By Design: Registered Design FTO Analysis

• Published date: 18 August 2021
• Subject Matter: Intellectual Property, Patent
• Law Firm: Haseltine Lake Kempner LLP
• Author: Mr Luke Jones and Greg Sharp

Freedom to Operate (FTO) or "clearance" is the process by which a company assesses whether it is able to launch a product into a market in view of any third party intellectual property rights. For many companies, this is a crucial step in the product development cycle. FTO analysis can be performed in many ways but it is generally aimed at the same question: what is the risk of our product infringing someone else's IP?

In its simplest form, a company might search for similar products in the field in question to assess whether there are any relevant third party IP rights in directly competing products. More complex forms of FTO work can involve extensive searching for any IP rights in the relevant technology area, obtaining infringement opinions on particular IP rights, or even taking steps to invalidate a potentially troublesome third party IP right.

Many businesses overlook FTO analysis because it can incur significant costs before a product is even launched. However, it is important to keep in mind that the costs of defending an infringement lawsuit (typically in the hundreds of thousands) will greatly outweigh the costs of even a thorough FTO analysis (typically in the tens of thousands). A finding of infringement by a court can result in very costly penalties, such as an injunction against selling the product - meaning all investment in the product is wasted - and an order to pay damages to the IP owner. In many cases, infringement issues could have been avoided or mitigated if an appropriate FTO analysis had been performed before the product was launched.

Traditionally, the most in-depth FTO analysis has been reserved for products which involve lengthy and costly development, such as pharmaceuticals. In contrast, companies who market cheaper and simpler products, such as those for which aesthetic design is the main appeal, have tended to avoid or simply overlook clearing their products. However, brand owners in all areas are turning to registered and unregistered design rights to defend their market share. Consider, for example, that some recent high profile design infringement cases have concerned products like children's ride-on suitcases and baby baths - a far cry from the...