Patent Attorney and Founder
There are two big (and very different) questions that inventors and businesses ask with respect to patents. Ok, well, there are a LOT of questions they ask… but, these are the important ones:
- Can I get a patent on this invention?
- Why can’t I sell my invention without being sued?
The first question is one that, if you’ve been reading our blogs and following my tutorials, is something that is VERY well covered. We explain everything from the difference between an idea and an invention, to patentability opinions, to filing the patent application at the USPTO.
It is, as you probably guessed, this second question, that trips many inventors and businesses up. When they go to actually make and sell their invention, a careful review of what they are making and selling should be undertaken. 9 times out of 10, the product or system they are selling comprises parts, pieces, assemblies, finishes, or a process that is not covered under their invention, and must be considered prior to sale.
In other words, let’s say the inventor has patent claims on a new robotic arm extending device and new gripping pads (as shown below). However, the inventor didn’t come up with the robotic arm, nor did they invent the several thousand other components that must be included in a state of the art robotic arm.
The problem lies in that in those other thousands of parts that make up the robotic arm (the silver/gray in the image below), it is likely that many of them are protected by patents, and in order to sell the entire robot arm, you would either need to license the rights to make/use/sell them or run the risk of being sued by the rights holder of those component parts.
So, before an invention is taken to market, a wise inventor will seek a “Freedom to Operate” opinion from their Patent Attorney. This opinion will inform them of any risks as to other Patents held by 3rd parties on other aspects of their product that’s being sold. The name “Freedom” will help an inventor/business owner with to what degree they are free to sell (i.e. “Operate”) their invention without fear of being sued by another patent holder.
Let’s abbreviate the Freedom to Operate as FTO, as we will be using it a lot in this article. It’s my hope to be able to break down the parts of a complete FTO and explain them simply and clearly:
Step 1: Determine the “Operations” Plans/Goals
Step 2: Research all Patent Rights Holders within Operations Plan
Step 3: Validity and Enforceability of all Patent Rights
Step 4: Infringement Opinion covering Valid and Enforceable Patents
That’s all! Just 4 steps… piece of cake, right?
Ok, as you probably guessed, there is a LOT of work that goes into delivering an FTO, and it may come as no surprise that this type of legal opinion is the most expensive opinion in all of patent law. It’s not uncommon for legal fees to be around $40,000-$50,000, just because of the scope of the research and analysis needed. That said, we’ve done FTOs for under $10,000, so there is quite a range.
Step 1: Determine the “Operations” Plans and Goals
This step certainly sizes up the project. As we sit down with a client who is asking these types of questions of us, it comes down to what they are planning to make, use, and/or sell.
An operation plan consists of everything from the entire supply chain and raw goods to the final assembly and retail sales of the final product. From a very high level, operations includes EVERYTHING from the machines, processes, and organization of people around the development, designing, manufacturing, logistics, sale, and even post-sale activities.
As far as we are concerned, the most important aspects of operations that will impact the patent rights are:
- Where do you plan on making, using, and selling potentially patented products?
- What are the various potential products that will be sold?
The “where” is all about geographical reach, and the most important part about this is that each country has its own patent laws. So if you are planning on selling your product outside of the US, then you should pay careful attention to this first inquiry.
Even though there are different patent laws in each country, patent rights are generally consistent. The patent holder has the right to exclude others from making, using, or selling their invention in the jurisdiction(s) in which they have the right. So, even if you are selling your invention in the US, and there may be a rights holder in Japan, if you actually MAKE your invention in Japan and ship it to the US, you would be infringing upon the Japanese Patent Holder.
There is an entire doctrine of patent litigation called “the doctrine of equivalence” which means that someone who may be infringing only in part can be held liable for the “actual/direct” infringement. This means that an upstream supplier of only part of the invention can be held liable if they knew or had reason to know the end product was protected by a patent.
For more about patent litigation – read up on a blog I wrote last year here.
The “what” part of the above question set should be obvious… this is what you will be selling! Now, some inventors and business owners get confused – and think that because they got a patent on their invention, they can go to market and start making/using/selling it to the public. And they’d be correct if they could actually sell just the invention.
To explain a bit more about what I mean, I’ll use a forklift invention as an example. This invention, US Patent Number 10,377,613 is called “Forklift Truck and Method of Driving the Same” – Link to full patent here.
More importantly, related to our example above. If you were a forklift manufacturer, having this patent is great, but it doesn’t give you the right to build and sell just any forklift!
Note, the claim is only covering a forklift with a specific configuration of a first load and a second load. The claim has nothing to do with the actual operation of the forklift…therefore you cannot likely apply this new method to a new style forklift, and start making and selling them without first looking to see if that new forklift design is covered by another patent set.
