FTO Search: A Cog in the Wheel of Patent Strategy

The contours of Intellectual Property rights are more challenging than ever in the twenty-first century. Which is why, it is no surprise to see organizations investing a fair share of their revenue on its protection and due enforcement. Besides protecting your patent rights, it is also imperative not to infringe on someone else’s rights, as it may be detrimental to the seamless growth of your organization. Therefore, it has become a standard practice for organizations to conduct clearance analysis (with the tools at disposal) to explore any infringement possibility. Freedom-to-Operate (FTO) Search is one such tool utilized by organizations across the globe at different stages of product development. Having said that, the question that often bogs an inexperienced professional is “what is FTO search and how to conduct it?”.

FTO search, also known as clearance search or infringement analysis, examines whether a product or a process infringes on any claim of an active patent. Moreover, it helps to identify potential roadblocks that may need licensing or invalidation, guide product design decisions, and uncover design-around technologies.

This article is a comprehensive discussion on FTO search and how it has become a strategic tool for an organization to stay ahead of the curve.

How an FTO Search differs from Patentability (Novelty) Search

While a cursory observation reveals little difference between an FTO and patentability search, the difference (shown in Table 1) is understated and rather critical for organizations. A patentability search is conducted to check whether a new invention is unique over an existing prior art. On the other hand, an FTO search is focused on finding the risk (or the working method) of a product infringing over a third-party’s patent. A patent right (being negative rights) in itself does not grant freedom to access the market. This means that a patent is not a guarantee on non-infringement of third-party rights – and is precisely the reason for performing a freedom to operate search/analysis.

Table 1: Differences Between Patentability and FTO Search

*NPL: Non-patent literature (NPL) includes technical standards, scientific publications, clinical trials, conference proceedings, manuals, books, technical or research reports, or any other technical, scientific material that has already been published in the public domain.

Let us understand the difference with an example. Suppose a new invention encompasses features (1+2+3+4); this new combination is considered novel over prior art that reveals features (1+2+3). Moreover, the new feature “4” is novel, too, as it is not an obvious or routine modification of the prior art. Figure 1 illustrates a real-life example of prior art citation and patent getting granted as the prior art, on the whole, does not cover the core area of the research for which the patent is requested.

Figure 1: Citation of Prior Art in Patent Application

In an FTO search, if a new product feature encompasses (1+2+3+4) features, this combination will infringe on an earlier claim that only contains elements (1+2+3). Conducting an infringement analysis will consist of two essential steps:

  • The first step will be claim construction to determine the scope and meaning of each patent’s claim limitation.
  • The second step will be proper claim construction for a suspected infringing product or a process.

Now that we have covered the difference between patentability and FTO searches, it is crucial to know the types of FTO searches and their applications.

Different Approaches Adopted by Organizations for FTO Analysis

Although there are many types of FTO analysis performed by organizations, it can be broadly categorized into three major segments (shown in Figure 2).

Figure 2: Three Types of FTO Search Analysis

1. Competitor-Specific Analysis: Quite often, companies conduct competitor-specific searches to ensure that their products are not infringing on the intellectual property of their competitors. Competitor-specific analysis is the least that companies undertake when there is a high probability of competitors protecting similar inventions. The analysis also makes sense as the likelihood of receiving lawsuit notice from competitors is probable than from companies with similar patents but different core business.In this analysis, the search results reveal patents belonging only to the competitor. The outcome of the investigation is to determine whether the commercialization of the service or product may prove problematic given the patent rights of a competitor. Although this kind of FTO analysis provides a reasonable indication of the risk of entering a marketplace, there is still a probability of patent rights held by non-competitors posing a problem from an infringement perspective.

2. Feature-Specific Analysis: The second type of FTO analysis focuses on examining third-party patent rights related to specific features or aspects of a new product or service. Other features are not considered for analysis as a company’s interest does nor overlap with them. For example, take the case of a new car engine with self-diagnostic capabilities. The feature-specific analysis for this case would be examining third-party patents in the domain of self-diagnostic engines. But, the other aspects, such as operating characteristics and engine design, are ignored. The result of this analysis indicates contentious patents related to single technical aspect, i.e., self-diagnostic capabilities of the new product. Although cost-effective, this type of FTO analysis has limitations as other features of a patent (not identified) could prove problematic.

