Freedom to Operate Analysis: Reducing Patent Infringement Risk

Imagine dedicating months, even years, to developing a groundbreaking product, only to discover it infringes on an existing patent, preventing its launch. The potential legal and financial repercussions could be devastating. This article explains why a Freedom to Operate (FTO) analysis—a risk management tool that ensures your product can be commercially made and sold in your target markets without infringing on existing intellectual property (IP) rights – is so important.

What is Freedom To Operate Analysis?

Our customers often begin with a question like:

I’ve designed an innovative coffee machine. Is it safe for me to manufacture and sell it in the USA without another company pursuing me for patent or design infringement?

An FTO analysis addresses such concerns by thoroughly investigating whether your new product inadvertently violates someone else’s IP rights. Given the breadth of existing patent portfolios, conducting a comprehensive FTO analysis early in the development process is essential.

Why FTO Analysis Matters

In fast-moving technology sectors, there’s always a risk that your innovation could be blocked by a competitor’s existing patent. An FTO analysis helps mitigate this risk by systematically identifying potential patent obstacles at an early stage, before significant resources are invested in product development.

Is the analysis a 100% guarantee?

IP lawyers will not commit to a 100% guarantee. They tend to say that there is always a chance of inadvertently infringing IP rights that were never found, although if a thorough analysis is done, it is typically enough for your peace of mind.

When to Conduct an FTO Analysis

An FTO analysis is most prudent:

• Before you make significant research and development investments

• When entering new technological markets that are unfamiliar to you

• If you have invented a cutting-edge innovation that, to your knowledge, has not been made before

What’s Done in a Freedom To Operate Analysis

Comprehensive Patent Search

A deep search of patent literature for:

• Existing patents
• Pending patent applications
• More broadly, intellectual property that might conflict with your product

As a rule of thumb, the more you invest in your new product, the more exhaustive your FTO analysis should be, as the stakes are higher.

This search can be conducted through the following ways:

1. Private IP law firms, such as the UK-headquartered Murgitroyd IP law firm
2. National intellectual property offices, such the United States Patent and Trademark Office (USPTO)
3. Specialized patent search services, like Promax Legal, which offers hybrid FTO searches utilizing their proprietary tools

Note that we do not offer that service. Engineering firms like ours generally focus on new product design & development and don’t go deep into IP research & evaluation.

Evaluating the Patent Landscape

Not all existing patents are barriers that you can never overcome. The FTO analysis will consider these opportunities:

• Territorial restrictions: A patent protected in your primary market but in the public domain elsewhere

• Expired protection: Patents generally last 20 years, after which the technology becomes freely usable

• Scope limitations: Patent claims define protection boundaries. Technologies outside these specific claims might be available for use

Getting around Patent Obstacles

If you have identified a possible conflict, consider these workarounds:

• Inventing a workaround: Modifying your product to avoid direct patent infringement while still getting to where you need to go

• Licensing: Obtaining authorized permission from the patent holder to use their technology in exchange for a royalty payment

• Cross-Licensing: Exchanging patent rights with other companies, allowing mutual use of specific technologies (if you have any to exchange that may be mutually interesting)

• Patent pools: Collaborating with other companies to establish a shared patent rights pool

The Cost of Overlooking FTO

If you forge ahead with the manufacturing and sale of your innovative product without doing this analysis, you are open to these risks and costs:

• The money spent developing and manufacturing the product may be wasted, and it may have to be redesigned
• The product may be barred from sale by the authorities
• You may be taken to court by IP rights holders and may have to pay for expensive litigation and possibly steep damages or royalties
• Your brand reputation may take a hit
• Investors may become cautious of dealing with a company who has not ensured that their innovation has a low risk of IP infringement (important for hardware startups)

Key Takeaway

A Freedom to Operate analysis is not about getting a 100% guarantee that your product idea will not be at risk of infringing IP, but about systematically reducing risks and making informed decisions before making investments. If you identify a high risk in that domain, you may need to add it to your to-do list for the early stages of product development — not when you are deep in the NPI process.

Disclaimer

Here at Sofeast, we are not lawyers. What we wrote above is based only on our understanding of the legal requirements. We do not present this information as a basis for you to make decisions, and we do not accept any liability if you do so. Consider consulting a lawyer before making legal decisions.