• Jeff Morton

The Importance of Freedom To Operate

So, your company is in the process of developing a new mobile app, or a new diagnostic method for diagnosing an important disease, or any other new and useful invention. You are rightly excited at the impact that this invention will have on the market, let alone the value of your company.



But hold on for a moment:


What if your new invention infringes third party rights?


How should you mitigate this risk?


The answer is a freedom to-operate (FTO) analysis.


What Is An FTO Analysis?


At its most fundamental level, freedom-to-operate (FTO) involves an analysis of a new product, or method, or system that is being developed or marketed to determine whether the new product, or method, or system infringes existing third-party patent rights.


In the absence of FTO, a company may be developing technology that, upon completion, results in a costly (i.e., 7-figure and up) patent infringement lawsuit.


Accordingly, it is common for companies of all sizes and in nearly any area of technology to carry out a FTO analysis to determine whether there is freedom to operate, or whether intellectual property (IP) licenses will need to be acquired in order to prevent downstream patent litigation.


Carrying out this analysis results in the development of important risk profile information that a company can then use to decide whether there is a risk in launching their product/method/system and if so, how to mitigate such risk.


A FTO analysis generally consists of three broad steps:

  1. The desired product/method/system is described.

  2. A search for potentially relevant patents and pending patent applications is conducted and a list of results is compiled.

  3. The scope of the issued or pending claims of the potentially relevant patents or applications is compared against the specifications of the desired product/method/system in order to gauge the risk of proceeding with the development of that product/method/system.

Each step may be iterative: for example, an initial review of search results may consider patent abstracts and key words appearing in independent claims, while a later review may include a thorough review of the patent specification and prosecution history in an effort to assess how claim terms might be defined.


Depending on a company’s resources and the scope of the project, the entire search and assessment process may be outsourced to outside counsel, or certain initial steps may be performed in-house.


Step #1 - Describing The Product/Method/System


As outlined above, a typical first step in conducting a FTO analysis is to adequately describe the existing or hypothetical specifications of the desired product/method/system against third-party patent rights. Without an adequate description, it will be much more difficult to both generate suitable search results.


This description requires a fine balance between describing the product/method/system in broad terms and including sufficient detail, so that a meaningful comparison can be made between the product and identified third party patents.

"A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well." – Jeff Bezos

Step #2 - Defining Relevant Searches


A critical aspect of any FTO analysis is defining the relevant search strings. This requires a balance between breadth and granularity: if the search terms are too broad, the number of third-party search results will be so high that no meaningful analysis can be carried out within the time and budget constraints of the project.


Conversely, if the search terms are too granular, there is a danger that potentially relevant results may be overlooked, resulting in a false sense of security.


Step #3 - Comparing Search Results With The Described Product/Method/System


With the product/method in question adequately described and search results obtained, a comparison is made between the third-party patent claims and the product in question.


One challenge in making such a comparison is assessing the potential scope of a claim from its wording. The general presumption is that the language in the claim carries its ordinary and customary meaning amongst artisans of ordinary skill in the relevant art at the time of the invention.


However, one way to reduce it is to focus specifically on the wording of the claims themselves, without assumptions as to their intended meaning based on factors such as the year of patent issuance or preferred embodiments.


Conclusion


Obtaining FTO is a critical part of the technology life cycle and companies developing novel products/methods/systems are well advised to consult with experienced patent attorneys for guidance.


Better yet, ensuring that your enterprise has FTO as well as its own robust IP portfolio should be foundational for any strong technology company that wishes to build – in the words of Warren Buffet – an “economic moat” to keep its economic competitors at bay.


 

Jeff Morton is Partner & Chair of Life Sciences Practice at Snell & Wilmer, a full-service business law firm with more than 450 attorneys practicing in 15 locations throughout the United States and in Mexico. You can find him on LinkedIn here.