3. Comprehensive FTO Analysis: This is a thorough FTO analysis as it covers all the patents (competitors and non-competitor) and its features that need to be commercialized. Comprehensive FTO analysis provides the most integrated information and thus the assurance of non-infringement while commercializing a product or service. Although effective, it is costly in terms of time and financial resources needed for investment.

Apart from understanding the types of FTO search, it is also imperative to know the suitable time to perform an FTO search and who should perform it.

When and Who Should perform an FTO Search

As in other aspects of life, timing is also critical in an FTO search. Often, organizations are confused about when to perform an FTO search. However, the FTO search yields the most productive results in three phases (Figure 3).

Figure 3: Three Phases when an Effective FTO Search can be Conducted

1. Early in the Product Development Cycle: Conducting an FTO search in the initial stages of the product or process development cycle is beneficial in the following ways:

  • It helps to decide the optimal allocation of resources and minimizes financial consequences during the early stages of product or process development.
  • Minimizes the risk of time-consuming and costly future litigation and also highlights strategic licensing opportunities in case of possible infringement.
  • Enables alteration in design around any enforceable patent early on in the product or process development lifecycle.

2. Before Launching a Product in the Market: If you are looking to reassure existing shareholders and investors, conducting an FTO search before launching or continuing a product is the right way to proceed. It ensures an extra degree of confidence to support the business decision to launch or continue the product line in the market. FTO search at this time might also highlight potential untapped markets that could be exploited by using, selling, or licensing the invention. Suppose the FTO result is unfavorable with a high probability of litigation, then the organization can resort to below-mentioned measures:

  • Approach the organization owning the patent for licensing or buying
  • Oppose or invalidate the relevant patent
  • Modify the product to eliminate the probability of possible infringement
  • Cancel the plan of launching or introducing the product in the market

3. After Receiving a Granted Patent: Conducting an FTO search after receiving a patent grant helps identify the changes in the existing technology landscape since its disclosure. Moreover, it helps to identify competitors and possible patent infringement cases that could be defended via the enforcement of granted patent rights. On the positive side, for a start-up, FTO report proves invaluable while pitching for investment. The result of the report helps investors grasp the potential of an idea and assess the possible infringement risk in the future.

Once you determine the optimal time to conduct an FTO search, it is equally important to understand who should perform it.

Who should conduct an FTO Search?

Any organization or an individual can perform an FTO search to determine whether it has the clearance to operate/use an invention/product in a specified jurisdiction. Besides, individuals or organizations can also conduct an FTO search when planning these activities:

  • Launch new products
  • Explore new licensing opportunities
  • Expand to new market
  • Before raising initial funding and investment (for start-ups)
  • Prior to making a hefty product development related investment

Having stated when to perform an FTO search and who should perform it, we will discuss the implications if you don’t conduct an FTO Search.  

What Happens if You Don’t Perform an FTO Search?

An FTO search is a part of due diligence exercised by an organization before launching a product in the market. It is interesting to know what happens if an organization with a small investment and low ROI or high tolerance for risk does not perform the clearance/infringement analysis search. The risk associated with not performing the search is fraught with consequences, as shown in Figure 4.

Figure 4: Four Main Risks of Not Performing an FTO Search

1. Reputational Damage: When your organization’s name is dragged in a lawsuit related to patent infringement, it causes immense reputational damage that can take years to restore. The infringement raises a question on the integrity and work ethics of an organization. Therefore, despite a stellar track record, it is crucial to protect your organizations’ name by minimizing infringement lawsuits.

2. Development Cost: The development of a new product is a culmination of years of hard work and research. A patent infringement lawsuit and subsequent verdict in favor of the litigator forces you to cancel the product launch and commercialization of the invention. As a result, the development cost incurred in conceiving and developing the invention produces no results.

3. Product or Service Withdrawal: A patent infringement lawsuit limits your capacity to continue with the product or service launch in the market unless categorically permitted by a court of law. The resources (time, money, and personnel) utilized for product or service launch is squandered away. Moreover, the product or service withdrawal garners unwanted attention from the media and consumers.

4. Legal Costs: The legal cost associated with a disputable patent infringement can extend to millions of dollars. Such a large amount can cause a dent in your financial resources. Apart from that, the time and resources spent tackling litigations can cause an enormous burden on the growth of your organization.

