What is Freedom to Operate Search?

A Freedom to Operate (FTO) or Clearance Search is conducted in the relevant jurisdictions prior to a product or service being marketed. It is utilized to evaluate the prospective likelihood of potential infringement and reduce the chance of additional legal issues. FTO search typically focus on one country, but for absolute surety, it is recommended that the search be widened to cover foreign applications that could potentially reach the target jurisdictions. During the FTO search, patent claims are examined that could be applicable to the features of the expected product or service. This process makes you comfortable enough to start your business.

Why it is important for inventors and businesses

• Protect from Legal Risks: If you launch a product that is already patented, you may be sued for patent infringement.
• Risk-Free Market Entry: FTO allows you to make risk-free investments in development, manufacturing, and marketing.
• Assurance for Investors and Partners: Prior to funding or cooperation, investors and partners frequently want FTO clearance.

Legal Foundations of FTO

What is Patent?

A patent is a governmental-granted legal right provided to an inventor that provides exclusive ownership of their invention for a specific time period (usually 20 years from the date of filing). The right permits the inventor to keep others from producing, using, or selling the invention without permission. A patent essentially protects an invention that is new, useful, and not obvious, which can be a product or a process.

Patentability vs. FTO

Patentability search is a search employed for identifying whether an invention is already disclosed to the public in any form or not. Patentability search encompasses any type of material which is in public domain available and could be termed as prior art, including patents, research papers, online publications or any other types of non-patent literatures.

Conversely, an FTO search (right-to-use or clearance search) is a search for determining if a product or invention is saleable or useable without infringing on existing patent rights.

Patentability Search:

• To find out if an invention is patentable or not.
• Novelty and non-obviousness of the invention is the focus of this search.
• Search scope is jurisdiction-specific active patents.
• Search is done prior to patent filing.
• The ultimate result of the search is to give advice on patent application.
• The search is cheaper compared to FTO searches.

FTO Search:

• Purpose is to ascertain risk of patent infringement.
• Third-party patents and claims are the emphasis of the search.
• The scope of the search is worldwide prior art(s) comprising both patents and non-patent literature.
• The search is done prior to product launch or commercialization.

• The ultimate result of the search is to deliver a possible risk assessment.

Patent Rights Differ by Jurisdiction

A patent in one jurisdiction does not give protection in others because patent rights are territorial in nature. Each jurisdiction has its own enforcement system, rules, and patent office. Hence, unless you have filed and received patents in Europe, China, India, or any other jurisdiction, your invention is not protected if you only have a patent in the US. For example, you can prevent anyone from making, utilizing, importing, or marketing your innovation anywhere within the United States if you obtain a patent within the country. According to U.S. law, you cannot prevent a person from manufacturing or selling the same invention in Germany if you do not possess a patent in that country.

Why Jurisdiction is Important for FTO?

If you are marketing a product in several countries, it is not enough to do an FTO search in one country. You must examine the patents of other nations where you intend to manufacture, sell, distribute, or provide the product. This way, you can ensure that you don't infringe someone's existing patent rights in any country and thus avoid legal proceedings, import restrictions, or postponement of your product release.

How Claims Define Infringement

Claims are the most important element of a patent application since they define the scope of protection an invention deserves. In other words, patent claims define the legal boundaries of an invention where the inventor’s exclusive rights begin and end.

Importance of FTO Analysis

An FTO search is useful for purposes other than ensuring legal compliance. It helps achieve a number of strategic business objectives:

• Reducing Legal Risks: Through FTO searches, companies can identify potentially conflicting patents early on and develop workarounds or investigate other licensing options. This minimizes the possibility of future infringement claims.
• Minimizing Litigation Expenses: Allegations of patent infringement can be expensive and time-consuming. A FTO search before product launch significantly reduces the chance of lawsuits, saving time, cost, and reputation.
• Improving Investment and Licensing Appeal: A clean FTO report can boost investor confidence and facilitate more advantageous license negotiations. It demonstrates thoroughness and reduces perceived risks associated with the product or technology.
• Safeguarding Intellectual Property Assets: By having a thorough awareness of the IP landscape, businesses can protect their portfolios and avoid litigation. By creating their designs around existing patents, businesses can also stop their own ideas from being weakened.
• Supporting long term growth: Avoiding patent disputes ensures that attention will remain on innovation, development, and market expansion without being diverted by legal concerns. An effective FTO strategy supports ongoing research and development and enhances competitive advantage.

