“Without Freedom, there is no Creation” - J. Krishnamurti
An innovation is useful only if there is freedom to test, market, or sell product or service utilizing that innovation. An enterprise with even the most innovative product may be laden with technology risks in the form of existing intellectual property in the market which may need to be licensed or circumvented. Such risks often culminate in the form IP infringement disputes (if the technology is already patented by another party, firm or individual) – sometimes even before the company earns revenue from the breakthrough product.
A Freedom to Operate (FTO) analysis allows companies to avoid the above risks by analysing the government regulations, intellectual property rights, trademarks, copyrights and any other IP laws that might apply to the product or service.
For example, food and medication have to meet strict safety standards to operate freely, no matter how many U.S. patents inventor has. If FDA (Food and Drug Administration) rejects the drug, there is no way to commercialise or enter into the market for the same.
For patents, particularly (which may be the biggest encumbrance for technology products), the FTO analysis begins by searching patent literature for issued or pending patents, and obtaining a legal opinion as to whether a product, process or service may be considered to infringe any patent(s) owned by others.
When to Perform an FTO Analysis?
Launch of a new technology, product or service
Expanding or entering a new geography
Targeting a new customer audience for an existing product or service
Investing in or acquiring a new company, product or service
Planning for future research and development
Steps to Perform an FTO Analysis
Identify Relevant Geography: The first step is to identify the country or region in which the product or service is to be launched. Most forms of intellectual property, including patents, are jurisdictional, so if the product or service is being launched in two different countries, two separate FTO analyses are typically required.
Identify Keywords: Keywords explaining key functionalities of the product, technology or service must be identified to perform FTO analysis. The keywords must include broad as well as specific terms to aptly identify the product, technology or service – as well as synonyms for each of those terms.
Infringement Search: Based on the keywords, the relevant patent databases are searched for all granted and active patents, and pending patent applications that may cover the key functionalities of the product, technology or service.
Prepare FTO Opinion: Preparing an FTO opinion is the most important step which will give an idea to the enterprise whether to go ahead with the product/service or not – and whether there is a need for obtaining licenses before the technology is brought to market. An FTO opinion includes product/service details for which FTO is being prepared, closest competitors’ products details, patents and applications that are relevant to the product, technology or service, and a mapping of the product, technology or service with the independent claims of the closest relevant patents and applications for literal infringement, infringement under doctrine of equivalence or indirect infringement (inducement of infringement).
What Happens After an FTO Analysis?
Depending upon the extent of overlap between the closest patents and application discovered during an FTO analysis, the company may be presented with the following courses of action:
Buy the closest patents: An enterprise can buy patents that are closest to the breakthrough technology, product or service. Buying a patent gives full rights (including but not limited to sue other companies who might infringe on the patent) to the enterprise to market and distribute the invention to the public.
License the closest patents: Patent licensing refers to the act of getting the ownership of a patent so as to make, use or sell the invention for an amount of pre-decided royalties.
In-Licensing: Licensing all the patent rights to operate freely and sell the product or service in the market.
Cross-Licensing: An agreement between two parties so that each party may benefit from each other’s patent. Generally, the patents that each party owns cover different essential aspects of a given commercial product. Therefore, by cross licensing, each party maintains their freedom to bring the commercial product to the market.
Patent Pools: A partnership between two or more companies that come together to share a patent for either intellectual property or a particular technology, so that they are free to develop and sell their products in the market.
3. Circumvent the closest patents: Once the closest patents has been identified through an FTO analysis, an enterprise can modify its product or service around those patents to avoid the infringement lawsuit.
To know more about how Copperpod IP can help you safeguard against patent infringement, contact us at email@example.com for a free consultation.
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