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

By Gene Quinn
June 27, 2015

search-magnifying-glass335Every 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.

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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.

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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.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments.

  1. Benny June 28, 2015 5:24 am

    Before spending upwards of 10K on an FTO, look at the costs of paralegal courses which teach patent searching. It is a worthwhile investment to have at least one person in the organization who can do a preliminary search and take the raw material to an attorney for a professional opinion, thus entailing a considerable saving in fees.

  2. Edward Heller June 28, 2015 5:31 am

    Gene, rule of thumb, it is almost impossible today not to infringe on a patent.

    At Seagate, we actively cross-licensed everyone in our business. This automatically took care of 99.9% of the problem — and allowed our engineers to actually read the patents of our competitors.

    Startups should build in some sort of sinking fund for future royalties, and should invest in their own patents as trade material. There really is no alternative.

  3. Benny June 28, 2015 5:40 am

    Edward,
    Is “cross-licensing everyone in our business” fundamentally different than having everyone in the business placing their technology in the public domain? I understand that only works when everyone plays fair, but calculate the savings in patent and attorney fees and you will see that altruism can in fact be profitable.
    As for not allowing your engineers to read competitors patents – there are many definitions of that policy, none of them flattering, some unprintable. At our place we encourage engineers to read patents.

  4. Edward Heller June 28, 2015 6:38 am

    Cross-licensing requires a quid-pro-quo. If a company does not itself invest in patents — then they are left open to being shut down.

    Startups might be licensed, but usually they pay a royalty.

  5. Anon June 28, 2015 8:04 am

    Benny,

    Your views here seem to be of the utmost Pollyanna-ism. You do not seem to understand what public domain means, and as Mr. Heller quickly points out, you miss the easy distinction of contributing something new and inventive in the first place.

    This then is an endemic feature of those who would denigrate the patent system: the view (somehow) that mere copying is “inventing,” and that everything should just be “communal.”

    You do recognize the common root word for that and another particular political philosophy, do you not?

    As to further nuances in the real world of cross-licensing, one would HOPE that enough grey matter exists to see exactly why large corporations created the term “Patent Tr011” and then went hog wild with propaganda on that term. It stems to wanting to compete on size factors rather than pure innovation factors, and the link to “efficient breach” is unmistakable.

    I am SO looking forward to an update from Ron Katznelson and his request to the Executive Branch concerning the patently offensive “Tr011” propaganda piece that stood in stark contrast to the OMB report.

  6. Benny June 28, 2015 8:17 am

    Anon,
    According to Mr Heller, his company invests in patents yet collects no licensing fees nor restricts his competiors market. He is engaged in a profitless cold war arms race, spending vast amounts on defences but gaining no ground. This, I believe, is not the stated purpose of the patent system.
    I have no problem with exclusive rights to innovation, but Mr Heller points out that there is nothing exclusive in his market.

  7. Anon June 28, 2015 8:44 am

    Benny,

    What Mr. Heller may decide to do is not an equivalent (nor a restraint) to what others may decide to do.

    Your use of the term “profitless” is not appropriate – at all. The actions are still tied to obtaining profits, but merely through different business mechanisms. I shall remind you as well, that there is NO guarantee of profit in not intended to be in the patent system. Actually obtaining profit is very much still left in the hand of the person with the patent property (which is merely the negative rights aspect of that property, which you seem unable to understand).

    Your view here then of attempting this action as directly linked to the stated purpose of the patent system is false. You have ignored the basic Quid Pro Quo already achieved and instead are looking solely at post-obtainment business actions. You show a lack of understanding of BOTH the patent system and the larger game of business.

    In essence then, you continue to shout out “I cannot see” while ever clenching tight your eyes and refusing to open them.

  8. PS DIP June 28, 2015 8:48 am

    Benny,

    With all due respect, I do not believe a paralegal that takes a one to three day course should be allowed anywhere near an FTO search project.

    There are three courses taught in English around the world on the subject of patent searching:
    1) Two day Fundamentals course through the trade group PIUG.org
    2) Three day Art and Science course through PRG (Landon IP)
    3) Multi-week course in Europe through a Dutch trade group (WON)

    None of these three courses teach FTO. All focus on searches of the novelty and validity type. Why is that? Because novelty and validity searches are searches for positive recitations of subject matter and this is relatively easy to teach. It is how the human brain naturally thinks.

    An FTO or clearance search is a search for “negative” recitations of subject matter expressly not practiced. This is a huge change in perspective and it takes a long time before a professional searcher can shift their frame of reference to understand the difference.

