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When & Why to conduct a FTO (Freedom to Operate)

Posted on: November 19th, 2020

Whenever a company is planning to develop and launch a new product, a major risk, particularly in technology sectors where there is extensive patenting, is that commercialization may be blocked by a competitor who holds a patent for a technology incorporated within that product. This is why many companies, at an early stage, seek to secure their “freedom to operate,” i.e. to ensure that the commercial production, marketing and use of their new product, process or service does not infringe the IP rights of others.

While an absolute guarantee of freedom to operate will never be attainable, there are ways of minimizing the risks that can save a company significant resources. Patent protection is territorial. While a certain technology may be protected in a company’s main markets, it may be in the public domain in other countries. In the latter, no permission (or license) is needed from the patent owner in order to commercialize the product.

Patents have a limited duration. Patent protection lasts for a maximum period of 20 years. Thereafter, a patent is considered to be in the public domain and may be freely used by anyone. Moreover, the European Patent Office (EPO) estimates that fewer than 25 percent of all patents granted through the EPO are maintained for the maximum 20-year term. Many patents are allowed to lapse through non-payment of maintenance fees by the patent holders before the 20 years are up.

Patents have limits of scope. The claims section in a patent document determines the scope of the patent. Any aspect of an invention not covered by the claims is not considered to be protected. That said, it is not always easy to determine the scope of a patent. It requires considerable experience in interpreting the claims, the written specification and the history of the application process.