Freedom to Operate: Knowing if you will likely infringe a patent

Every so often we see an influx of questions regarding patent searches where the person contacting us is really interested in what is called a freedom to operate opinion.

Many people incorrectly assume that a patent search will accomplish two goals; namely that a patent search will inform them whether they can obtain a patent themselves and then also whether they would be infringing any patents if they were to move forward to make, use and/or sell the product.  A patent search focuses only on whether you are likely to obtain a patent, and used to determine whether you are able to move forward without fear of being sued for infringement.  If what you need to know is whether you are at risk for being sued for infringement what you are asking for is either called a freedom to operate opinion, or sometimes referred to as a patent clearance search.  There is a dramatic difference in these two services in terms of both scope and cost.

A patent search with a patentability opinion, which will determine if the patentability requirements can likely be satisfied, can range from $250 to $3,000, depending on the cost of the search and level of analysis you want and the party who is doing the search and providing an opinion. If you are looking for a patent search and opinion that would be viewed as competent and deliver a industry standard work product the minimum you would spend for the search alone would be $500 and likely at least another $500 at a minimum for an attorney to review and opinion.

In contrast, the search for a freedom to operate opinion would alone cost at least $3,000, and that would return dozens of references that a patent attorney must wade through in painstaking detail. Typically a freedom to operate opinion will cost at least $10,000, and sometimes substantially more. It is not at all uncommon for a freedom to operate opinion to cost $20,000 or $30,000, or more.

What is a Patent Search?

The purpose of a patent search is to determine whether it makes sense to move forward with the expense of preparing and filing a patent application. There are well over 9 million US patents that have been issued and well over 1 million pending US patent applications, with many more published patent applications that have become abandoned, but which are prior art.  Searching through these number of patents takes time and skill, and a US patent search can and does quite effectively sift through these patents, assuming of course you have a professional do the search.  Notwithstanding, there are many millions of other references and foreign patents and applications that can be used by a patent examiner to reject claims.

If an exhaustive search were to be undertaken a search and opinion would cost hundreds of thousands of dollars, maybe more.  In patent litigation it is not uncommon for defendants to spend upwards of $1 million looking for prior art, sometimes substantially more.  This being the case, the goal of a patent search is to do reasonable due diligence.  To get to the 100% certainty level you would have to spend tens of thousands of dollars at a minimum, likely much more, all to determine whether it makes sense to spend $8,000 to $15,000 on a patent application.  That is not a wise business decision and it simply is not done.  Thus, the goal is to get to about the 80% certainty level, which can be done for somewhere between $1,200 to $3,000, depending on the complexity of the invention. For example, a relatively simple mechanical invention can cost $1,200 for a thorough U.S. search and a patentability opinion. For software related inventions the cost typically rises to $2,600 to $3,000. If  you want an international search conducted that can add on the order of $500 to the search.

With all patent searches, regardless of who does the search, there can be no guarantee that all relevant prior art will be found. Specifically, pending US applications are not published until 18 months after they are filed, so even with an exhaustive, comprehensive patent search that left no stone unturned there is no way to be sure that everything pending at the Patent Office has been discovered. Additionally, when you do apply for a patent it is extremely likely that the patent examiner will rely on at least some patents that you did not know about. Sometimes this is due to the fact that an examiner rejection could not be anticipated, sometimes it is due to the fact that the description of your invention is considered to be over-broad (which may be a strategic choice made during the drafting stage), and sometimes it is because an examiner will weave together multiple patents to make a rejection. Receiving a rejection from a patent examiner is normal and common.

The key to obtaining a patent is to have an application with sufficient disclosure so that if an examiner does make a rejection you can amend your application as necessary and obtain a patent. Therefore, it is important to understand that the goal of a patent search is not to guarantee that there is no relevant prior art that will bar patentability, but rather to investigate whether proceeding with the expense of a patent application makes sense given the rights that can likely be gained.

What is a Freedom to Operate Opinion?

It is understandable that those who are entering into a business endeavor would want to know what their potential exposure might be, and when you have an invention perhaps the single largest potential liability looming is the threat of infringing a patent owned by another.  This being the case, it is understandable that individuals and small businesses would like to be able to obtain a patent search and opinion that if they were to do what they are about to do they would not be sued for patent infringement.  The analysis required in order to make this determination is daunting, takes a lot of time and comes with substantial liability for the patent attorney who offers the opinion.  What this adds up to is a freedom to operate opinion costing a lot of money.  Allow me to explain why.

