FTO in simple words is the freedom to operate/commercialize a product/process without infringing valid intellectual property rights of others. This search enables the Party to analyze if his product/process is infringing on in-force patents/patent applications, belonging to a third party. And secondly, FTO is Jurisdiction or territorial specific. As in If a particular party wants to release a product in India, where in party posses the patent on its product/process, FTO search with the relevant technology/product will give a information about the patent/applications already made in India, for specific matter/technology. A FTO search is a search among the claims of in-force patents/ patent applications for specific elements/steps of a product/process. A comparison is done between elements/steps of a product/process and individual claims of identified in-force patents/patent applications to determine the freedom to operate.
NEED OF FTO
There is enormous risk if one launches a product without any freedom to operate analysis and search. In such case the newly launched product is quiet vulnerable to infringement suits which can threaten the business of the company itself. At this stage, the cost associated with IPR litigation and the uncertainty involved in it, is usually fatal and it may force the company to withdraw itself from the business altogether. A very famous case study which is often quoted to emphasize the importance of a thorough freedom to operate search is that of Polaroid Vs Kodak. Kodak was a pioneer in the segment of photography in USA. Polaroid made a late entry into the market and developed its proprietary technology for 'instant photography'. Eventually, Kodak too decided to make a foray in the instant photography segment. One week after the Kodak's product launch, Polaroid filed infringement suits against Kodak for infringement. The courts held that Kodak infringed Polaroid patents. Kodak had to pay $ 900 million. This forced Kodak to withdraw from the instant photography business altogether.
The best way therefore is to undertake a thorough freedom to operate search and analysis even before one starts making investments in setting up plants for manufacture of the proposed product1.
OBJECTIVE OF FREEDOM-TO-OPERATE
Conducting a freedom to operate analysis has become imperative in today's times. The main objectives of the FTO search and analysis is to understanding the 'degrees of freedom' in terms of claims. The main goal is to come out with a product/process that does not infringe a patent or a registered design. A "freedom to operate" analysis is but a type of due diligence which has to done with lot of care and seriousness before undertaking any manufacturing activity. Freedom to operate analysis provides the details based on which one can ascertain whether or not the proposed product or the existing product can be made, used, offered for sale or sold without infringing another valid enforceable patent. Freedom to operate search should be preferably carried out at an early stages of product/process development, so that inventor or applicant do not incur huge development costs in developing potentially infringing products and are not entangled in a legal battle later, on infringement charges. Planning for the development, production and launch of a new product is as much a matter of forecasting future market developments as it is of minimizing risks. A major risk for any company, particularly companies in technology sectors in which there is extensive patenting, is that the commercialization of a new product or technology may be blocked by a competitor holding a patent over a technology that is incorporated in the new product. In extreme scenarios, there may be "essential patents" that are indispensable for developing certain types of products or for meeting certain technical standards. In such cases, without prior authorization of the patent owners, the risks of being accused of infringement are extremely high. This is why many companies, prior to launching a new product, and often even prior to initiating a new line of research that may lead to the development of a new product, seek to minimize the risk of infringement by securing their "freedom to operate" (FTO), i.e. ensuring that the commercial production, marketing and use of their new product, process or service does not infringe the intellectual property rights of others. Some of the valid objectives to conduct FTO, which may include:
- Analyze if there is a need for their product
- Identify a market for the product
- Study competition
- Device a marketing plan
- Come up with pricing strategy
STRATEGIES FOR OBTAINING FREEDOM-TO-OPERATE
The approach to FTO follows a logical sequence. It begins with an FTO search on wide databases viz. USPTO, EPO, ORBIT, THOMSON REUTERS etc, where granted and non granted patents are searched, the results of such an analysis allow patent counsel to provide an FTO opinion that discusses the likelihood that the product or process infringes identified IP rights or tangible property rights of others. The resulting FTO status becomes the baseline for formulating an FTO strategy, which then allows management to weigh different risks and make informed business decisions.
FREEDOM TO OPERATE- AN INDIA'S VIEW
From the below mentioned examples we can easily narrate the importance of FTO in the Indian market. Various patent infringement in the country happens in the field of medicine. Such pharma companies should work more in the FTO field. Today India is a very huge market for IP, and lot of multinational companies are investing their money in technological, Pharmaceutical, Automobiles and research & development. Being a huge hub of intellectual property, there would be more chance of IP infringement. In India IP awareness is increasing, Technology, R&D companies are performing lot of researches more and more IP associated companies, law firms are performing good number of FTO searches and helping their clients from the infringement cases.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.