This article is written by Ch. Leela Madhuri, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Aatima Bhatia (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).
In the regime of Intellectual Property Rights, patents play a very important role in protecting IP rights. A patent could be a privilege granted for an invention, which could be a product or a process that provides, in general, or offers a new technical resolution to a problem. To get a patent, technical information regarding the invention should be disclosed to the general public via a patent application. However, it should be borne in mind that Patent litigation can be an expensive, unsafe, and risky business, and as the saying goes: prevention is better than cure. So, when a company or organization or firm or any individual plans to develop a new product and introduce it to the market, there is a major risk, especially in technological sectors that deal with a large number of patents. That is why many companies try at an early stage to ensure their “freedom to operate” (FTO), i.e. to ensure that the commercial production, marketing, and use of their new products, processes, or services do not infringe any third party property rights. Freedom to operate is the capacity to operate in a given jurisdiction without infringing on another’s intellectual property rights. Freedom to operate is established once no active patent is being infringed or is otherwise not in force. It enables the company or an individual to make and market products without infringing the right bestowed by any active patent. This article disperses light on all the things we need to know about Freedom To Operate Search together with features, advantages, importance.
About FTO search
The term FTO search stands for Freedom To Operate search. In order to get a patent, a product must be novel, creative, and must have industrial application. However, the mere undeniable fact that one has got a patent is not any guarantee that the person won’t infringe on another manufacturer’s patent. All the same, it’s been established by a novelty search that once an invention meets the essential parameters for a patent, one is able to continue to take the remainder of the market into account. To provide some insight into that market, there’s the liberty to control search. Freedom To Operate search can be also known by different names such as a Patent Clearance search, a Right to use search, and a Freedom To practice search. Whatever it is, the goal is always the same. Which is to determine whether a product or process infringes any of the claims in granted patents or pending patent applications. It aids in determining whether your product or process, regardless of whether that product or process actually exists or is still under development (or just an idea), would infringe existing patents. Ultimately, an FTO search enables an inventor or company to know in advance whether there is a patent that is identical to the inventor or company’s product or process. One is able to acquire freedom to operate by inventing a completely unique technology of their own, invalidating or opposing relevant patents, or licensing or getting the rights to the patent(s) their technology infringes on.
A good FTO patent search may offer a creator or company the chance to develop a design-around early within the development process, before massive amounts of time and/or cash are undone into a product or process. At the same time, an FTO search can also highlight changes to license existing technology, which aids in saving time and reducing the danger of litigation proceedings from the get-go. And for a few inventors or companies, mainly start-ups, an FTO search can help founders to have confidence in their product and aid in availing funding from possible investors.
It is to be noted that both Patentability Search and a Freedom To Operate Search are sharply different though they may seem similar. Basically, a patentability search better covers all publications, organized with previous art and non-patent works, to work out whether the product or process in the dispute is novel and is, therefore, patentable. Whereas an FTO search, on the other hand, emphasizes its pursuit severely on patents, since it’s solely focussed on active patents (and not other methods of permits).
Freedom to operate analysis is an analysis of whether a product used, or a process performed by an entity is infringing on any claim of an active patent. At this point, the other basics of the patent, such as specifications and sketches, are not as significant (although they may still be revised), as it is the privileges of the patent that delimit the lawful scope of the patent. While carrying out an FTO, it is recommended to follow certain practices such as date restriction, jurisdiction restriction and document type restriction, etc. In date restriction, a period of 20 years is taken into account for patents given that only active patents are taken into account. Patent literature for locations where a patent or process is in use is searched in case of jurisdiction restriction. With regards to document type restriction, only patents are searched for an FTO, since only patent claims affect FTO. Non-patent documents are not searched for an FTO search.
Though it tends to be expensive, an FTO is a worthy investment, particularly if proceedings are currently within the domain of patents. In fact, an FTO can be an essential component if the company is seeking foreign investment.
A company X wants to launch a motorcycle in the market with a new engine, for which they have filed several patents after a patentability search. However, the company did not conduct a freedom to operate study considering that a positive patentability study was sufficient for proceeding with the launch. It was later sued by company Y as one of its patents had a broad claim found to be infringed by an essential component of the X motorcycle engine, and the court instructed X to stop their launch and motorcycle manufacturing, due to which X suffered heavy losses.
Importance of freedom to operate search
Whenever a company is planning to develop and launch a new product, a major risk, particularly in technology sectors where there is extensive patenting, is that commercialisation may be blocked by a competitor who holds a patent for a technology incorporated within that product. This is why many companies, at an early stage, seek to secure their “freedom to operate,” i.e. to ensure that the commercial production, marketing and use of their new product, process or service does not infringe the IP rights of others. While an absolute guarantee of freedom to operate will never be attainable, there are ways of minimising the risks that can save a company significant resources and this is the importance of FTO. Similarly, it helps organizations to know the commercial and legal liability of the actual invention in numerous regions and markets. FTO search helps to accurately identify the NPEs (Non-Practicing Entities) to prevent businesses from infringing on their patents. This process of identifying NPEs gains significance because a rapid rise in infringement litigation by these entities has been recorded. Also, since FTO searches deal with numerous geographical and national regions, they help organizations to recognize countries where their innovations are most likely to be infringed upon. These searches also enable businesses to find countries/regions where they cannot commercialize their inventions due to existing patents.
Similarly, FTO searches help to recognize patents that have expired or are existing in a given dominion. By recognizing these, a company can investigate whether to launch a trust or to cooperate in the given dominion. In the same way, FTO searches additionally assist companies to become aware of expired patents in a given geographical region. These patents may be utilized by them to increase new improvements which can be commercially possible within the global market. With such complete analysis, enterprises can increase products without infringing any rights. FTO searches, therefore, help to discover whether or not there’s any liberty to work on a particular invention in a specific jurisdiction from a legal perspective.
Patent proceedings are often especially pricey and the time taken to reach a conclusion is lengthy as well. Since there is the potential to calculate chances of infringement through FTO analysis in advance, it is better to do this right at the stage of initiating the new project. A correct FTO analysis alone cannot measure the probability of steering clear of patent infringement litigation, however, it would additionally open up new business prospects by showing the number of opportunities in the arena of technologies within the marketplace and also minimize the risk of infringement of the rights of the third parties. So this Freedom To Operate search supports not only in preventing infringement but also helps in conducting business safely and also makes it clear what the patent rights of others are which might be infringed if one begins to operate. Therefore, FTO search is an integral part of such competitive intelligence because it prevents new technological innovation from being targeted for infringement. Furthermore, it helps businesses come up with good revenue from their product and services.
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