Do You Have Freedom to Operate 

publication 

December 2010 - (Intellectual Property Brief Winter 2010-2011)

Intellectual Property Brief Winter 2010-2011

Companies today are faced with the many challenges that accompany an economic downturn.  Trying to make the most of every dollar invested is the objective of their business development plans for any commercial undertaking. With every new product being contemplated for development, one important business decision is whether to perform a freedom to operate analysis. It is important to bear in mind that as markets shrink in a downturn, the fight to maintain sales levels and market share can be intense. A competitor with a patent will certainly use it to delay your entry to market if it has an arguable case that your new product infringes. For a company at any stage of its lifetime, ignorance is not an option. Freedom to operate analyses may appear to be a large investment upfront when developing a new product or technology, but, litigation can be even more costly. Even more important, if your competitor obtains an injunction, the investment you made to bring that new product to market is lost. This article briefly discusses what a freedom to operate analysis is and provides some of the factors to consider in deciding whether or not to invest time, money and resources in one. This is of particular importance for pharmaceutical and biotechnology companies.

The first thing to keep in mind is that patents only have effect within defined geographic regions. A Canadian patent gives no rights in the United States and vice versa. Thus, you will have to consider the most important markets for your new product in order to assess which patent jurisdictions need to be considered. The second is that there are two common types of patent review. The first is referred to as a "landscape" review. This sort of review is usually carried out either before product development begins to assess whether it is worth investing in product development, or at an early stage of product development in order to guide development away from solutions that would risk patent litigation. A landscape review will provide you with a summary of the key features claimed in issued patents and pending applications relevant to the field of interest. The second is a freedom to operate opinion (also known as a product clearance opinion). This sort of review is usually done after the product is in the form in which it is contemplated that it will go to market. It is a formal legal opinion that will advise whether the importation into, manufacture of, sale or offer for sale in, or use in Canada of that product would infringe any published claim of any unexpired Canadian patents or patent applications identified in a search. Similar opinions would be required for other jurisdictions in which you wish to make, use, sell or import the product. Even though it is common to have families of patents for the same invention in a number of geographic areas, for a variety of reasons the scope of the final patent that issues in each jurisdiction may differ – often significantly. As well, there are often significant differences in the law in different jurisdictions that may affect the assessment of either infringement or validity, or both.

The key to a thorough landscape or freedom to operate opinion is proper design of the search strategy so as to retrieve all relevant patents and published patent applications. To do this, a clear understanding of the product or process is needed. The product parameters are used to design the search structure. Hence, it is imperative that the client provide information that is as precise and complete as possible. The search should be crafted with parameters that ensure the scope is not overly broad so as to identify too many potential patents and patent applications of interest (the majority of which later prove to be irrelevant), but not so narrow as to exclude potentially relevant patents and patent applications. Designing a good search is an art and may require some preliminary testing and review until a targeted and thorough search is achieved, while still remaining cost-effective. It is common to adjust the search parameters based upon the initial list that is generated.

The scope of the search is typically defined by the use of key terms defining the product, ingredient or process to be cleared, including appropriate alternate key words (i.e., synonyms, alternate spelling, acronyms) depending on the country or field of use and for chemical compounds, a chemical abstracts search using a CA registry number and a search of chemical structures.

If the initial search results appear to be overly broad, the scope can be narrowed using limitations such as date restrictions or restrictions to patents and applications owned or applied for by identified competitor(s) in the field of your commercial undertaking. The limitations applied will depend upon the assessment of the business risk.

The patent documents identified in the search are reviewed and the analysis is compiled into either a landscape or freedom to operate opinion.

Donald J. Trump wasn't thinking of freedom to operate opinions, but his advice still applies to them: " For entrepreneurs, ignorance is not bliss. It's fatal. It's costly. And it's for losers. You either get organized, or get crushed."

This article appeared in the Lang Michener LLP Intellectual Property Brief Winter 2010-2011.