It is the freedom to operate that keeps you in the market
Written by Dr Edelbert Häfele, CEO of PATEV
A patent gives you the competitive edge, but it is only the freedom to operate that keeps you in the market
Change is the only constant, and in today’s business world, change is faster than ever before. In this fierce competition, patents play a key role for a business to gain a competitive edge. But it is important to understand, having a patent does not include the right for freedom to operate.
Freedom to Operate, abbreviated as FTO, in simple words is the ability to perform a particular commercial activity of your technology/product/service without infringing third party’s valid Intellectual Property (IP) rights.
This necessitates for an FTO search that can make you aware of third party IP which are enforceable in a specific country in which your product/service will be commercialized.
An FTO search should be carried out at an early stage of a product development
Here, PATEV presents a real case which shows how an early stage FTO search and analysis was proved to be critical for Company X in its product development strategy.
Technology readiness level (TRL) of company X: Early stage.
FTO search results: A critical patent family with broad claim coverage was identified. The claim chart analysis showed that the scope of protection was not only relevant for the specific idea but also for future developments planned in a similar direction. The family had 2 members, one of which had already been granted in China and the other one was a still pending German patent application, if granted, Company X’s new idea for the future product would be infringing the German patent.
A continuous monitoring of the legal status of the German patent application was conducted for few months until it was observed that the application was dropped by the applicant. Hence there was no threat from this application in Germany. However, Company X has to be careful and watchful about the granted patent in China, in case Company X would like to expand its business and commercialize its future product in China.
What if the German patent application had not been dropped by its applicant and eventually got granted? We call it now a blocking patent.
Company X would have had to take one of the following strategies
1) Design around/modify the product, 2) licensing-in or partnership, 3) opposition, 4) prepare for litigation with arguments or acquire offensive patents against the blocking patent, 5) if nothing is feasible, abandon the project.
Now imagine a totally different scenario, where Company X didn’t conduct an FTO search early enough and hence is totally unaware of the enforceable third-party IPs. Company X invests money, time and resources on developing this product which could potentially infringe the blocking patent. Company X incurs a huge development loss once it learns about the blocking patent just before the launch through an FTO search at that point. Much adverse situation can arise, when Company X never cared for an FTO search at any stage of its product development and went ahead with the launch; Company X can get sued for patent infringement whereby the litigation risk is rising with the success and popularity of the new product.
Through an FTO search carried out at an early stage of a product development, you know your threats early and can prepare for a feasible risk mitigation.
How can FTO solutions be aligned with respect to the different SME Instrument phases in the context of HORIZON 2020? How is an FTO analysis conducted in practice? Learn more in our related webinar on November 14, 2018.
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PATEV examines, evaluates and shapes patent portfolios, adds the right design to technologies and inventions, and provides consulting support during patent related corporate activities.
Since its foundation 10 years ago, PATEV has continuously expanded its range of services. Today PATEV counts among the leading companies worldwide in the field of Intellectual Property (IP) Management. PATEV has branch offices in Karlsruhe, Düsseldorf, Hamburg and Munich as well as network partners in Switzerland, France, Italy, Great Britain, the United States and Japan.