A Freedom to Operate Search (FTO) or Clearance Search regularly begins by searching patent literature for issued or pending patents and obtaining a legal opinion as to whether a product, process or service may be considered to infringe any copyright (s) owned by others.
Many private law or IP firms offer such analyses as part of their legal services to clients.
In conducting an FTO search and report, it is worth having in mind that some of the limitations on patents also offer potential opportunities.
- Patent protection is territorial. While an appropriate technology may be protected in a company’s main markets, it may be in the public domain in other countries. In the latter, no permission (or license) is needed from the patent owner to commercialize the product.
- Patents have a limited duration. Patent protection lasts for a maximum period of 20 years. After that, a license is considered to be in the public domain and may be freely used by anyone. Moreover, the European Patent Office (EPO) estimates that fewer than 25 percent of all patents granted through the EPO are maintained for the maximum 20-year term. Many patents are allowed to lapse through non-payment of maintenance fees by the patent holders before the 20 years are up.
- Patents have limits of scope. The claims section in a patent document determines the scope of the license. Any aspect of an invention not covered by the claims is not considered to be protected. That said, it is not always easy to determine the scope of a patent. It requires considerable experience in interpreting the claims, the written specification, and the history of the application process.
An FTO analysis based on the search of patent literature is just the first step. If the patent search reveals that one or more patents do limit a company’s freedom to operate, the company must decide how to proceed. Assuming that the blocking patent is valid, options include:
Purchasing the copyright or licensing in
Licensing involves obtaining written authorization from the patent holder to use the patented technology for specified acts, in specified markets and for a specified period time. The convenience of such an agreement will depend mainly on the terms and conditions of the proposed license.
While there is a potential loss of autonomy, and while the patent holder will require payment of a lump sum and periodic royalties, it may be the simplest way of clearing the ground for the commercialization of new technology or product.
It involves two or more companies exchanging licenses to be able to use certain patents owned by the other parties. To be able to cross-license, a company needs a well-protected patent portfolio that is of value to potential licensing partners.
A third option is to “invent around” the invention. It implies steering research or making changes to the product or process to avoid infringing on the patent(s) owned by others.
For example: if freedom to operate search is limited by a process patent, then a company may be able to develop an alternative process for arriving at a similar result and thus be able to commercialize the invention without the need to pay a licensing fee to someone else.
It is a mechanism by which two or more companies practicing related technologies put their patents in a pool to establish a clearinghouse for patent rights. A well-known example of a patent pool is that formed by Sony, Philips, and Pioneer for inventions that are essential to comply with certain DVD-Video and DVD-ROM standard specifications.
How much does freedom to operate search cost?
The search for a freedom to operate opinion would alone cost at least $3,000, and that would return dozens of references that a patent attorney must wade through in painstaking detail. Typically freedom to operate opinion will cost at least $10,000, and sometimes substantially more.