So, returning to operations plans and goals… If your plan is to make and sell the types of forklifts shown in the above picture, only adding on the functionality/capability to do the double loading with the patented method, you need to be clear about where you plan to make/use/sell them. Then you must determine if there are any rights holders covering any aspect of that ENTIRE PRODUCT you plan to sell.
While an FTO opinion will help with this, there are never any guarantees with research – there’s always the potential that a patent was missed in the research – so a foolproof method is to use a forklift that was made more than 20 years ago so that there are no risks that any aspect of the forklift is still under patent protection. Now, this may not be such a great idea for a business, as the demand for 20+-year-old equipment may not be so strong and the parts may be outdated and not as efficient as newer machines. So, it’s a trade-off.
Yet another option would be to simply LICENSE your newly patented method to a company (like Toyota) that may be able to put this new type of loading method to use in its millions of users’ factories.
Licensing has its own ups and downs, but for many products that are dominated by big players, it is almost surely a simpler plan than to try to enter the market as a small player among big whales. I won’t get into licensing right now, but if you want to dig in, please read this article here.
As you will see in that article, there is a tradeoff and a business decision that must be made between making your own product or licensing it out.
This trade-off and balancing is exactly what I’m hoping you are taking away from this… there is never a perfect answer on this sort of stuff, just a matter of gathering the right type of information and asking the right questions so you can make a sound business decision going forward.
Step 2: Research all Patent Rights Holders within Operations Plan
Ok, so you have made a decision to manufacture that forklift and sell it! Now, you need to know who the rights holders are that might be able to go after you for infringement and potentially put you out of business!
Patentability Search answers the following: Can I get a patent on this invention?
Freedom To Operate answers the following: Can I sell my product without getting sued?
This second (and much more difficult one) is the focus of our research in this phase.
The heart of what we’re looking for is unexpired patents and pending patents in jurisdictions of interest that are owned by other entities that have claims that cover the product or service that is being sold (or are desired to be sold).
Unpacking this a bit, our research will focus on both patents and pending patents for the subject matter which is being sold (here our example is forklifts). Now, we’re not going to search for just ANY patent related to forklifts, but we will analyze the specific model that our client wants to sell (for a plethora of business reasons).
So, we will take apart each component of the forklift itself and perform a search. The analysis will start high-level to determine which parts of the forklift (maybe the chassis, the engine, the wheels, and shocks) are of a known technology that has been in use for decades, and there are no patents on that. Then, the focus shifts to other aspects of the forklift, until each component/system has been evaluated for potential patent protection.
As the research goes forward, careful documentation is done to capture not only potential patent numbers and technical information that may have claims that cover the subject matter, but also the assignee (otherwise known as the owner) of the patent rights, to help
The client appreciate who may own one or more patents in the space for later consideration as to licensing and so forth.
Next, we need to then filter our research by jurisdictions of interest. This means that the only patents we need to look for are those with rights in the geographies that the operations plan has laid out as somewhere the company is going to make, use, and/or sell their product or service.
So, as a simple example, if we plug into our keyword search on our various databases “forklift battery housing” and we get several patents in Australia for the technology that are only Australian patents and they didn’t seek patents in the US at all…
That’s actually a VERY good thing for you, if your operations plan is to exploit the US market alone (or non-Australian markets for that matter). Because that company (and any other inventor) is going to be restricted from filing in the US (or other non-Australian country) unless they filed a PCT or International Application (which would be a little tricky to find).
So, once we have our list of patents and pending patents narrowed down (from above) that cover the component pieces of the product being sold and only include the jurisdictions of interest, we will again focus our research only on patents that have claims that cover what is being sold (or is planned to be sold).
This analysis is painstakingly slow and arduous. Getting to know the details of the product that you are trying to sell is very important to this process so that as the Patent Attorney reads through the claims, they can tell whether it covers the proposed product via the operations plan.
Here’s an example forklift patent [US 10,556,783] that might be close to what’s being sold… Do these claims cover the product to be sold? Is there an infringement risk here?
So, as you can tell, the more detailed you can be with respect to how you’re going to market and what your operations plan and sales plan is, the more specific and accurate you can be in your FTO analysis and whether there is any risk of infringement.
Step 3: Validity and Enforceability of all Patent Rights
Ok, so you have found a few patents that seem really close to what you are hoping to sell, and you think that those entities are not a good fit for a licensing opportunity (either licensing in or licensing out).
