What is Freedom to Operate (FTO) in relation to patents and IP?

Tom Baker

What is Freedom to Operate FTO in relation to patents and IP

What is Freedom to Operate?

Freedom to Operate (FTO) refers to whether it’s commercially ‘safe’ for you to make or sell your product in the country in which you wish to do so, without infringing existing third-party rights.

An example question might be “I’ve designed a new medical device — can I sell it in the UK without someone coming after me for patent or design infringement when I release it commercially?”

In this situation, if there are no third-party registered rights in-force in the UK, you may be clear to make and sell the new medical device here without any FTO barriers. However, if there are existing registered rights in force, you run the risk of having to stop selling, paying damages/royalties or potentially being sued and becoming embroiled in infringement proceedings.

How do I check FTO and know how much is required?

Conducting a FTO search is usually the best step you can take to help minimise the risks of infringing existing IP rights. Think of FTO searching and analysis on a scale of 0% to 100% — 0% being where you’ve given no consideration to FTO (and therefore the risks of infringing third-party rights are highest) and approaching 100%, where you’ve completed a significant and exhaustive amount of FTO searching and analysis. In reality, it’s never possible to be 100% certain that you have FTO.

The amount of FTO work you should carry out depends on a number of factors, but as a simple guide you can base it on the cost of developing a new product and bringing it to market. If you’re making a significant investment, it’s always advisable to carry out more FTO searching and analysis at an early stage.

How can I avoid Freedom to Operate risk?

To obtain the required degree of certainty that you have FTO, you first need to find any relevant IP. This will be patents, trade marks or other IP rights which are in force in the country in which you wish to make or sell your product. You then need to determine whether such rights pose an infringement risk. We’ll focus on patents here, but other registered and unregistered rights may exist.

There are ways to reduce this burden — I recommend using a professional for this task to minimise the risk of missing key third-party IP and avoid the analysis of any irrelevant IP.

The options to maximise the effectiveness of your FTO searching while keeping costs low are:

  1. Limit your search to countries in which you’re intending to be commercially active — if there are multiple countries to consider, you may wish to reduce the search to the key territories in which protection might be in force. For example, if a competitor has no patent rights in Europe or the US, are they likely to have independent protection in other national countries? If your product happens to be a medical device, the chances are low.
  2. Limit your search to certain key competitors or their technical field — doing so will likely reduce the cost significantly and result in quick gains to increase FTO certainty.
  3. If you need more certainty, you can expand the searching later.

What are you looking at?

If I filed a patent application (and paid the relevant fees) for a ring of rubber to fit around a wheel, it would be officially published as a pending patent application after 18 months. This official document would elicit shock that someone had secured a patent for a tyre — an innovation which has been known for years, so isn’t novel.

However, such an application would never proceed to grant, as clearly a tyre (without any new technical feature being added) is nothing new and patents must be based on new technologies. This initial publication is known as an ‘A’ publication and relates to a pending patent application. Only when the application is accepted by the patent office as defining new technology does it progress to a granted patent. It’s then republished as a ‘B’ publication. The patent claims at the end of a ‘B’ publication define the patent rights that can be enforced.

Therefore, you must be sure to identify between a granted or registered right rather than an application. However, although applications can’t be enforced until they’re granted, they raise their own problems since they cause uncertainty about the scope of protection that might eventually be obtained. For example, imagine the patent application directed to the tyre does have a feature, not necessarily defined in the claims, that seems to be new — and I want to make a tyre that includes this feature. The rights owner might limit their scope of protection to include this feature, meaning that once the application grants, I’d infringe the patent.

For this reason, pending rights can often be more problematic then granted rights, as the scope of protection is less certain. Monitoring the progress of patent applications can therefore be extremely important and action can be taken if appropriate to try and stop the grant of such applications.

In either case, I recommend that you take advice as to the ‘scope’ of those rights, as interpreting patent claims is often a difficult task, best handled by a patent attorney.

What happens if I didn’t know about existing IP rights and someone comes after me for infringement?

The idea that you have 100% FTO is never true. There’s always a risk of infringing third-party rights no matter how much searching is carried out. While there are implications for IP infringement, rarely does it end in a month-long hearing before the High Court. However, this is a possibility. If something happens, don’t panic, but be sure to seek professional advice immediately. Never ignore correspondence from a rights holder, as the situation invariably worsens.

Possible scenarios to resolve the situation may be to take a licence, redesign the product to avoid the scope of the IP right for future products or even seek to show that the enforced IP right is invalid. Each option has a different cost attached to it.

Six things to remember about FTO

When it comes to FTO, always ensure that you:

  • consider searching and analysis for a new product at an early stage of development
  • think about the level of FTO certainty you require based on the effort and associated cost needed to take your product to market
  • take the low-hanging fruit first when it comes to searching — think about your key competitors and/or competitors’ technical field and restrict your search accordingly
  • limit your search to key markets
  • understand whether third-party rights are pending (therefore of uncertain scope) or granted (having confirmed scope), and consider accordingly
  • engage a professional — FTO searching costs depend on the certainty required and you can minimise these by working with an expert

Need help with Freedom to Operate searches, or want more information? Feel free to get in touch with us.

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