To avoid the above-discussed risk, you must perform an FTO search based on your requirement and budget. However, there are pitfalls of not completing it or performing it inaccurately, increasing the risks.

Five Regular Pitfalls of Freedom to Operate Analysis

The five main regular pitfalls of freedom to operate analysis are shown in Figure 5.

Figure 5: Five Regular Pitfalls of Freedom to Operate Analysis

1. Myopic Claim Setting: One of the mostcommon mistakes while performing an FTO search is focusing too much on existing threats and ignoring the possible future threats. Although granted patents present an immediate threat to the proposed product, the approach is rather short-sighted and overlooks the possible future threat. A complete FTO analysis should also include published patents (both within jurisdiction clearance and international applications) for examination. The underlying logic is that the published patent being examined may get granted with claims that you might end up infringing in the future.

2. Incorrect FTO Relevance Criterion: FTO search is often treated as just another patent search. The patent analyst uses the same selection criterion (novelty and non-obviousness) to FTO searches that filter the relevance of potential prior art. Although these are the correct factors for patentability or validity searching, they are unsuitable for conducting an FTO search. The change in search criterion from patentability to an FTO search is subtle but essential. The focus of the search should be on spotting claims that affirm that the product or a specific feature bears resemblance to the prior art.

3. Sole Focus on Claims: It is a standard practice to solely focus on the clearance search around the claim of an existing patent. However, it also opens up unavoidable risks. For example, a person filing the patent application for a grant is a subject matter expert and places more non-descriptive language throughout the specification while returning to generic language in the claim. As a result, a simple observation might not reveal any possible infringement with the claim. But, the interpretation of the claim through non-descriptive language definition in the specifications will establish the case of infringement. The solution to this problem is reviewing the entire specification and not limit to just claim search.

4. FTO Wanted (Dead or Alive): Patent analysts love the functionality that modern search system offers by filtering out patents as per the legal status. The modern search system can filter the results to include only unexpired, enforceable (alive) patents or expired, unenforceable and lapsed (dead) patents. On paper, this functionality appears excellent as it reduces the noise by eliminating redundant patents. However, a more profound insight reveals an entirely different story. The lapsed patents that are currently unenforceable are not truly dead as it can be revived after payment of maintenance fees. Most jurisdictions across the globe provide a grace period for the revival after payment of penalties and fees. Unfortunately, the search system does not indicate patents that could be revived and enforced in the future for infringement.

5. Ignoring Non-Patent Literature (NPL): This point might come as a surprise to you as NPL is not under estimation while checking the possibility of a product infringing a patent’s claim. However, NPL may appear in the future when you are least expecting it. NPL forms a vital source to recognize future threats. Fortunately, you can mitigate the risk by shortlisting organizations and companies working on technology related to your product under clearance. Investigation of NPL is critical thanks to the grace period provided to the applicants during which they can publish blogs, papers, podcasts and videos.

To counter the above-discussed pitfalls, our next section covers how Sagacious IP offers a unique approach to FTO search when compared to its competitors.

Adopting Unconventional Approach to Deliver Quality Results

Sagacious IP has an unconventional and comprehensive approach to FTO analysis with multiple language search options. We conduct an in-depth search to pick out patents with claims that could pose a challenge to selling or manufacturing a product or practicing a process in a particular jurisdiction. Our search results have actionable insights to assist in making impactful business decisions. Our comprehensive FTO searches include the below-mentioned results:

  • Patent categorization with relevance to indicate the threat level
  • Claim chart mapping against the product information
  • Accurate legal status of the identified documents
  • Claim restriction of the related patents
  • Native language capabilities in 16+ languages, including CN, JP, KR, FR, and DE
  • Legal opinion on demand
  • FTO Search Report Format:
    • MS PPT Report: The report includes a visual technical analysis based on the identified references. It also provides claim chart mapping of the relevant identified references.
    • Excel report: An excel file that includes keywords, IPC classes, search strings, project methodology, patents mapping as per the provided product’s essential features, and many other details related to the project.

