When is Freedom to Operate Analysis Cost-Effective?
Most of the organizations nowadays have recognized the value of taking the patents for the inventions prior to launching a product. Getting the patents for your invention adds up value to bottom line by enhancing intangible assets and provides your company with big-headed rights. The patent mainly enhances the power of your company in the marketplace and stop your competitors from using your invention without your permission. Less obvious but equally important are the advantages that come up with product clearance also known as Freedom to Operate. FTO analysis incorporates recognizing and analyzing patents of others which might subject your organization to patent-infringement liability. By performing FTO analysis before launching and developing a product or acquiring a new company, your organization can avoid the risk of future litigation and minimize unnecessary expense. The FTO analysis done early in the stage of product development affords company to change design and minimize infringement. Despite an advantage, FTO analysis can also recognize the opportunities for patenting or future development. Identically, performing FTO analysis as a part of due diligence enables to steer clear about an opportunity filled with risk of litigation. The Freedom to Operate search starts with an assessment of service or product. Does any of them subjected to existing license? Do any components create under agreements which incorporates any indemnification clauses? Do product or services differentiate from country to country? Simultaneously, a clearance search is done for the published applications or unexpired patents which might claim several components. At last, an experienced patent provider can analyze the data and offer the conclusion on risk while going forward with service, product, or any acquisition. It is highly crucial to know that FTO analysis can not guarantee completely that your organization will not be sued. The applications and patents recognized mainly depends on the search quality and degree of relevance of every application or patent will be subjected to clarification. There are some applications by others which are on the file but not published at search time, so they are not considered at research part.
As FTO study is expensive as well as time-consuming, so most of the organizations select where and when to do FTO study so as to reduce the risk and boost value. Here are some factors which can enhance the decision:
Consider product value and investment amount As an initial step, it is crucial to consider the service or product acquired or launch in terms of its value to organization. What is projected revenue? Is this product can offer high or low-margin profit The products that have high volume or high margin are probable to lead to more damage. Thus, it is more worthy to take an extra step and clear product prior of proceeding. The products in this incorporates, cell phones or television. If an organization has restricted amount to spend for clearance, then, product can be least ranked in value terms. The services or product needed an investment relevant to the company’s overall research and development budget such that Freedom to Operate outcome might be utilized to lessen down costs or enable time for designing any recognized patents. The products which need less investment, FTO study is delayed ending of the product launch but in fact need to be done before release of product.
Check whether identical products have Flickered Litigation If your company is thinking of launching a product or service in the competitive market, then getting FTO analysis done is ideal to identify the risk before the launch.
Check competitive community for the product How large and how drenched is market? How many competitors are providing and what is the history among players in the area? Is domain litigious, like TV and cell phone domains, or challenges are mainly from non-competitors. In this scenario, FTO analysis can reveal the patents in those litigations. If your organization has technical individuals and developers, then you probably will get great source of information. Ask some related businesses to recognize entities they believe might be highly motivated to keep proposed new product off market, and also as technical individuals which competitors are closely resemble with your product. It is highly common in marketplace for the development to get inspired from the competitors.
Consider Sources What if you are sourcing all or some of your service or product from some other company? Don’t you think that organization bears the risk of patent infringement? Well, it does not always work this way. The marketing and selling of a company product is done under their own private label products which are mainly manufactured under the contract y others for the sake by organization under their own brand.
What are the objectives and risk tolerance of your business? Prior of taking any FTO analysis, an organization is required to give some serious thoughts on how they can handle the results. Does organization seek to avoid all the litigations at all cost? If they are ready to walk away if new product, service or the acquisition are not favorable? If any organization will go ahead without considering the results, then FTO analysis might not be effective. This results that the organization is completely comfortable with all risk of litigation as well as possibility it will require to collect required resources to defend. With all this in mind, this tactic rarely seems pragmatic.
Conclusion Analysis of FTO plays major role in the IP strategy. It enables an organization to recognize, reduce and handle risk while concurrently at same time recognizing the fields where the patent coverage is not available and thus present the opportunities. The only side to the regular FTO analysis on all the products is cost. As few organizations only have unlimited budget for the legal fees but most of the organizations consider level of the FTO analysis on new acquisitions and products in their budget as well as risk tolerance. Having an experienced patent attorney is able to assist in creating policy which is right for your organization.
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