    I have personally trained dozens of searchers to perform FTO searches. In my experience, it takes 8-16 months of full time novelty/validity experience before a searcher may begin to be trained to perform an FTO search. To perform an FTO search, a searcher must be able to craft a complete field of search (without most of the usual iterative learning steps) which should encompass the two thousand to ten thousand or more references of relevance to the subject matter. And then, all the references in the complete field of search must be manually reviewed, independent claim by independent claim. Each and every reference should be deemed a risk unless a claim limitation is identified that we know we are not practicing.

    Even with the 8-16 months of novelty training and the following year of mentoring, many professional searchers will be unable to shift their perspective enough to perform a proper FTO searcher. They may think they are doing a good job and they will cite plenty of references based on positive disclosure or claims. However, many will still not truly understand how “negative” claim limitations alter the focus of this search type.

    Okay, off the soap box. You really got me worked up with the “send a paralegal to a two day course and then they can do your FTO searching” comment. Our industry (patent searching) is in the midst of a push to self-certify (see QPIP.org) because of mis-understanding like this.

    Currently, patent searching is an unlicensed and unregulated industry with a full range of ethical behavior. We are struggling with how to handle the lack of understanding by clients / customers of the difference between a high end professional and the folks on the other side of the bell curve. It is tough for us to self-certify without a call to do so from AIPLA, IPO, or similar “up the food chain” groups. These organizations are rightly mired in high level things on Capitol Hill, so we muddle along in the trenches.

  9. Benny June 28, 2015 9:06 am

    PS DIP,
    If you had read my post more carefully, you would have noted that I explicitly stated that an FTO opinion should be left to a professional attorney. However, a knowledgeable client need not pay for the attorneys’ learning curve, and is probably far more aware of the competitions’ technology than the attorney will ever be. Handing an attorney a stack of patents and asking them to check them out and look for others in a similar vein is a more cost-effective approach than sending the attorney down to a dark cellar with a flashlight.
    You might also like to take at peek at the IPR-resources website and discover that there are more than 3 options for patent searching courses.

  10. Anon June 28, 2015 9:55 am

    I have come to deeply respect the perspective that PS DIP brings to the table.

    Thank you for your post capturing that perspective. The part about managing expectations and understanding of clients/customers applies throughout the spectrum of providing legal services.

    I have in the past jokingly “fired” Benny as a client because of his unwillingness to learn. He presses his “engineering-limited” views well beyond their reasonable limits, and makes it difficult to glean any pearls from the amount of detritus that he posts.

  11. Diane June 28, 2015 7:33 pm

    I would like to know the identity of the search firm that you use. I could use another reliable firm to add to my arsenal.

  12. Seena June 30, 2015 8:59 pm

    I’m echoing Diane’s interest in learning what search firm you’re using, Gene.

    And Diane, if you’re using one that you recommend, I’d like to learn their identity as well. Ps, if Gene doesn’t monitor the comments section, I will try to contact him directly.

  13. PS DIP June 30, 2015 10:01 pm

    Diane and Seena – Asking for a referral from a trusted colleague / source is definitely the best way to find a reliable search firm. If a search firm is cold calling you for work or bugs you incessantly via email, run the other direction! Most of the good firms are 100% referral based service providers.

    Benny – Thanks for the heads up on the IPR outfit in Israel. I have never heard of them and their offerings, but will keep an eye out for them. Do you know if they attend any of the patent information conferences in Europe or the US? I’ve never seen them at our nerd fests.

    Anon – Thanks for the love. Always happy to answer your database and PTO IT questions when they arise…

  14. Gene Quinn July 1, 2015 9:14 am

    Diane, Seena,

    The search firm I use is Walsh IP. It is run by Pat and Stewart Walsh. Very detailed patent searches.

    http://www.walsh-ip.com

    Cheers.

    -Gene

  15. Stacia Stokes July 6, 2015 10:07 am

    A quality search firm combines knowledge, experience, tools, and best practices for delivering consistent and thorough searches. For example, a firm with both former examiners and former patent attorneys will provide a higher quality search than one with lower qualifications for its searchers. Moreover, the databases used by the search firm is extremely important and often overlooked by patent attorneys. Be sure to ask your search firm about the extent of their trials with various search tools. Finally, random searching doesn’t work. Period. This is how you end up with incomplete results. You need a firm that has a detailed method of searching. Sherman Patent Search Group has all of this. http://shermanpatentsearch.com/ Simply sending a paralegal to a short course on searching or having your junior associates fumble around on google patents isn’t going to provide you with the results you need.