Why Choose Sagacious IP

  • Product review – comprehensive identification of features – both state of the art & protected. We cover every component from all perspectives – method, system, individual parts of the product, and combination thereof.
  • Understanding of laws from different countries – considering broadest claim scope – infringement possibility.
  • Also, the claim construction is taken to be broadest possible – keeping prosecution history & specification support in mind.
  • Comprehensive searches covering broadest possible claims – multiple iterations.
  • 80+ countries covered – even some obscure countries are covered – including different rights, utility patents, utility models & design rights.
  • Accurate legal status analysis.
  • Analysis based on latest claim sets.
  • Detailed mapping reporting with expert comments on each result – visual mapping also available to show how claims are relevant for the product.
  • Quarterly updates available for FTO search reports – covering legal status changes, claim changes in previously identified results, and new results.
  • Liability Insurance is also applicable and covers our reporting.
  • We design the communication to cover the FTO search reporting under attorney-client privilege.
  • We can also conduct structure & sequence-based searches, including expertise in Markush structure searches.

To know more about our FTO searches, check our samples.

In this section, we understood the capability and expertise of Sagacious IP. The next point of our discussion is to address the FTO search issues by sticking to best practices for conducting an FTO search.

Best Practices for Performing an FTO Search

 The nine best practices for conducting a FTO search are shown in Figure 6.

Figure 6: Nine Best Practices for Performing an FTO Search

1. Focus on Key Features: Performing an effective FTO search becomes easy if you select the key features correctly. Ideally, they should be unique and self-explanatory. One of the potent ways of finalizing the key features is the comparison method, where all the special features are analyzed against each other, and the best ones are selected. Besides, the client and the searching firm should also devote time in identifying and finalizing the main key features for the search.

2. Jurisdiction Coverage: An FTO search is generally conducted considering the jurisdictions in which the client is planning to launch a product. A good search must cover all the mediums related to particular jurisdictions to provide the best quality search. For example, applicants can file a patent in Germany (DE) through various mediums, such as the German patent office, World Intellectual Property Office (WIPO), or EPO with DE as a designating state.  

3. Date Restriction: This is another critical factor while conducting an FTO search. Usually, the patent filed in the last 20 years is considered significant in jurisdictions of interest. In addition, for WO/PCT applications, a period of the previous 31 months is relevant within jurisdictions of interest. Apart from that, the concept of patent term extension plays a crucial role in domains of food additives, color additives, human and veterinary pharmaceuticals, medical devices, etc. The term extension is intended to restore a section of the patent term awaiting regulatory approval for the safety and efficacy of the product. However, the patent term cannot be extended beyond five years. For example, if a product is under clinical trial and regulatory review, the patent term can be extended for some time. Hence, it is crucial to change the date restriction to cover the domain with patent term extension.

4. Targeting Important Players: While performing an FTO search, customize your search strategy to include the leading players of your domain with an impressive array of patent portfolios. The searching efforts should be focused on evaluating such patent portfolios. Moreover, search strings that capture essential patents assigned to any patent troll has to be separately analyzed and mentioned independently.

5. Segregating Patents into Different Sets: The efficacy of an FTO search can be significantly improved by classifying the entire patent result set into different subsets based on claim length and legal status.

6. Citation Search: The forwards and backward citations in patents are the closest results in that domain. It is a healthy practice to conduct a citation search of the shortlisted patents. The exercise helps identify missing patents while searching due to a combination of factors such as missing keywords, missing classifications, translation mistakes, etc. Therefore, citation search is crucial to bolster the FTO patent search and offer full-proof coverage.

7. Similarity Search: Many existingsearching database offers similarity search features, a vital aspect of FTO search analysis. In many instances, the feature helps recognize the close prior arts that are missed. Assuming every related patent is significant from an FTO perspective, it is wise not to miss such a standard searching process to capture all the patents that disclose similar inventions.

8. Dynamically Updating Keywords & Classifications: To spot new and diversified keywords used to disclose the invention, use dynamically updated keywords and classifications. Moreover, classification should also be tracked through the entire search process to understand classes with most patents of interest. You should develop the habit of updating keywords to ensure that no obvious patents are missed and a quality search is performed.

9. Report the Findings: Thejob of an FTO search is a high stake one. Therefore the findings of the report should be structured to avoid any ambiguity. Moreover, the findings have to be easy to comprehend for the reader. Therefore, a well-drafted FTO report should include the following points, categorization of results, order of results, updated legal status, and latest claims. For more information, click here.

