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Mitigate Patent Infringement Risk with an FTO

Companies understand the value in filing for patent protection on their products prior to launch. Obtaining patent protection adds value to the company’s patent portfolio and keeps competitors out of the marketplace for the covered products.

Unfortunately, many companies do not understand the value or benefits that come with the performance of a Freedom to Operate (FTO) or product clearance opinion. The FTO opinion’s main purpose is to serve as a risk management tool for the company. It meets this goal by identifying and analyzing third-party patents or trademarks that may negatively impact a new product launch because of the risk of patent infringement liability. It should be clearly understood that FTO and clearance opinions do not imply absolute clearance or the total elimination of liability risk, but rather the opinions provided are relative to the current IP landscape for the specific product at a given point in time for a defined geographic location.

The FTO process typically comprises three stages: 1) product deconstruction, 2) patent search with geographic location and 3) claims review and assessment.

Stage 1: Product Deconstruction
Stage 1 involves dissecting the planned or existing product into its various component parts. The product as a whole will be reviewed as well as the critical components that the company has identified as new or innovative.

In addition, how the component parts and proposed product are manufactured or assembled should be reviewed, because third-party patents could exist that would block a company’s ability to manufacture the proposed product.

Stage 2: Prior Art Search
Typically, most companies and patent attorneys will outsource the performance of the prior art search to entities that specialize in this service and have access to proprietary patent databases. The patent attorney will develop search criteria, including a detailed product description and all identified components. In addition, any associated methods or processes that were discovered during the product dissection should be described in the search criteria. Further information included in the search criteria may be a listing of known competitors; any already identified relevant patents and geographic limits. Most companies focus only on U.S. patents because they have no plans to make use or sell their products outside the U.S. However, an increasing number of countries are looking to Europe to perform clinical trials of new products, thus for these cases, European patents must also be included in such a search.

Once the search criteria are finalized, the appropriate patent databases are searched and results compiled. The returned prior art is then ready for the next stage of the FTO process.

Stage 3: Claims Review and Assessment
In this stage of the FTO process, the company or patent attorney determines the likelihood of whether the product or methods infringe upon any of the identified third-party patents. The focus of the patent review is on the claims and, more specifically, the broad independent claims. The claims of a patent provide a qualitative description of the inventors’ structural or step limitations. When reading the claims, the scope of the language used will determine what or how much is covered by particular claims.

Infringement of patent claims can occur in several ways. "Literal infringement" occurs when the product or proposed product literally or actually infringes the claims as it reads in the patent. For example, the claim states "A red wagon with four wheels and a pull handle" and the product is a red wagon with four wheels and an elongated handle. The proposed product literally infringes or “reads on” the claim.

Another form of infringement falls under the "doctrine of equivalents." In this situation, infringement is found even though the proposed product does not fall within the literal scope of the claim; however, the product is determined to be substantially equivalent to claimed inventions referenced to the claimed red wagon example above. The infringement under the doctrine of equivalents would likely be found for a proposed product that included a red wagon with four wheels and a pull bar, instead of a handle. It would likely be found that the bar element was "substantially equivalent" to the pull handle because it functioned similar to the handle with similar results relevant to the wagon. Therefore, the red wagon with the four wheels and pull bar would likely infringe the claim under the doctrine of equivalents.