?
Granted and pending patents
An FTO search is also called infringement analysis or clearance search. An FTO search aims to uncover the IP, primarily patents related to your product. It is a search to find relevant prior art - granted patents and pending patents. Prior art in an FTO are patents filed before the launch of your product. Holders of granted patents can sue you in case of infringement.
In comparison, pending patents may become granted patents at a later stage. Thus, there is a significant risk in launching a product that already has a filed patent on it without preparing for it. Issued (or granted) patents may be both active and expired. But both active and expired patents are of importance in an FTO search.
Active granted patents
Active patents show where the competitors hold most patents and until when they are in force. This awareness will allow you to make a strategy for entering the market with your product. For example, you plan to launch a medical device in Germany. During your clearance search (FTO Search), you find company A has patents related to the device. You will face the risk of legal action from company A if you launch your product. But with this knowledge, you can save on the development costs of your product. You can also re-design your product around the claims to avoid infringing the patents. Or, you can license the patents from company A.
Inactive or expired patents
Once you file a patent, the patent office publishes it usually after 18 months. Then, after examination and resolution of any objections, the patent office grants it. To keep the granted patent active, you have to pay a maintenance fee from time to time. Besides, patents expire when they have completed their term of 20 years, from the date of filing. Patent holders in both these cases can no longer sue you for using these patents. Thus an analysis of such results informs where you are free to launch your product.
Geographical restriction and life of a patent
Since applicants apply for patents in particular countries, they remain in force in those countries only. Such patents may be free to use in other countries. Let's say you wish to launch a product in Europe. But from an FTO search, you find that a competitor has patents in Germany only. Then you can use the product in the remaining countries and get a license in Germany. So you must conduct an FTO in all those countries where you plan to sell the product.
Besides the geographical restriction, patents also have a specific life. Design patents usually last from 14 to 15 years, depending on the regional patent office. Utility patents, or simply patents, last for 20 years from application. So if a competitor filed a patent in 2015, it would remain active till 2035. There may be patent term adjustments for delays in processing the application. The patent office then adds this term to the life of the patent.
Why should you conduct an FTO search?
Patent lawsuits in the US range in millions of dollars. Defending such cases is even more expensive. Competitors will sue you for infringing their patent rights. This section explores why you should conduct an FTO search before launching a product.
Avoid lawsuits from Non-Practicing Entities
Some entities license and get patents only for filing patent lawsuits. They earn through these lawsuits. Such entities are called Patent trolls. There are many definitions of patent trolls, but the IP world considers this a derogatory term. Such entities are often called non-practicing entities (NPEs) or patent assertion entities (PAEs). They do not develop or research the invention claimed in the patents. They buy licenses or patents from firms left with only patents as valuable assets. As NPEs don’t own assets for manufacturing or marketing a patented product, it may be difficult to counter sue them. So NPEs buy patents and earn much more from the rewards of successful patent lawsuits. Thus conducting an FTO search can save you from potential lawsuits from NPEs.
Competitive analysis and preventing infringement
Competitors might block the product from entering the market if they hold a prior patent involving the product. Such a threat is why many companies want to ensure that they have the freedom to operate in that region. FTO search gives you an estimate of the potential dangers. You can also use this search to analyze the competitors’ strengths.
Besides, awareness of such patents will help you prevent a lawsuit in the future.
Avoid redesign costs and initial investment
There is a considerable risk in launching a product that might infringe on a patent. You will have to redesign the product so that it does not infringe on the claimed features of the patent. Plus, the initial R&D costs would be wasted. An FTO search will help you avoid such expenses before you infringe the IP rights of a patent holder.
Freedom to launch a product in a market
An FTO study reveals the freedom to operate a company has. If it shows that a product infringes multiple patents, you can plan to tackle the situation. In contrast, if it does not infringe on a patent, you have the freedom to operate in the region.
FTO searches depend on the patented claims and skills of the searchers. Even if an FTO reveals the most results, there can still be chances of infringement. It is better to launch a product knowing the threats rather than going clueless.
Where can I get an FTO search done?
An FTO search begins with searching for patent literature relevant to your product. While you can search on your own, FTO usually requires an attorney's opinion to be fruitful. Patent searchers, under guidance from a patent attorney, can conduct FTO searches. There are also many intellectual property research firms that offer FTO searches. In some countries, IP offices also perform clearance searches for a fee. E.g., the Swiss Federal Institute of Intellectual Property. It provides an FTO search service with a case-to-case basis fee.
Clearance opinion
Followed by an FTO search or clearance search is the legal opinion. A patent attorney usually advises you based on the results of the search on your freedom to operate. A clearance opinion is thus a legal document written by the attorney(s). It gives a legal view on whether your products infringe on a patent or not. Generally, these are expensive and range in thousands of dollars. But, you might need a clearance opinion if you are seeking investment from other companies. Based on this opinion, you need to plan before launching your product.
If your product infringes a patent
If there are patents that your product infringes, you can look for these options:
- Licensing. Many companies in the same field of technology sign cross-licenses to prevent suing by one another. One company acquires the license of another’s patents to use the invention freely. Cross-licensing is a win-for-all strategy. It is helpful if the patents belonging to one are vital for the other. You can also buy the license if you do not have patents to cross-license.
- Invalidation. Generally, followed by a clearance opinion is the validity opinion. Validity opinion tells whether a patent is valid and can be enforceable or not. So in case, the patent that your product infringes is valid, you can seek its invalidation. Invalidation is searching for prior art that renders the patent invalid by breaking its novelty. If the office finds that the invention was known to the public at the time of filing, it can revoke the patent. Also, if the terms of a licensing agreement don’t suit either side, invalidating the patent may be the only option left.
- Design around. Patent lawsuits are costly and are often unpredictable. It is wise to compare the costs involved in making the product from scratch vs defending a lawsuit. But if neither licensing nor invalidation are workable options, you can try designing around. It is an infringement if your product matches any of the claims of a patent. You can then re-design your product so that it does not infringe on the specific claims of the invention.
If the product does not infringe a patent
So what if the FTO search shows that your product does not infringe on any patent? The first approach would be to go ahead and launch the product. But sometimes, not even an FTO search can guarantee the prevention of a lawsuit. So you should tread carefully. If your product doesn't infringe on any patent means there's scope for patenting it. If you have the resources, you should build a strong patent portfolio to protect your unique invention. Also, you may go for defensive publication of your invention. It is a technical disclosure of the product to stop its competitors from getting a patent. If they get a patent on the same invention, they can sue you in the future. However, defensive publications give access to the public - freedom for all to operate.
There are all sorts of insurances available to protect from unforeseen events. There is also an insurance policy for protection against infringements that you did not intend to make. Patent infringement insurance is available for both defence and litigation. If you're sued for infringement, the policy will cover the litigation costs. If someone infringes your patent, the policy will pay for damages to your business.
Conclusion
FTO search saves you the lawsuit costs that could damage your business later. You can act early from the conclusions of a clearance search. You can make slight design changes, license patents or invalidate a patent. The options after an FTO search become more vivid compared to what would have been the case without the analysis. That is why IP professionals advise companies to have an FTO search of their product before launching at an early stage. While you save money by averting the launch of an infringing product, you can also find potential business partners.