First, a patent search is only the first hurdle with respect to opining whether someone is likely to be sued for patent infringement.  In fact, the patent search needs to be a clearance search, and the searchers know that they are going to be held accountable if they make a mistake, so they are only willing to provide a clearance search for an amount the reflects a substantial premium compared to what they charge for a patent search.  This only makes sense.  If they make a mistake and miss something and you spend $15,000 to file a patent application they have limited exposure, and that is if you even decide to go after them, which would never typically make business sense.  If they offer a clearance search and make a mistake their exposure would easily be hundreds of thousands of dollars, perhaps millions of dollars.  So it only makes sense to accept that amount of liability if there is a substantial premium involved.  The same holds true for the patent attorney relying on the clearance search provided by the professional search firm.

Second, the act of filing for and ultimately obtaining a patent is not an act of infringement.  You can, in fact, obtain a patent for a device that if made would infringe the patent of another.  The question with respect to patentability is whether the invention is useful (easy to satisfy), novel (i.e., exactly identical to something in the prior art) and nonobvious (i.e., an invention is obvious if it is a trivial or common sense re-arrangement of the prior art).  With respect to infringement, the question is whether all of the elements of the claim in question are present in the allegedly infringing device.  So all of the elements can be present, but the device such an improvement that the improved device is useful, new and nonobvious.  Indeed, there are many reasons to obtain a patent on a device that might infringe a patent, including creating leverage for a licensing deal and/or the ability to make the improved device without competition from the original patent owner after the underlying patent has expired.

Third, most times when an inventor wants a patent search they come with sketches, drawings or an explanation of the invention.  Sometimes a prototype will be available.  In order to provide a freedom to operate opinion the device as it will be made must be defined with concrete certainty.  Opinions are not provided in a vacuum, they are provided with respect to a specific context.  A freedom to operate opinion can opine that if you were to do X differently or Y in a certain way it would be better, but there needs to be context.  Typically when we do patent searches and offer opinions a big part of what we do is to identify space for the inventor to move into where a patent could be obtained.  This is early stage investigation, and with an eye toward whether a patent can be obtained, not late stage analysis of whether a legitimate claim for infringement can be made.

Fourth, it is impossible to determine whether an device would infringe without obtaining the complete file history of each patent that is close.  You simply cannot tell from reading a patent whether a device will infringe.  This is because everything in the file history is relevant, such as all the arguments made to the examiner and papers filed work to either narrow or expand the definition and meaning of terms in the patent application.  You simply cannot assume the meaning of words or what the examiner understood or appreciated something in a certain way. A patent attorney must read and consider the entire file history of all relevant patents in order to reach a valid legal opinion.  This takes time.

Finally, for better of worse, in America you can be sued for virtually anything at any time.  With the cost of filing a patent infringement lawsuit they are not typically filed when there is no legitimate merit, but I have seen those cases where there is absolutely no way there is infringement and the lawsuit is merely harassing. So even with a freedom to operate opinion no one can ever guarantee that you will not be sued.  Freedom to operate opinions are used most effectively to give peace of mind about the reasonableness of pursuing a particular business opportunity, but it does not mean you could never be sued.

A Hybrid Approach to Freedom to Operate

Sometimes in the past I have been approached by small businesses who really want to know whether they are likely going to infringe before they spend what to them is a large sum of money moving in a particular business direction. Most times, however, a small business or start-up just cannot afford a true freedom to operate. I’ve worked with people to try and get them at least some information that gives them useful information about whether moving in a particular direction makes sense. The search firm I use has developed a thorough patent search that can operate as a quasi-freedom to operate search. The way I explain this service to people is by drawing a comparison to an audit where the books would be certified versus an audit where the accounting firm would not certify the books. It is still an audit, yes, but it lacks that final authority and certification.

So, if you are in the position where you want the best information available but have to operate on a budget there may be a partial solution. The cost of the search would likely be in the $1,500 to $2,000 range plus the cost to provide the professional advisory services necessary to explain what the search means.