Executive Summaries » When is a Freedom to Operate Opinion Cost-Effective?

When is a Freedom to Operate Opinion Cost-Effective?

May 22, 2013

Most companies understand the value of applying for patents on inventions before launching a product. Equally important are the benefits that come with product clearance, also called “freedom to operate” (FTO) or “right to use” opinions.

FTO analysis involves identifying and analyzing those patents of others that may subject your company to patent-infringement liability.

By performing FTO analysis before developing and launching a new product or acquiring another company, your company can limit the risk of future litigation and avoid unnecessary expense. FTO analysis done early in the cycle of product development affords companies the opportunity to either modify the design and avoid infringement before reaching the point of no return, or to take a license.

FTO analysis can play a valuable role in an IP strategy. It allows a company to identify, minimize and manage risk. Often, it also enables a company to identify areas where patent coverage is thin or absent and which therefore may present opportunities.

The only real downside to regular FTO analysis on all products is the cost. Since few companies have unlimited legal budgets , most companies consider their level of FTO analysis on new products and acquisitions in light of their budget and risk tolerance. An experienced patent attorney should be able to assist in developing a policy that is right for any company. The author lists five factors that drive the decision on whether or not to perform an FTO analysis.

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