When is the right time to conduct an FTO analysis

Conducting a Freedom to Operate ("FTO") search is fundamental to the innovation life cycle. It serves as a legal and marketing checkpoint for companies and innovators who want to make sure that their technology, method, or product may be sold without violating any existing intellectual property (IP), particularly patents.

Key Stages for Conducting an FTO analysis

The timeliness of an FTO search is critical to mitigate risk and ensure a clear path to market. A number of typical phases can provide some guidance on the decision, although the best time may vary depending on the nature of the innovation and the business goals:

• Early Stage Product Planning: When planning for the product at an early stage of the product development, companies can eliminate possible patent conflicts by conducting a freedom-to-operate search before dedicating a significant amount of time and resources to the process. Once risks are recognized, the product can be re-designed or altered to circumvent infringement.
• Pre-product Launch: In order to avoid delays and legal barriers, you must conduct FTO search before the product launch. This system reduces the risk of litigation and streamlines the commercialization process by providing companies an opportunity to identify and address other relevant patents before a matter becomes litigious.
• Before Filing a Patent Application: An FTO search is beneficial to help work out whether a proposed innovation is likely to infringe any patents that already exist before filing a patent application. The FTO asks whether or not practice could lead to legal problems, while patentability asks whether an invention is new and non-obvious. Understanding both aspects will help ensure your IP filings are more meaningful and informed.
• Transactions such as Mergers or Acquisitions: In the case of a merger or acquisition, an FTO search can illuminate any undisclosed IP risks. This data can affect the terms of the deal as well.
• When Adding New Features or Expanding into New Markets: Adding new features or improvements to an existing product, or entering new geographic markets, may put the product in conflict with other patents. In these situations, a new FTO search guarantees continued adherence to patent regulations in the updated setting.

Strategic Factors that Influence FTO Timing

Several practical and strategic factors can influence when an FTO search should be carried out:

• Product Development Stage: Conducting the search early helps avoid costly reworks or redesigns.
• Urgency to Enter the Market: A quicker FTO assessment might be required for a quicker market launch.
• Budgetary Restrictions: Although thorough FTO searches can be expensive, postponing them may result in far higher costs because of potential legal action.
• Competition Activity: Vigorous competition increases the necessity of FTO inspections to prevent infringement on pending patents.
• Impending Licensing or Acquisition Deals: Knowing the FTO risks prior to licensing or acquisitions helps guarantee that the technology is viable within the law.  

Risks of not conducting an FTO Search

Following are the repercussions of not conducting an FTO search:

• Unintentional Patent Infringement: Businesses may face cease-and-desist orders, product recalls, or injunctions for unintentional patent infringement.
• High Financial Liabilities: IP rights lawsuits can result in large settlements and litigation expenses.
• Interrupted Product Rollout: If intellectual property conflicts are discovered after a product launch, manufacturing may be stopped or redesigns may be required.
• Damage to Brand and Trust: Claims of patent infringement may have a detrimental impact on a company's reputation and clientele
• Reduced Investment Appeal: Legal concerns may discourage possible partners or investors from lending their support or working with the business.

Economic Impact of an FTO Search

Depending on the intricacy of the technology, the number of jurisdictions investigated, and the depth of the prior art study, the cost of an FTO search might vary greatly. Even if up-front fees might seem substantial, they pale in comparison to the possible costs and risks of intellectual property litigation.

Hiring an expert patent lawyer or IP firm to conduct the search can improve accuracy and guarantee expert handling of intricate legal opinions and claim interpretations.

