Key Takeaways

  • A freedom to operate opinion (FTO) is a legal assessment determining if a product or process infringes third-party patents.
  • Obtaining an FTO opinion can prevent costly litigation, provide assurance to investors, and inform product design changes.
  • FTO analyses should be conducted early in development or before major investments.
  • The cost of an FTO opinion typically ranges from $10,000 to $50,000 depending on complexity and jurisdictions.
  • Even with a favorable opinion, ongoing patent monitoring is necessary to stay compliant.

A freedom to operate opinion, or FTO, typically refers to the process of determining whether a particular action can be completed without infringing on others' intellectual property rights.

What Does "Freedom to Operate" Mean?

The freedom to operate process may include commercializing or testing a product. Acquiring a patent does not grant you freedom to operate. A freedom to operate opinion can help a new developer by:

  • Completing a thorough search of valid patents to determine whether or not these patents cover your actual product, conceptual product, or the process of your product
  • Providing product clearance
  • Assessing the risk of infringement on someone else's product before you enter into the market
  • Helping businesses answer questions, such as:
    • Am I infringing on someone else‘s patent?
    • What current patents will affect my opportunity to profitably sell my own invention?
    • What are the risks with moving forward with my new product idea or process?
    • Will I have to license someone else's technology?
  • Identifying any patents, or patent publications, that would result in patent infringement liability if a new product or process is brought to the market

Why Obtain a Freedom to Operate Opinion?

A freedom to operate opinion is more than a legal formality; it’s a strategic tool for mitigating risks and fostering business growth. By identifying potential patent conflicts early, businesses can:

  • Avoid expensive infringement lawsuits.
  • Secure investment by demonstrating due diligence in IP risk management.
  • Inform design changes to steer clear of protected technologies.
  • Enhance negotiation positions when seeking licenses or partnerships.

An FTO opinion can also serve as evidence of non-willful infringement, reducing the risk of treble damages in patent litigation.

Freedom to Operate Analysis

It is critical to complete a freedom to operate analysis in the beginning stages of product or process development in order to determine the level of risk of patent infringement. If any associated risks are determined, then a strategic plan can be developed by the business partners through licensing and/or assignment agreements. In addition, this can allow for any product or process design changes that need to occur to avoid any patent infringement.

When to Pursue a Freedom to Operate Opinion

Determining the right timing for an FTO opinion is critical. Common scenarios where obtaining an FTO opinion is highly recommended include:

  • Before significant investments: Ensure product viability before scaling production or entering new markets.
  • Before product launch: Avoid last-minute roadblocks or costly redesigns close to commercialization.
  • Before mergers or acquisitions: Assess patent risks tied to acquired products or technologies.
  • When seeking investor funding: Some investors may require an FTO opinion as part of their due diligence.

Additionally, an FTO opinion may be required in litigious industries or when the product’s design is unlikely to change significantly in the near term.

Intellectual Property

Typically, patents are presumed valid but can be found invalid during closer examination and through research. This may be due to patents that weren't fully established yet or problematic patents. Once issued, a patent is presumed active and valid. (See 35 U.S.C. §372.) Given this presumption, a patent's invalidity must be proven with convincing and clear evidence.

Since intellectual property rights are unique to different jurisdictions, a freedom to operate analysis should correlate to the particular region or country in which you wish to operate. Consider an agricultural engineer that seeks to commercialize a new seed in his home country. He has complete freedom to operate without issue if there are no:

  • Patents
  • Trademarks
  • Intellectual property rights on the seed
  • Plant variety rights
  • Intellectual property rights on the marketing, production process, or methods

However, the agricultural engineer may not have the same freedom if he wishes to export his seed to another country where intellectual property rights and patents may have already been established.

When a patent is granted, it should prevent others from marketing your patented information technology. However, it is advisable to still perform a thorough freedom to operate analysis prior to commercializing the technology. Freedom to operate can be questionable if your invented product uses another invention. To specify, another invention can be any machine, process, make, composition, or manufactured matter.

Costs and Limitations of Freedom to Operate Opinions

The cost of obtaining an FTO opinion can range from $10,000 to $50,000 or more, depending on factors like:

  • The complexity of the product or process.
  • The number of jurisdictions involved.
  • The breadth of the patent search.

While the upfront cost may seem high, it can prevent much greater expenses from infringement lawsuits or delayed market entry. However, an FTO opinion represents a snapshot in time—patent landscapes evolve, and new filings can impact freedom to operate after the opinion is issued.

Businesses should also be aware that an FTO opinion cannot guarantee freedom from litigation but can demonstrate reasonable efforts to avoid infringement.

Freedom to Operate: An Example

Consider the following example, an inventor who designs an eraser to go at the tip of a pen could patent the invention. However, since the inventor doesn't own the patent for the pen, they could not freely manufacture and sell eraser-tipped pens. The person who does own the patent on pens would be having their copyright infringed.

Next Steps After Receiving a Freedom to Operate Opinion

Once an FTO opinion is obtained, actions may vary depending on the findings:

  • If no restrictions are found:
    • Proceed with commercialization but continue monitoring the IP landscape.
    • Safeguard your own IP by filing patents and protecting trade secrets.
  • If restrictions are found:
    • Explore licensing agreements with patent holders.
    • Redesign the product to avoid infringing claims.
    • Challenge the validity of blocking patents if feasible.

Regular IP monitoring remains crucial even with a positive opinion, as new patents may arise.

Patent Databases

Patent databases are extremely important for determining whether there's freedom to operate in your jurisdiction. In your research, if you discover a patent or patent application that relates to your invention or process, you may still have freedom to operate. For a variety of reasons, the patent still may be available to use, including:

  • The patent may not have been applied for in your country.
  • A claimed invention or process is protected only in the countries where the patent was granted.
  • Patents can expire and have expiration dates.
  • Patents that have previously been issued may not be in effect if the patent owner has not been keeping up with their patent payments.
  • Laws regarding what is patentable vary among countries.

Certain countries have exemptions for some actions. For example, Germany exempts enacting research, and New Zealand exempts certain types of clinical trials.

How a Freedom to Operate Opinion Is Prepared

An FTO opinion typically follows a structured process:

  1. Assessment of the product or process: Identify unique features, components, and jurisdictions.
  2. Patent clearance search: Review unexpired patents and pending applications relevant to the product.
  3. Legal analysis: An IP attorney reviews search results to assess infringement risks.
  4. Written opinion issuance: A detailed report outlines risks, potential conflicts, and recommended actions.

Collaboration between legal, technical, and business teams ensures that the opinion reflects both legal and practical realities of the product.

Frequently Asked Questions

  1. What is a freedom to operate opinion?
    A freedom to operate opinion is a legal assessment by a patent attorney evaluating whether a product or process risks infringing third-party patents.
  2. Why is a freedom to operate opinion important?
    It helps businesses avoid costly infringement litigation, informs design decisions, and reassures investors and partners.
  3. How much does a freedom to operate opinion cost?
    Costs typically range from $10,000 to $50,000, depending on product complexity, jurisdictions, and search depth.
  4. When should I get a freedom to operate opinion?
    Ideally before launching a product, making large investments, entering new markets, or raising investor funds.
  5. Does a freedom to operate opinion guarantee no infringement?
    No, it reduces risk but cannot eliminate the possibility of infringement claims or litigation.

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