This article describes freedom to operate (FTO) opinions. They are an important but complex and often ineffective tool for businesses launching new goods or services.
What Is a Freedom to Operate Opinion?
A freedom to operate opinion is exactly what it sounds like: “You have the freedom to do what you propose to do without infringing a patent. Technically, it is an opinion provided by a lawyer after determining whether your new product or service infringes on existing patents. In most cases, these come from a patent attorney, but it could be done by any attorney familiar with patents (not just the ones licensed by the USPTO ). There is a very serious risk associated with a business that requires patent infringement. As a practical matter, bigger firms often have larger malpractice policy limits, and that consideration favors big law firms.
- It’s a tool to help you evaluate the risk of patent lawsuits or disputes.
- By reviewing existing patents and pending applications, the attorney assesses whether your offering is likely to infringe any intellectual property rights.
- Anybody who claims that they can issue a freedom to operate opinion that is 100% accurate does not understand patents well enough to rely on.
- I know, I just said it, but it is worth saying again: Anybody who claims that they can issue a freedom to operate opinion that is 100% accurate does not understand patents well enough to rely on. The image below tells the story… Can you truly be certain that your product doesn’t infringe one of the 3.5 million patents in force in the USA? Or one of the 16.1 million patents in force in the five largest patent areas?
Why Are FTO Opinions Important?
The U.S. has over 11 million issued patents, with hundreds of thousands added each year. Navigating this ocean of IP fences is daunting, but an FTO opinion offers:
- Risk Reduction: Helps identify potential infringement risks early.
- Legal Benefits: May be helpful against a claim of wilful infringement.
- Strategic Guidance: Guides design-around strategies to avoid infringement.
- Identification of Possible Partners: If Jane Doe owns a patent that covers the product or service you wish to roll out, it is entirely possible that she would sell the patent for cash or equity. If it is an operating entity that holds the patent, they may want to partner with you.
Challenges of Freedom to Operate Opinions
Despite their value, FTO opinions are far from foolproof:
- Volume of Patents
- With millions of issued patents and a growing number of pending applications, no search can guarantee complete accuracy.
- Unpublished Applications
- Some patent applications remain confidential until published, meaning a potential risk might not yet be discoverable. You should be aware of the risk of submarine patents.
- International Complexity
- A U.S. FTO opinion doesn’t cover patents in other countries, and global markets add layers of complexity.
- Human Error
- Even the most thorough attorney or search firm might miss relevant patents, leaving a degree of uncertainty. Indeed, “might miss” is an understatement. It is difficult to imagine a device of any significant level of complexity not being vulnerable to claims based on patents that the FTO did not identify.
Best Practices for Using FTO Opinions
- Get an Opinion Early (and Late)
- Conduct the review before you make a big investment. Don’t forget that the patent landscape is a moving target, so continue to monitor for patents that were applied for before you rolled out your product or service (so they would be enforceable against you) but that issue after you roll it out.
- An FTO is Just One Tool
- Don’t rely only on the FTO opinion. The chances are pretty good that at least one of the millions of patents out there reads on what you are doing. That said, be aware that if you learn of a patent and move forward without licensing it, that might constitute wilful infringement and increase your risk.
- Contingency Planning is Key
- An FTO opinion is great, but so is IP insurance (if you can afford it and find it). You should be prepared to modify your designs to design around patents that might get asserted against you.
- Have a Defensive Portfolio
- If a competitor sues you for patent infringement, and you have patents that cover what they are doing, a quick and cheap resolution may be possible via cross-licensing.
- You Should Not Only be Prepared to Design Around Patents; You May Need to do so Prior to Launch
- If the opinion identifies risks, work with your team to change the product and avoid infringement. Beware of the doctrine of equivalents, however.
- There is One Document That Operates as a (Nearly Always) Reliable FTO
- If your “new” product was described identically, and the techniques you plan to use to manufacture the product were also described identically, in a document published more than twenty-one years ago (a patent term is 20 years from filing, but the 1 year provisional patent application “head start” doesn’t count in the U.S. against the 20 years), you are probably ok. This is because no patent issued after that prior art was published will be valid if accurately analyzed by a court, because it would be obvious and would not be novel. There is one caveat, though: If a patent exists that was filed prior to the publication of the document you are relying on, and that patent has a patent term extension that causes it to still be in effect beyond 20 years, you could end up infringing that patent. A small term adjustment is not unusual, but a large one is rare. The risk is further mitigated with increasing age of the document you are relying on. For example, relying on a document published 50 years ago that exactly describes your product and means of producing the product will invalidate any subsequently filed patent (if the judge gets it right) and the chance of a patent issued prior to the publication having a patent term extension greater than 30 years is vanishingly small.