What is a patent infringement search?
There is not a single type of patent search. What most people mean by a “patent search” is a novelty search to see if an invention is patentable. Novelty searches, however, offer no assurances regarding infringement. To determine the risk of patent infringement for selling a product, you need an infringement search. An infringement search goes by a few other names: freedom to operate (FTO), product clearance, patent clearance, infringement clearance, etc. The purpose of an FTO search and analysis is to assess the risk of patent infringement associated with a particular product.
Keep in mind that a patent clearance might not be exhaustive. A certain level of risk may remain even if an FTO opinion says otherwise. Experienced patent litigators would say that a favorable FTO opinion does not prevent a particular patent owner from suing you. Patent lawsuits may occur even when you think there is no reasonable way your product would infringe a particular patent. Patent owners may use the high cost of patent litigation to shake down smaller companies lacking financial resources to fight a protracted patent lawsuit.
What is the purpose of a patent clearance?
If a freedom to operate search does not prevent a patent infringement lawsuit, then why bother doing an infringement search? There at least two reasons for considering an FTO review.
First, what you learn from a patent infringement search may help guide your sales, product development and any product modifications. Suppose that a detailed review of the claims in a utility patent helps you understand that certain critical features must be avoided in your product. This may help you design around the patent by modifying your future versions of your product.
Second, a well written legal opinion serves an exculpatory purpose if and when you are found liable for patent infringement. In other words, a sound written opinion of noninfringement shows the accused infringer’s state of mind during the time when the infringement took place. Specifically, the infringer acted reasonably and that the resulting infringement was not willful. Avoiding willfulness will save you from paying enhanced money damages and attorney’s fees to the patent owner if and when you are found liable for infringement.
How does an FTO search differ from a patentability search?
Most IP product clearances are concerned with utility patents because changes to the appearance of a product will not be sufficient to avoid infringing a utility patent. Therefore, infringement searches of utility patents focus on the claims, and not on the drawings or associated written descriptions. While an FTO opinion may refer to examples, or embodiments, shown in a patent for context, you must understand that claims are broadly written to cover concepts that go beyond the preferred embodiments discussed in the specification of the patent.
Patentability searches typically overlook the claims because the primary issue in a patentability search is figuring out whether the client’s invention is novel. This difference in analyses explains the vast difference in costs.
When does a patent infringement search make sense?
Naturally, any business launching a new product with innovative features will want to know if they’re going to be sued for patent infringement. Does that mean that every new product should receive IP clearance prior to launch?
In my humble opinion, it boils down to a cost-benefit analysis. If an FTO search can provide a greater than 50% assessment that the product would not be infringing, then it may be worthwhile to invest up to tens of thousands for that peace of mind.
If your product development is at an earlier stage where modifications are possible, then an FTO search may be a wise investment. By identifying key patents early on, you may be able to find ways to design around the claims of the patents that present the highest risk of infringement. In fact, the value of an FTO search may well exceed its cost by spurring design-around efforts that reduce infringement risks and increase the patentability of your product.
How much does an FTO search cost?
The cost of an FTO search primarily depends upon:
- Finding live relevant patents that relate to the product(s) at issue;
- Comparing claims of each relevant patent to product(s) at issue to assess risk of infringement (i.e., infringement analysis); and
- Communicating results to the client (verbal or written).
The first part of an FTO search is finding relevant patents that have not yet expired. The cost of this initial task starts at $2,000.
If the relevant patents are already known or fixed (e.g., a handful of utility patents by a certain competitor on a specific technology), then our firm may be able to skip this first part of locating relevant patents.
The cost of the second part of an FTO search depends upon the number of live relevant patents found. If only a couple of live relevant patents are found, for example, then this second part of the FTO might cost another $2,000 to $4,000. On the other hand, the cost of this claim analysis might be significantly higher if several patents are located. After locating live relevant patents, a fee flat may be provided for comparing the claims of the found patents to the client’s product.
The third and final part of a patent infringement search relates to how we communicate results to the client. My firm typically does not charge additional fees for a call to communicate our findings. If a written non-infringement opinion letter is desired, we can provide a flat rate estimate for drafting the letter which typically starts at $6,000.
So the overall cost of an FTO search for a product can range from a few thousand to tens of thousands. Ballpark estimates for a patent clearance search may be $10,000 to $20,000 or more.
Verbal vs. Written Communications: When to keep infringement thoughts unwritten
It may make sense to communicate the results of an FTO in two stages:
- Verbal: initial review followed by verbal discussion with client
- Written (optional): written noninfringement opinion if desired.
The reason for avoiding written communications at the first stage is to protect the client. Suppose the client’s product has a medium to high risk of infringing a patent. You don’t want to have a written communication stating, for example – “Dear client, your product X infringes patent Y.” – which may be discoverable by the patent owner in any potential future litigation.
If the conclusion of the first stage review is that your product safely avoids infringement, then the client can choose to have a noninfringement opinion letter written at an additional cost. Keep in mind that a nonfringement opinion letter will not save you from a lawsuit. A well-written opinion letter can serve an exculpatory purpose in patent litigation by showing that you acted in good faith, thereby avoiding attorney’s fees and enhanced damages that might have resulted from willful infringement.
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