What is fto?

FTO: Freedom to Operate

Freedom to Operate (FTO), also sometimes referred to as clearance, is the assurance that a company's commercial activities (e.g., manufacturing, using, selling, importing) do not infringe upon the valid intellectual property (IP) rights of others. It essentially means the company has the "freedom" to operate in a specific jurisdiction without the risk of facing patent infringement lawsuits.

• What an FTO is not: It's crucial to understand that an FTO search and opinion do not guarantee that a product or process is patentable. It only assesses whether existing patents might be infringed. A patentability search investigates novelty and non-obviousness, while an FTO focuses on infringement.

• The Process: Achieving FTO typically involves several steps:

  1. Product Definition: Clearly defining the product or process is the first step. This helps focus the search.
  2. Jurisdictional Scope: Defining the geographical areas (countries) where the product will be manufactured, used, or sold is critical. Patent laws are territorial.
  3. Patent Searching: A thorough search is conducted to identify potentially relevant patents and patent applications in the specified jurisdictions. This often involves keyword searches, patent classification searches (e.g., using the IPC system), and searching the patents of competitors.
  4. Patent Analysis: Each potentially relevant patent identified during the search is analyzed to determine its scope of coverage and its validity.
  5. Risk Assessment: Based on the patent analysis, the risk of infringement is assessed. This involves considering factors such as the likelihood of infringement, the potential damages, and the strength of the patent.
  6. Opinion and Mitigation Strategies: A legal opinion is usually provided, outlining the identified risks and offering recommendations for mitigating those risks. Mitigation strategies can include:
     • Designing around the patent.
     • Licensing the patent.
     • Challenging the validity of the patent.
     • Waiting for the patent to expire.
     • Ignoring the patent (taking a calculated risk), if it is not valid or is unlikely to be enforced.

• Importance of FTO: Conducting an FTO analysis is vital for several reasons:

  • Reduces Legal Risks: Minimizes the risk of costly patent infringement lawsuits.
  • Informs Business Decisions: Helps companies make informed decisions about product development, manufacturing, and marketing.
  • Attracts Investment: Demonstrates to investors that the company has taken steps to protect its commercial interests.
  • Increases Company Value: A strong FTO position can increase the value of a company.

• Limitations: FTO opinions are based on the information available at the time of the search. New patents may issue after the search is completed, and a previously undiscovered patent may be found later. Additionally, FTO opinions are legal opinions and are not guarantees of non-infringement. Courts may interpret patents differently than the FTO opinion.

• Patent Infringement: This is the violation of the rights granted to a patent holder. It occurs when someone makes, uses, or sells a patented invention without permission.

• Intellectual Property: Refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Patents are a form of intellectual property.