So, you have developed a ground-breaking technology and want to sell it in Europe but do not want any patent or design infringements, what are your options?
FTO analysis will help you determine the commercial scope of your new endevours as well as reduce investors’ concerns about the marketability of the product, process, or service
In this situation, an FTO Analysis is a vital step to undertake. FTO is part of IP due diligence and risk management strategy, where a thorough analysis is done on product or design to determine whether a particular market testing or commercialising is possible without any risk of future infringements or over-stepping valid intellectual property rights of others.
A company may choose to pursue an FTO when;
• Launching a new products in competitive markets that are particularly crowded, competitive, or litigious;
• Raising capital for your business
• Avoiding financial risk in a new market for its product, process, or services.
An FTO analysis therefore, provides new product owners and concept designers invaluable knowledge about the market of intangible rights before they contemplate pouring major investments into their manufacturing processes or scale -ups for new regions.
Why does a Freedom to Operate (FTO) matters to an investor?
Obtaining a FTO opinion from certified IPR or patent attorney can be very beneficial pre-emptive measure. As having a FTO analysis will help you determine the commercial scope of your new endevours as well as reduce investors’ concerns about the marketability of the product, process, or service. Normally legal recommendations basis a FTO analysis are:
- License or Buy-out Third-Party Patent
- Invalidate/Litigate (Third-Party Patent)
- Wait until the Patent Expires
- Continue Research and Development underSafe Harbour Rules of Transfer Pricing under the Indian Tax Act (Especially relevant for Life Science and Pharmaceuticals)
Therefore, every investor who seeks an assured return over their investments will be keen to note the following
- Acquisitions: If the patent assets, such as in-license or acquisition of a company or division have been acquired prior or not.
- Value of Patent Assets: The investor would like to know ability of the claimed product or technology and the value a patent asset would generate. This is particularly important for biotechnology /biopharmaceutical companies.
- Risk Mitigation: Moreover, an investor wants to understand what you would do to avoid his risk? Do you have a “research tree decisions framework,” explaining feasibility of your technology and openness to future research to meet market competition ? Generally, an investor seeks to pick FTO results that have least number of third-party IP associations to avoid potential litigation or breach of licensing royalties.
“…an investor wants to understand what you would do to avoid his risk?..”
How to avoid Freedom to Operate (FTO) risk?
The very first step to manage risk is target the low hanging fruits . Therefore, to have a degree of certainty you must first opt for,
- In-House Mapping You must first, take an audit of your existing IP assets such as, patents, trade marks or copyrights etc. and map those to the target country where you seek to be commercially active.
- Legal Research: To avoid a FTO roadblock it is important to have a thorough legal research report certified by an IP lawyer that will map your competitors in a new territory, existing laws or independent protection rights that those companies may have and brand assets available for you to acquire. According to our experts , by learning about existing competitive industries, it will help you have a clear idea of what kind of IP assets you would want to avoid risk of present or future infringements. For example, some of the technology companies have existing licenses from universities or partnered companies. Therefore, as a foreign entity you must know the scope of their licenses, and limitations that may hinder your business goals.
- Hiring Mistakes: In our experience, this is especially common in start-ups companies that opt to hire employees from competitor’s firms. While frequenting companies is a new normal it is important for firms to determine the extent of confidential information the employee may have as this can pose formidable risk to your freedom to operate as well as expose your IP assets ,in a new territory.
Some Best Practices to opt before applying for Freedom to Operate Analysis:
- Develop and budget for the risk mitigation strategy for your IP assets
- Educate your executives, vendors, and product research team about pre-emptive commercial challenges
- Adopt a team of legal counsels and litigation budgets prior to proceeding
“…have a thorough legal research report certified by an IP lawyer that will map your competitors in a new territory, existing laws or independent protection rights that those companies may have and brand assets available for you to acquire…”
If you are looking to expand your business abroad or are seeking to launch your technology in a new market get in touch with us for a quick FTO analysis. Contact us at email@example.com
Nicomedia IP Legal Associates is an allied partner of IP-Coster. An international consortium of fair legal pricing that assures transparency in legal consultations.