How to Conduct an FTO Analysis

The steps involved in an FTO analysis are listed below:

Step 1: Understanding the technology and preparing key features

This step involved developing an understanding of the technical domain and preparing key features of the search. Key features are the essential technical elements, functions, or structural components that define what the product or process is and how it works. In simple words, key features are the core building blocks of the search.

Step 2: Patent Search

This step involved formulating search strategies and carrying out search on one or more of third party patent databases such as Questel Orbit, Patseer, USPTO and Espacenet and on AI-based tools. A variety of search strategies will be used to identify relevant patent references from the databases. As an example, following strategies may be used for identifying relevant patent references:

• Assignee based searching
• Keyword based searching
• Inventor based searching
• Class based searching (IPC; US class; CPC; F-Term etc.)
• Citation searching (which includes analysis of Backward and Forward citations of relevant references)
• Similarity searching

Step 3: Jurisdiction Coverage

One important consideration in FTO searches is jurisdiction. The jurisdictions in which the client indents to commercialize a product must be included in the search. In the future, losing out on a significant patent in a certain country may have major legal repercussions. For instance, if the product is intended to be commercialized in the U.S., the patent search can primarily focus on U.S. patents. However, it is advisable to also search the WIPO database, as there may be international patent applications that could later enter the U.S. jurisdiction through the PCT national phase route.

Step 4: Date Restriction

Typically, a 20-year period is considered for conducting FTO searches. Patents too have a fixed term of typically 20 years. In some cases, or jurisdictions, this period can be extended by a few additional years through regulatory mechanisms such as Patent Term Extensions (PTE). Further, an international application, or PCT application, may enter the regional or national phase within 31 months from the earliest priority date. Therefore, a date restriction of 31 months should be applied for searching PCT application.

Step 5: Preliminary Patent Screening

This step involved conducting a preliminary screening, based on title, abstract, claims of the patents obtained above to identify potentially relevant patents.

Step 6: Detailed Analysis

This step involved detailed analysis of the potentially relevant patents and their mapping in accordance with the key features of the product.

This step further involved categorization of the relevant identified patents based on claim length and their legal status.

The scope of the invention is determined by the length of the primary independent claim. Patents with shorter primary independent claims typically cover more ground. Priority is given to patents having shorter primary independent claims since they can have broader project effects.

Further, Sorting patents according to their family legal status in FTO searches can yield important information. Prioritize active and issued patents above anything else since they may present immediate obstacles during product launches.

However, patents whose legal status is expired, lapsed may also be shortlisted due to the following reasons:

• Expired patents not only show that the technology is open source, but they also provide guidance to the R&D team on how to improve or modify it. In the early phases of the product's or technology's development, this is fairly significant. Additionally, they can be utilized to invalidate a patent that you may be violating. These patents may also be used in negotiations for license. As a result, including these patents to an FTO analysis can lower the total risk and the expense of overcoming it.
• One key point to remember is that a patent that has expired for reasons other than completing its full term can still be revived at any time. Many patents that lapse due to non-payment of maintenance fees can be reinstated within a six-month grace period by simply paying the required fees. In some cases, even after that period, the patent can still be revived depending on whether the delay was considered inadvertent or inevitable. In short, an expired patent is not always truly dead, it can be revived unexpectedly, so it is wise not to ignore it completely.

Step 6: Deliverable Report:

The final deliverable is a structured MS Excel-based report. This report includes all the potential references located during the search.

Importance of Claims in an FTO Analysis

The purpose of a Freedom to Operate (FTO) analysis is to make sure that your product or procedure does not fall within the range defined by another individual's patent claims.

FTO analysis involves closely reading, analyzing, and comparing assertions in existing patents with your product or technology. This process is done by comparing such statements with the characteristics of an implied technology or product to determine whether there is any potential overlap that could cause patent infringement.

About Effectual Services

At Effectual, we have successfully delivered 500+ Freedom to Operate (FTO) search projects worldwide in various branches of science for gathering and analyzing the latest advancements and innovations in specific scientific fields such as biotechnology, chemistry, environmental science, computer science, medical science, material science, agricultural science, neuroscience, energy science, aeronautical engineering, mechanical engineering, and electrical engineering searches etc.