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Freedom to Operate Analysis

Freedom to operate analysis is a custom service provided by patent agents and search providers in order to give customers an answer, if it is safe to produce a product or use a production technology without infringing or violating third party intellectual property rights.
Assume, a company is considering to start development of a new product. The company might have some novel and innovative ideas about the product, however sophisticated products might already be protected by several, tens or hundreds of previous patents. Freedom to operate search is made primarily for the purpose of evaluating the risk of market entry.

Such analysis usually consists of following steps:

  1. Analysis of the principles. An expert looks at the technology or product a company is planning to use or produce;
  2. Patent agent makes a patent search and collects all accessible information about existing intellectual property rights (IPRs), which are in force;
  3. Then the agent makes technical comparison analysis and determines, if the technology or product, to be produced by the company, is infringing a patent(s) or not;
  4. If yes, he examines, in which countries the corresponding patents are valid and how long the protection will last;
  5. Finally the patent consultant recommends, how to act further.

How much does the freedom to operate analysis cost?

There is no single number for such patent search and analysis, however several components of such work coudl be found and evaluated in terms of cost. First of all, key features of the product shall be identified, which might be subject to patent rights of third persons. Such feature analysis requires input from both sides - the agent and the company. After the initial set of features is made, the patent agent can start the search. Some new aspects of the feature set can reveal during the search, thus extending the scope of analysis. A ball park price for this initial stage, for an average product, could be around GBP 2000 to GBP 3000 (USD 4000 to USD 6000) a reasonably comprehensive freedom to operate search.

Next step is selection of the most relevant patent rights, to which the company might be liable to in case infringement. After the most relevant IPR is identified, the agent performs validity check, which means he/she looks at the databases to see if certain patents have been validated and maintained in countries of interest. Some global database entries might be rather unclear or not comprehensive, thus the patent agent has to look for verification and the newest status in national databases. Patent offices of some smaller countries usually do not provide database search in foreign languages, even English. Therefore, contacting a patent attorney in the corresponding county might be indispensible. Such service costs GBP 100 per status check per country.

Checking a patent status in a national database might seem as a very easy task to do. However, great care has to put into such work and the patent has to be searched at least according to 3 parameters: name of the applicant, names of inventors, title of the application. Some of these parameter might be not possible to find because of bad title translation, transfer of patent rights from the primary applicant. Names of inventors is the most steady parameter - in principle they shoul not change during patent prosecution. However, usually there are many inventors having similar names, thus double-checking never makes any worse.

The total cost of an freedom to operate analysis might vary from GBP 2000 to GBP 20000, depending on complexity and comprehensivity required. Naturally, the cost will be calculated based on the amount of time one has put into it.

What is the outcome of a FTO analysis?

After FTO analysis, the patent agent will provide recommendations with some risk assesment.
Possible recommendations after freedom-to-operate analysis may comprise aspects like:

  • Consider buying a license;
  • consider buying a patent;
  • change the technology or a product in a way, that it would not infringe third party IPR;
  • limit activities to certain markets, where the technology is not protected;
  • plan entry to certain markets only after expiration of relevant IPRs;
  • etc.

No matter, how much due diligence has been put into FTO analysis, there is always a risk, that some features were not identifies as potentially being protected by patents, or due to great number of different features, not all patents have been found. Some unpublished applications might exist as well, which will come into force later (which is relevant for hi-tech products).

Other benfits of an FTO include better understanding of competition in given field of industry, it can also give a sense of new products, which will be launched soon by other companies. In general it also shows, how crowded the market is and who are the biggest investors. Business and investment analytics are using patent search quite often in order to see, which companies are most active in a certain field. The WIPO search tool is extremelly suitable for that, since it provides statistics and sorting by company names.

Freedom to operate search providers

IAM cosultants Ltd. provide such custom service.  We have done it for number of companies in Europe and Asia. Such service significantly reduces the risk of entering a market with new products. Exceptional expertise in photonics and machining technologies, we provide deep insights, requiring less input and effort from the customer.