Ok…well, you now need to face the likelihood of being sued by those rights holders if you start marketing/selling the product. So, before you make any decisions with respect to pulling the product or making major changes to it (to take out the patented parts), you should evaluate the patents themselves for validity.
So, even if you have a threatening patent whose claims touch on the product, you can and should perform a validity analysis on the actual claims. As is the case in US patent law, via federal court, supreme court, and USPTO administration changes, rights can change too! This means that what was once patentable may no longer be patentable, and a prior-issued patent can be struck down as invalid by both the federal court system and the Patent Trial and Appeal Board.
I wrote a lengthy article on patent subject matter eligibility, and encourage you to read through it here.
In essence, that article covers the new 2-part test which specifically looks at computer-implemented inventions and business methods. There are other issues that can come up regarding validity that are more plain.
As you may know, examiners are human!! And, of course, humans make mistakes sometimes. Sometimes patents get issued/granted when they shouldn’t have. Therefore, it is possible that an examiner missed a piece of prior art when they performed their search!
This means that if you can find a prior art (or several) that would make the underlying patent information not novel or obvious as of the time of filing their invention (i.e. the prior art reference/publication predates the filing date of the underlying patent), then you may be in a great position to continue with your operation plans to sell the forklift device with the patented system on it… knowing that if you’re challenged, you will need to seek invalidation of their patent in the proper tribunal.
Invalidating a patent doesn’t come for free, and even though you may be in the legal “right”, it will cost you some money to hire counsel and afford the time/energy required to go through the court battle. That being said, if the other party hires competent counsel, they will see that their patent has holes and will likely be willing to settle or waive their claim against you.
Step 4: Infringement Opinion covering Valid and Enforceable Patents
This is the last piece of the FTO, and now you can fully appreciate it, right? We’ve come a LONG way. You’ve put together a full operations plan, know where you may be infringing on other’s patent rights because you are aware of the geographical implications of making, using, and selling potentially patented products/systems around the world.
On top of that, you now know that of those patents you’ve found that seem to cover the subject matter you’re going to market with, only a smaller subset is valid and enforceable for the jurisdictions of interest.
Now, you’re down to the very small list (hopefully it’s 0, haha) of those patents that pose a very real threat to you. Now, it’s time to do the claim by claim evaluation to see whether a jury would agree by a preponderance of the evidence that your product/system is practicing ALL of the elements of the patented claim set.
A “claim chart” is developed. This compares elements and even specific words of a claim to assure there is or is not literal infringement. This type of analysis will rely on definitions coming from different sources, and specific interpretations can be very important.
Here is an example claim chart for US Patent 9,876,543 for a SYSTEMS AND METHODS FOR CHANNEL STATE INFORMATION EXCHANGE. This below claim chart is not for the entire patent claim, but actually JUST FOR CLAIM 12!!!
As you can see, there is a lot that goes into these claim charts and the infringement analysis. The amount of scrutiny each patent gets should depend on how much is at risk.
Meaning, if the patented aspect of your product/system can be replaced by a non-patented product you should just go ahead and replace it, as opposed to spending a lot of time/money hiring attorneys to analyze the claim set with an infringement opinion. But, if it is more integral to your product, and there are no known alternatives, then you should proceed with further analysis.
In the end, you should get an opinion as to whether there is an infringement or not. This is, after all, what you’re paying the Patent Attorney the big bucks to deliver on!
In addition to an answer on infringement for each of the patents at issue, the attorney should summarize the FTO with an opinion on the “level of freedom” based on the jurisdiction of interest. Meaning, if there are NO patents that pose a risk to infringement, the FTO will be “FREE AND CLEAR”!!! Woo hoo! Buuuuut, it is usually the case, that there are some patents that pose a risk, and therefore the opinion will be something less than completely free.
In Summary
So, that’s the gist of it! Hopefully you have a better and more thorough understanding of the Freedom to Operate and why it is such a lengthy (and often expensive) process.
To recap, the four steps we discussed today are:
- Determining the “Operations” plans and goals
- Researching all patent rights holders within the Operations plan
- Validity and enforceability of all patent rights
- Infringement opinion covering valid and enforceable patents
It is my hopes that this article becomes another piece of the puzzle in helping you realize your dreams so that you, too, can Go Big and Bo Bold℠ ! Are you ready for the FTO step in your patenting journey? Did you have any questions left unanswered? Let us know!
Legal Note: This blog article does not constitute as legal advice. Although the article was written by a licensed USPTO patent attorney there are many factors and complexities that come into patenting an idea. We recommend you consult a lawyer if you want legal advice for your particular situation. No attorney-client or confidential relationship exists by simply reading and applying the steps stated in this blog article.