Monday, 24th February, 2014

IP Protection search vs Freedom to Operate Search

This article looks at the two main kinds of IP searching that are regularly done by companies looking to proceed with a new initiative.

IP Protection Search (patentability search)

An IP protection search is done to determine if a new initiative is entitled to IP protection. For technology, this search is often called a patentability search, and is done to see if new technology is entitled to patent protection and how broad the scope of such patent protection is likely to be.

In order to be eligible for IP protection, most forms of IP require the idea to be new.

Let's say you have invented a bicycle and you want to patent it. It consists of two wheels, a frame holding the wheels together, a seat and a steering wheel. Your patent attorney will want to know what is unique about your invention because only the unique aspects can be patented.  Uniqueness may reside in a component part of the bicycle or in a combination of parts. But until an assessment of old technology is conducted, filing a patent for what appears to be unique can be a stab in the dark. A patentability search can help understand what aspects of the bike are unique. If the closest thing to the bike is a unicycle, then you know that you cannot patent the wheel, but it should be possible get a patent covering a vehicle having at least two wheels and a frame connecting them together – such a patent being of a broad scope ­ broad enough to cover variations such as a trike or a bike, with or without a seat or steering wheel.

If you file a patent application without doing a search first, you may end up filing a patent application for an invention that is completely old and can never lead to a valid and granted patent. Working with your patent attorney, who knows about the degree of difference that must exist between an invention and old technology in each country, is important.  In some countries, the degree of difference needs to be high whilst in others, it can be very low. Your patent attorney will be able to tell you what aspects are unique and also work with you to figure out if such aspects are worth patenting. Sometimes the unique aspects are commercially irrelevant or easy to design around. A patent attorney who has a technical background in your area of technology is vital to ensuring you know whether you can get a patent and whether such a patent is worth pursuing.  Patent attorneys are also experienced in searching and know where to look to try and prove that your invention may be old. I did a search for an improved bicycle late last year.  Having done a few now, I know the importance of looking for the current state of the art in bike technology in China (China being a country full of bikes and where a lot of bike evolution has taken place).

The cost of a search need not be high. The cost should be balanced with the exposure you face in not doing a search. Not doing a search may result in you filing a patent application in many countries for an idea that you think is new, but turns out not to be. During patent office examination, a patent office will conduct a search, and may prove that your invention is old or that you have tried to protect only old parts of your product. You may then be forced to abandon the patent protection process having spent several thousands of dollars.  Searching before you start the patent process can help save you money in the long run.

A typical patentability search can cost between NZ$2,000 and $7,000 depending on the area of technology. This will include a report on how broad your patent protection is likely to be. Patentability searching should be done early on. This can help you determine what the most appropriate business model is. If you are entitled to really broad patent protection, you do not necessarily need a business model that attempts to keep your technology a trade secret. If the unique aspects of your technology are small but importantly subtle, then a business model that keeps your IP in the form of a trade secret may be appropriate.

Freedom to Operate (FTO) search

A freedom to operate (FTO) search is done to see if you are free from infringing the IP rights of others. That is, can you make or sell your product in light of the IP of others. It’s a determination made irrespective of whether you can get IP protection yourself. In my hypothetical example above, whilst the bike is unique and patentable compared to the unicycle, the unicycle inventor may hold the patent for the wheel. This means that the bike inventor cannot sell their bike, unless they can license in the wheel patent.

The amount to spend on FTO searching depends on the commercial exposure you face. A $3m spend on research and development and tooling up to get a product to market requires a larger FTO spend than if you are only spending $10,000 to launch a product. It also depends on what it is you are commercialising.  If you are a me-too start-up repackaging ubiquitous technology, then the risks are a lot lower.  You may only conduct trade mark FTO searching or perhaps do no searching at all because for start-ups, it's typically easier to change brands than it is for companies that already have a large established international market.

If a start-up is in the software space, then even scratching the surface to uncover FTO risks can increase your burn rate to an unsustainable level. Start-ups often have other options available to mitigate patent infringement risks.

A staged approach to FTO searching may be best for a start-up. An FTO search looking only for low hanging fruit is best. This may be a search limited to finding  patents owned by direct competitors or exit targets.

Because situations differ, the above must not be used as a substitute to seeking professional legal advice.

*This was originally posted on The Icehouse website.