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Freedom to Operate Search: What Is It And Why Do Companies Invest In It?

Freedom to operate search
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A “Freedom to Operate” search, known as FTO, is usually undertaken when trying to establish a new product or service that will not infringe on any third-party patents.

Even if your product or service is under a registered patent, it can still be possible that the features of your product are covered by a different patent.

A Freedom to Operate Search, therefore, entails identifying patents that  have already been granted and are currently in force in the region(s) of your product or service. You can then investigate whether or not your product or service may infringe on any of the existing identified patents.

Freedom to Operate Search Analysis

A Freedom To Operate Search Analysis is a due diligence process whereby any active or pending patents that may get in the way of an organization's freedom to operate are investigated.

The results of a Freedom to Operate Search Analysis can then be used to identify whether or not your proposed product, idea, process or service will infringe on the rights of any other patents.

Usually, it is advisable to carry out an FTO search in as early a stage as possible in the development life cycle of a product. This is to ensure that there are no legal issues that could possibly arise due to an infringement of an existing patent. This helps to mitigate a company losing a lot of money launching a new product.

Freedom to Operate Search Cost

The cost of doing a Freedom to Operate Search is quite significant. It can cost an organization as much as $3000 just to secure t a freedom to operate opinion. This is legal advice based on the kind of product or service you are looking to release to the market.

A freedom to operate opinion can also be called a patentability opinion, or a patent clearance search. This can cost anywhere from $10,000 to $30,000 and even beyond.

Since this is a significant cost, the organization or company needs to have a solid business plan and be certain that they wish to proceed with developing the product or process further, and obtain a patent.

The amount of Freedom To Operate work depends on a number of factors, but usually, you would want to base it on the cost of developing a new product and bringing it to the market. When making a significant investment in the search, it is advised to carry out the Freedom to Operate search and analysis at the earliest stage.

Freedom to Operate Example

A good example of a Freedom To Operate is in the biotechnology industry. The company, Cohen and Boyer are well known for having a patent on recombinant DNA technology. Almost 500 companies had to license Cohen and Boyer´s technology to create products such as recombinant insulin and other biopharmaceuticals.

In this key example, Cohen and Bayer are able to see profits from technology, as well as the companies who license the patent. Therefore, everyone benefited including their own customers.

Cross-licensing

Another way that companies can make sure they have a Freedom To Operate is to cross-license a whole portfolio of patents.

Instead of starting a “war” on who is infringing upon who, companies will often decide not to sue for infringement. Instead, they’ll work out a mutually beneficial arrangement where the whole portfolio of patents is licensed companies.

This is what is known as cross-licensing. Industries such as automobiles or smartphones are ones where a cross-licensing strategy is common. This is due to the fact that there are hundreds of thousands of patents corresponding to each product.

Things to Consider with a Freedom to Operate Search Patent:

  •  Consider the level of Freedom to Operate certainty that is required based on the cost to take your product to market 

  • Limit the search to key markets and industries 

  • Understand the reason why some third party rights are pending and weigh all options accordingly 

  • Carry out a search and analysis early on in the product life cycle and development 

  • Think about who your key competitors are and tailor the search 

  • Engage a legal professional who is experienced in Freedom to Operate searches and who understands your industry 

There are many ways to undertake a Freedom to Operate search on your chosen product, idea, or process. Hiring an experienced company that can guide you through the process will help mitigate potential losses of bringing your product to market should there be any infringements. 

The option that works best for you will depend on your chosen industry, any existing patents, your patent portfolio, and your goals and aspirations. 

UnitedLex can help ensure your Freedom to Operate process is thorough, efficient, and saves your company money in the long run. Click to learn more about Intellectual Property Management services.

UnitedLex is a technology and legal services company committed to delivering full-scale Digital Legal Transformation. The world’s most forward-thinking law departments rely on the company’s expertise in over 25 global jurisdictions. Founded in 2006, the team includes 3,000 legal, engineering, and technology professionals with major operations in 18 countries. For more information, contact us.