Freedom to Operate explained – are you sure you can commercialise your patented invention?

It’s a common misconception that holding a granted patent means you’re free to commercialise an invention and can’t infringe the patent rights of a third party. After all, how could you be granted a patent when someone else already holds patent rights covering the same invention? This can (and often does) happen. To understand why, here’s a deep dive into the nature of patent rights to showcase the importance of conducting Freedom to Operate (FTO) searches.

Patents are ‘negative’ rights

A patent is a negative right, used to prevent others from taking certain actions, such as making or selling a product. The ability to block competitors from the market can provide a significant commercial advantage. However, a patent doesn’t grant its owner the positive right to sell their own product.

While a patent may be granted for an inventive aspect of a new product, it’s possible that other aspects of that same product may have been protected by an earlier third-party patent. In this case, you may be blocked from selling your product by the third-party patent, despite having your own patent.

Patented wheel hits a roadblock

Imagine a time when people transported their goods on carts with square ‘wheels’. Clearly, this is far from ideal and results in a very bumpy ride. Eventually, one clever person hits on the idea of round wheels. This is a big improvement on the square version, and their ingenuity is rewarded with a patent. However, the round wheel is wooden and still provides a ride that rattles the fillings.

A second wheel entrepreneur identifies this problem and secures a layer of rubber around the outside of the wheel, creating the first tyre. This provides a dramatic improvement and the second inventor secures a patent for his rubber covered version.

The second inventor proudly goes to sell the rubber coated wheel but is surprised to hit a legal roadblock. Since the rubber coated wheel is round, it infringes the first patent. The inventor is therefore unable to sell the rubber coated wheel while the first patent remains in force, which can be for up to 20 years. A patent was awarded because the rubber covering concept was new, but the patent hasn’t granted the second inventor the freedom to commercialise their product.

The patent bargaining chip

Have the second inventor’s efforts been for nothing? Is their patent worthless? It may seem so at first glance, since a stalemate had been reached — the first inventor can only sell an inferior product (without a rubber coating) because of the rubber covered wheel patent, while the second inventor can’t sell their improved wheel (with a rubber coating) because of the original wheel patent — however, the second inventor now has commercial leverage and there’s a deal to be done.

A licence could be agreed with the first inventor to allow the second to sell round wheels, paying a royalty for each wheel sold. At the same time, the first inventor might wish to license the tyre patent. Alternatively, the second inventor may decide to move away from the wheel business, sell the tyre patent to the first inventor, and ride (comfortably) off into the sunset.

While a granted patent provides a bargaining tool in situations like this, there’s no guarantee an agreement will be reached. As the second patentee, you could find yourself excluded from the market.

To make certain of your ability to commercialise your invention, it’s advisable to conduct a thorough Freedom to Operate (FTO) search to identify third party patents that may cover your product. This should be conducted as early as possible in the product development cycle — ideally before any significant capital expenditure is undertaken. The earlier the search is conducted, the lower the commercial risk and the greater the opportunity for making changes to your design to avoid any problematic third-party patents.

If you need help commercialising your inventions, get in touch with us.