[Patent Talk] FTO Analysis: A Key to Business Success or Failure

This is a column contributed by our patent attorney Taeyoung Lee to Etoday on July 20, 2021. It discusses FTO analysis, which is essential for commercializing a business.

[Patent Talk] FTO Analysis: A Key to Business Success or Failure

When a company launches a new product or service, a freedom-to-operate (FTO) analysis is essential. As the term itself suggests, an FTO analysis examines whether a business can be carried out freely, and it is essentially the same as an infringement analysis. An FTO analysis may also be performed when a patent is sold or licensed, because even a patented invention may fall into a utilization relationship with an earlier-registered patent and therefore cannot be worked without the earlier patentee's permission.

In general, FTO analysis accounts for a substantial share of the work of corporate patent managers, because companies continuously carry out research and development and periodically launch new products or services. Since FTO analysis is performed mainly through infringement analysis of earlier patents, it may seem clear and simple at first glance, but in reality it is very difficult work.

The patents that exist at the time of an FTO analysis can be divided into registered patents, published applications and unpublished applications. A registered patent has already been granted and its scope of rights is fixed; a published application is still under examination and its scope is not yet fixed; and an unpublished application has been filed but not yet published.

Because the scope of a registered patent is fixed, infringement can be determined by comparing the patent claims with the elements of the product or service. Under the principle of territoriality, rights are distinct for each country, so registered patents must be assessed separately for each country, and each country's prosecution history may be referred to in interpreting the scope of rights. The most important point is to check whether any divisional or continuation application of the patent is pending. If there is a divisional application, the scope of rights may change or expand, so the prosecution history must be monitored continuously.

Published applications are still under examination, making them the most difficult part of an FTO analysis to handle. You should first conduct the FTO analysis conservatively based on the published claims, while actively determining the scope within which you can operate freely by referring to your own prior art searches and the examiner's opinions issued by the patent office. If it is an important technology that must be worked for the business...

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LNB IP Law Firm