One can reap many benefits by following the best practices for performing an FTO search as explained in the next section.

Advantages of Performing an FTO Search

The advantages of an FTO Search are shown in Figure 7.

Figure 7: Advantages of Performing an FTO Search

1. Save Development Cost: FTO searches can be carried out at the initial stages of product development to save substantial development costs incurred while preparing products that are bound to infringe and avoid related infringement charges.

2. Explore Expired Patent Technology: While conducting an FTO search, you will come across interesting expired patent technology that might be similar to yours. Taking inspiration from older patents, you can rework your plan to go with a better invention than initially thought.

3. Assess the Possibility of Buying Relevant Patent: In the midst of performing an FTO search, the result might throw up unexpected surprises with similar patent technology. It is a good idea to weigh the pros and cons of acquiring such a patent for enriching your portfolio and cutting out any scope for future infringement.

4. License the Patent: If the patent owner is unwilling to sell the patent, licensing is another option that could be explored. Licensing eliminates the risk of litigation if two patents and its claim seem similar to each other. You can always avail the service of a third party to walk you through the details of licensing.

5. Redesign the Product: If the result of an FTO search is negative, you can get back to the drawing board and redesign the product in a way that does not infringe any existing patent technology and claims.

6. Understand Competition and Market Strategy: While meticulously performing an FTO search, you also get business insight on your competitors and relevant market strategies that are critical in acquiring or retaining new/old customers.

Despite its many benefits, the FTO search results may not always be favorable. Therefore, understanding what happens if you have a negative clearance result from an FTO search is also crucial.

What to do in case of a Negative FTO Search Result

Suppose you don’t have the freedom to operate from the result of the clearance search. In this scenario, there are four viable options (shown in Figure 8) available.

Figure 8: Viable Options for Negative FTO Search Results
  1. Invalidate Rival Patent: This is the first option on the table. However, you should explore the alternatives only when you are reasonably confident about finding prior art related to the rival patent. Sometimes, the patent examiner overlooks significant items of prior art alone or in combination with other prior art that could invalidate or limit the claim of the patent. Moreover, the patent examiner pays greater attention to patents and scientific publications than prior arts such as blogs, forums, and commercial websites. The action opens up avenues of invalidating the patent by highlighting the related prior art.
  2. Obtain License for Technology: If yourpatent seems to be infringing on another’s patent, obtaining a license for a specific duration is the way to proceed. Licensing the technology makes you impervious to the future threat of infringement.
  3. Cross-Licensing: This has become very popular in modern organizations. It takes place when two parties are interested in each other’s technology intending to reap significant benefits from it. Cross-licensing is mutually beneficial for parties in agreement.
  4. Redesign the patent: If licensing or buying the patent is out of the discussion, you can always redesign the patent so that it is not infringing on the claims (subtle and evident) of the infringed patent earlier.

Now that we understand the options available when the result of the FTO search is negative, let us cover an impact story in which Sagacious IP was involved.

Custom Patentability & FTO Search for a Leading US-based Food Company

A renowned US-based food company approached Sagacious IP with a unique patentability & FTO search requirement. As part of the project, the client wanted to iteratively work with it to refine their products with quick patentability searches followed by a comprehensive FTO search. The final reports helped the client file robust patent applications and achieve infringement-free products. Click here to know more.

Conclusion

An FTO search is a vital tool in an impeccable business strategy. Based on the results of an FTO search (positive or negative), you can execute your plan with full conviction. Furthermore, the search can be performed in-house (with capable resources) or outsourced to a reliable third party such as Sagacious IP.

Intellectual property has emerged as a vital strategic tool for organizations in the last few decades. Sagacious IP was founded with the goal of offering cutting-edge IP solutions to provide a competitive edge to organizations. The company’s focus on creating personalized IP solutions has won appreciation from industry stalwarts. In 12 years, it has delivered more than 25,000 projects in 16+ languages covering multiple jurisdictions. In addition, through its FTO search service (32,000 hours of FTO search and 400+ FTO projects completed), it helps clients identify roadblocks and guide businesses in making sound decisions. Click here to know more about this service.

  • Nitin Sharma (Engineering Searching) and the Editorial Team

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