When is Freedom to Operate Analysis Cost-Effective?

 

Most organizations nowadays have recognized the value of taking the patents on the inventions before launching a product. Getting the patents of your invention adds value to the bottom line by enhancing intangible assets and providing your company with big-headed rights. The patent mainly enhances the power of your company in the marketplace and stops your competitors from using your invention without permission.

Less obvious but equally important are the advantages of product clearance, also known as Freedom to Operate.

FTO analysis incorporates recognizing and analyzing patents of others that might subject your organization to patent-infringement liability. Performing FTO analysis before launching and developing a product or acquiring a new company, your organization can avoid the risk of future litigation and minimize unnecessary expense. The FTO analysis done early in the stage of product development affords the company to change the design and reduce infringement.

Despite as an advantage, FTO analysis also can recognize the opportunities for patenting or future development. Identically, performing FTO analysis as a part of due diligence enables us to steer clear about an opportunity filled with the risk of litigation.

The Freedom to Operate search starts with an assessment of service or product. Which are the new components in the product visible to the public and likely to bring analysis? Does any of them subject to an existing license? Do any components create under agreements that incorporate any indemnification clauses? Do products or services differentiate from country to country? Simultaneously, a clearance search is done for the published applications or unexpired patents which might claim several components. At last, an experienced patent provider can analyze the data and conclude on risk while going forward with service, product, or any acquisition.

It is crucial to know that FTO analysis can not guarantee that your organization will not be sued. The applications and patents recognized mainly depend on the search quality, and the degree of relevance of every application or patent will be subjected to clarification. Some applications by others are on the file but not published at search time, so they are not considered at the research part.

As FTO study is expensive and time-consuming, most organizations select where and when to do FTP study to reduce the risk and boost value. Here are some factors which can enhance the decision:

1.      Consider product value and investment amount

As an initial step, it is crucial to consider the service or product acquired or launched in terms of its value to the organization. What is projected revenue? Is this product can offer high or low-margin profit

The products that have high volume or high margin are probable to lead to more damage. Thus, it is more worthy of taking an extra step and clear product before proceeding. The products in this incorporate cell phones or television. If an organization has a restricted amount to spend for clearance, then the product can be least ranked in value terms.

The services or product needed an investment relevant to the company’s overall research and development budget. Freedom to Operate outcome might be utilized to lessen costs or enable time for designing any recognized patents. For the products that need less investment, the FTO study is delayed ending of the product launch but needs to be done before product release.

2.     Check whether identical products have Flickered Litigation

If your company is thinking of launching a product or service in the competitive market, getting FTO analysis done is ideal. If you are preparing for a high-profile launch of some new service or product, it is better to identify the risk before the launch.  

3.     Check competitive community for the product

How large and how drenched in the market? How many competitors are providing, and what is the history among players in the area? Is domain litigious, like TV and cell phone domains, or are challenges mainly from non-competitors? In this scenario, FTO analysis can reveal the patents in those litigations.

If your organization has technical individuals and developers, then you probably will get a great source of information. Ask some related businesses to recognize entities they believe might be highly motivated to keep the proposed new product off the market and as technical individuals whose competitors closely resemble your product. It is highly common in the marketplace for the development to get inspired from the competitors.

4.     Consider Sources

What if you are sourcing all or some of your services or products from some other company? Don’t you think that organization bears the risk of patent infringement? Well, it does not always work this way. The marketing and selling of a company product are done under their private label products, mainly manufactured under the contract y others for the organization under their brand.

What are the objectives and risk tolerance of your business?

Prior to taking any FTO analysis, an organization must give some serious thoughts on how they can handle the results. Does the organization seek to avoid all the litigations at all costs? Are they ready to walk away if a new product, service, or acquisition is unfavorable?

If any organization goes ahead without considering the results, then FTO analysis might not be effective. This results in the organization being completely comfortable with all litigation risks and the possibility it will require collecting required resources to defend. With all this in mind, this tactic rarely seems pragmatic.

Conclusion

Analysis of FTO plays a significant role in the IP strategy. It enables an organization to recognize, reduce, and handle risk while simultaneously identifying the fields where the patent coverage is unavailable and thus present the opportunities.

The only side to the regular FTO analysis on all the products is cost. As few organizations only have an unlimited budget for the legal fees, most of the organizations consider the level of the FTO analysis on new acquisitions and products in their budget and risk tolerance. Having an experienced patent attorney can assist in creating a policy that is right for your organization.