Freedom to Operate – What does it mean and a look at some different approaches

Consideration of a company’s Freedom to Operate (FTO) can be extremely important. However, it can be misunderstood and very often not considered at an early enough stage. In this article, Emily Teesdale looks at Freedom to Operate issues, in relation to the patent rights of others. In particular, she explains some different approaches companies can take.

What is FTO?

So, firstly, what do we mean by FTO? In the context of IP (Intellectual Property), we mean that you are free to manufacture or sell your product because you are not infringing an IP right owned by someone else. This could be a patent right or a trade mark or design right. In this article we will be focusing on the patent situation.

Importantly, whether or not you may infringe someone else’s patent right is a separate question to whether you might be able to achieve patent protection for an idea yourself. To illustrate this, let us consider the car and the wheel. For the sake of the illustration, we will assume that there is an existing patent for a wheel (owned by “Wheel-y Good Company”) and that a company (“Car-ry on Regardless”) have later come up with the concept of the car.

They may well be able to get patent protection for it. After all, it is different to just a wheel on its own and it is likely that the use of wheels to drive a vehicle would be inventive.

However, the car, if manufactured or sold, would contain wheels and so “Car-ry on Regardless” would be selling something that infringed the “Wheel-y Good Company” patent. This means that they could be successfully sued and forced to stop selling cars and also pay damages to “Wheel-y Good Company”.

So, what should a manufacturing company like “Car-ry on Regardless” be doing instead? We will look at when a pro-active approach is required and some different options. We will then look at what could be done if a problem does arise.

Pro-active approaches

If a manufacturing company is thinking about developing a new product, FTO should be considered at an early stage.

However, the actual approach can vary widely and depends on the field you work in and the likely development costs. For example, if you are in a field where the development cost is relatively low, you may wish to take a passive approach. This is because you will have spent less up-front money on the development, and may be happy enough simply abandoning the project, if need be, when approached by a patent holder. On the other hand, if development costs are significant, this is unlikely to be the correct approach and a much more proactive searching strategy is required.

I outline below two main searching approaches and would suggest that a combination of them can be especially powerful:

1) Landscape Searching – This term is used to refer to searching to see what patent rights exist in a certain area, in order to give a steer on potential development areas. For example, these searches might reveal some areas that are “patent hot spots” and some that are much quieter that are still commercially important. A company may wish to steer development into those latter areas instead.

2) Regular/Ongoing Searching – As a project develops and the final product is taking shape, this searching will help to identify any issues early. For example, does the latest design include a feature that is under strong patent protection? If so, the design could be tweaked to avoid this.

Both these searches should be carried out by professional searchers. In order to maximise value from these searches, you should carefully consider the countries that are relevant (as IP rights are territorial) and whether or not to limit the searching to key jurisdictions, such as EP or US. You could also consider limiting the searching to certain competitor names, if the market is relatively closed, or to certain key words/within certain fields.

What if you find an issue?

When you discover an issue - either because a right owner lets you know once they become aware of your activities, or because you find a right of concern from your searching, what can you do?

Well, the first thing is to bear in mind the difference between pending patent rights (applications) and granted patent rights. Pending patent rights may appear very broad and indeed may cover what you intend to launch. However, most patent applications are narrowed during prosecution (to aspects that are novel and inventive) and only granted cases can be enforced against you, in due course. Therefore, when considering pending cases, we would be looking at the potential protection that we think might be achieved, rather than what the current application covers. We would also advise monitoring the prosecution of the pending cases and considering taking action to prevent grant of the case, if appropriate.

Once you have a list of potential problem cases, it is necessary to ensure the risk of each of them is managed.

This can be done in a combination of ways, including:

• Can you design around the relevant feature?
• Can you approach the owner for a licence or to buy the patent from them? This may be relatively straightforward if the owner and you are not direct competitors, or if they are not working the invention themselves.
• If you are competitors, a cross-licence may be a solution. This emphasises the importance of having your own patent rights as bargaining power.
• You could look at attacking the patents (or applications) by looking for relevant prior art - the searching you have already carried out may be a very useful starting point here.
• You could move manufacture/sales to different territories not covered by the rights.
• You could postpone until expiry of the rights (generally, this is 20 years after the patent applications are first filed).
• Finally, you may have to abandon the project.

To summarise, the advice would be to consider Freedom to Operate early when you are developing your idea. Have some budget and time to run some searches, and involve a patent attorney at an early stage as they will have the experience to help guide you through this process.

If you need further advice please contact Emily or any of our attorneys who offer a brief initial complimentary consultation for new enquiries.