You've developed a disruptive new technology that's going to revolutionise the food tech world, your commercial product has been formulated and the design of your eye-catching new logo has been finalised. You're ready to hit the market, right? Not quite...
Before you launch your product, build your pilot plant or promote your brand, it is prudent to take just one more action to de-risk your launch and that is to check whether there are any third party IP rights that might block your path. You might be thinking that, since you have registered IP for your product, you're free to proceed without the risk of infringing others. However, it's a common misconception that your own IP gives you permission to proceed. On the contrary, IP rights such as patents and trade marks give you the right to stop others from doing something, but they do NOT give you an automatic right to do anything. In other words, even if you have a granted patent, you could still infringe someone else's patent by making or selling your product, or carrying out your process, in a country where third party IP exists.
In this article, we focus on establishing whether you have freedom to operate (FTO) in the context of patent rights. In a future article, we will look in more detail at clearance searches for your brand.
How can I know what patents other companies have got?
A freedom to operate search can be carried out to determine what patents exist that might block your way in the countries where you plan to manufacture and sell your product, or perform your process. FTO searching is usually carried out by specialist search firms, and your patent attorney can help you to analyse any rights identified and assess the level of risk. An FTO search might be limited to your specific area of technology, to particular competitors you are aware of, or a combination of both.
When should I carry out FTO searches?
It depends. It your project is still an at early stage, it might be better to wait until the technology has been further developed in order to be able to carry out an FTO search that is meaningful. For example, if the formulation of your food product is likely to alter significantly as your R&D continues, there might not be much value in FTO searching until the formulation is closer to being finalised. On the other hand, if you will soon be making a significant investment in the company, such as building a processing plant, it may be worth carrying out an FTO search before committing to large-scale costs.
The timing of FTO searching may also be influenced by external factors, such as whether or not you are seeking investment. A potential investor or licensee may want to understand your FTO position before they are willing to sign a deal. Sometimes, a limited FTO search, for example restricted to a few key countries or competitors, or to the most important aspect of your technology, can be carried out initially to appease investors. Later on, as you get closer to market, a more expansive FTO search can be carried out. The search strategy should therefore be tailored to the stage you are at in your commercial venture and the level of reassurance needed by you or your investors at the time.
Great news – the FTO search gave me the all-clear, so there's no risk, right?
Unfortunately, no! FTO searching is not an exact science. Patent searches can be carried out using key words, patent classification codes, company and inventors names, chemical structures, or a combination of the above. The extent of an FTO search, i.e. how many documents it is designed to catch, will depend in part on the budget available. However, even a "gold standard" search is not guaranteed to pick up every single potentially relevant document.
It must also be remembered that determining whether or not there is a risk of infringing the claims of a granted patent often requires making a judgment as to the meaning of those claims, which can be a subjective exercise. Since courts in different countries interpret claims in different ways, it can be impossible to say with certainty whether or not your product or process would be considered to infringe a granted patent in the case of litigation. And, of course, although you may believe that you are safely operating outside the claims of someone else's patent, this does not necessarily stop them from taking legal action.
The question of FTO therefore comes down to levels of risk. Based on the extent of FTO searching that you have done, is there a high, medium or low risk of infringement? How litigious are competitors in your field, and how high is the risk that they will take action if they perceive that you are infringing their IP? Are you, and your investors, comfortable with that level of risk?
Help, there's a third party patent blocking my way – let's bin the whole project!
Not so fast! If a patent document is identified as part of an FTO search with claims that encompass your commercial product or process, there are a few options to consider:
(1) Investigate whether the patent is likely to be valid. A prior art search can be useful for establishing whether there are grounds to challenge the patent. Even if you decide not to challenge the patent, any prior art identified that potentially invalidates the claims could be used as a defence, or as a negotiation tool;
(2) Challenge the patent. If relevant prior art is found, there are various options for challenging third party IP. In Europe, these include: Filing third party observations (pre-grant); opposition proceedings (within nine months of grant); and revocation proceedings through the national courts or the Unified Patent Court.
(3) Obtain a licence from the patent owner; or
(4) Find a work-around for your technology.
While the prospect of having to re-design your product or process, or having to incur significant costs obtaining a licence or invalidating third party IP is not appealing, it is better to be in a position of choosing one of these options in the face of blocking IP, rather than having to react defensively to an infringement action.
By building FTO searching into your business strategy, you will arm yourself with the necessary information required for decision making at key milestones, as well as demonstrating to potential investors that you take third party IP rights seriously and are proactively managing risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.