FTO Search – How we aim to deliver the best value for money
Imagine – You have hit upon a really good idea, which has a ton of potential. You start working on it with the product development team and invest millions of dollars in the R&D. Because you know the value of having good IP, post conducting a patentability search, you secure various product features by getting patents on them. Your product is now ready to hit the market, but it turns out there is an obstacle.
You made one fatal mistake in the process that could cost you the launch and result in unwanted litigation. What mistake, you ask?
Turns out, you relied on a patentability search till the very end and went for an FTO search just before the commercialization of the product.
From the FTO search, you found that you cannot launch the product. Your product is infringing on multiple patents, which include patents by your competitors as well. Moreover, canceling the product launch isn’t an option either, as you have already spent millions on patent filing and product development.
What will you do?
In this case, you are left with only two options:
- File an IPR for patents with similar claims
- License or buy the relevant patents
These options might work, but at the cost of several thousands of dollars, and there’s no guarantee of thwarting litigation. It’s a bad situation to be in.
This situation can simply be avoided by getting the FTO search done in the initial stage of product development. Conducting FTO searches beforehand has additional benefits too. It could help you figure out and avoid most of the potential barriers – due to patents – during the development phase itself. And when you are ready for the market launch, you will have all the freedom to operate.
Also, if you get the FTO search performed during the ideation stage (yes, we are not saying product development stage), you can even look for inactive patents and modify your product features accordingly. We have written in detail about FTO-based landscape analysis. In an earlier post, we shared why one should include expired and lapsed patents in an FTO search. This is not conventional, but a valuable approach that reaps great benefits.
Today, I am about to share one case where we included inactive patents in the search, which yielded interesting results. Allow me to walk you through that case while giving you a glance at some of the key features of our FTO report.
“Your FTO report delivers huge value for money”, said the client after reading the report.
We were recently asked by one of our new clients to conduct an FTO search for their product related to coffee machines. They wanted us to perform the FTO search on the key features of the Coffee Capsule Piercing Module. We have changed the subject to Coffee so that it’s easier for every person, irrespective of the industry, to understand the advantage of such a study.
The two key features of their product were:
- Key Feature 1 (KF1) – A base plate/disc having protrusions for piercing the first surface of the capsule.
- Key Feature 2 (KF2) – At least one tooth at the top of the module for puncturing a second surface of the capsule.
Our intent here was to uncover potential infringing threats to the product. We kickstarted the process by doing the groundwork to comprehend the technology in minute detail to deliver exactly what is required and beyond. We studied the coffee capsule domain and its working principles.
After establishing a thorough understanding, we initiated our search by considering key features individually and making all possible relevant combinations of sub-key features in a pre-decided timeline. In other words, we targeted both active and inactive patents, but our primary target was alive/active patents that claimed the given features of the product.
Risk Matrix and its Objective
We understand how important is to get a bird’s eye view of the patents that need to be watched and the level of the risk associated with them. So we prepared the risk matrix in our analysis, which looked somewhat like the matrix depicted below:
Here R means the claim is fully reciting on the key features and the risk is more, whereas L means the claim is reciting on the key features, but there are further limitations or having not exactly the same features, which means the risk level is less.
Similarly, patents owned by your direct competitor (marked as Y) can carry more risk than patents owned by other parties if they are alive.
This matrix helps patent counsels and R&D heads to single out the patents (e.g. owned by direct competitors, alive, and fully reciting) where more focus needs to be heeded. Of course, the patents which are not fully reciting (i.e. L type) and owned by the competitors also need to be looked upon as sometimes the limitations in these patents are very obvious or general, which inevitably becomes part of the product.
The expired patents matrix also plays its role as it will help you in determining which set of features are free to use and which patent can be used to challenge the validity of the patent that may act as a risk for your product.
Overall, this matrix provides a holistic overview of the risks; threat level associated, and options to mitigate them.
Technology Timeline and its Purpose
We know the importance of technology timeline, so to understand the evolution of the technology in hand over the years, we took the timeline of 1950 to 2014. We divided it into two-time frames, as shown below:
Further, we analyzed all the relevant patents and found out that product key features were pretty broad. So, we shifted our primary target to the patents which were expired.
We tried to look for all possible features (and combinations of features) that can be incorporated into the product without any risk of infringement. Alongside, we also kept an eye out for the patents which would be expiring in the next few years before the launch date of the product.
Highlighted key features with limited or no patent claim overlap
We provided two fields named “overlapping features” and “extra features” in the report to the client. The extra feature column had features that could be added from the patents that were free to use. Additional features of inactive patents could help companies improve their products without worrying about patent risk.
Patents present in the time frame (1950-1990) were expired; therefore, extra features present in these patents were free to use.
From 1950 to 1970, 45 patents had KF1 and KF2 and other extra features like water inlet, nested disks on top for piercing the pellet, beaded ends of the coffee can, etc.
From 1971 to 1990, 76 patents had KF1 and KF2 along with more extra features than the earlier decade, such as means for moving the piercing plate, multiple capsules within the machine, and sealing sheets on the capsules.
Having information about these limitations/patents is very important and can serve in multiple ways:
- It can help the R&D teams to evolve the product from all possible directions and eventually lead to a more effective product that can have a good market and has less risk.
- If there is any alive patent based on these features, then these expired patents can be used to challenge the validity of those patents. One can also use these patents to negotiate for licensing purposes. Hence, these can be used to reduce the overall risk and cost associated with overcoming that risk.
Future Free to Use patents
For our search, most of the patents filed during the time frame (1990-2014) were alive and hence, not ‘free to use”.
Though not all but some of the patents will expire in a few years, and the technology will be free for public use. Considering the product launch time in an approximately 3-5 year cycle, features contained in these patents can easily be added to the product when it is launched.
A Threat to the Client’s Product
Now comes the apex, where we carefully examine the patents as the claimed features could easily be obvious in any coffee machine and can lead to possible infringement.
We found that from 1991 to 2005, 309 patents disclosed KF1 or KF2 along with extra features like a holding member, a tightening ring, and elongated slits pierced into the capsules.
And from 2006 to 2014, 704 patents had more advanced extra features, such as extraction using centrifugal force and a piercing device with the means to disengage the capsule afterward.
Based on our experience, we know that figuring out such limitations is very important in the early stages of the product lifecycle. First, since these features are available in the alive patents, they are mostly having more advanced features as compared to the features in the expired patents.
Secondly, knowing these features in the early stages can help in the 360-degree shaping of the product – particularly IP counsels and R&D heads evaluate these features to see if any of them can have a great impact on the product or its market, then they try to think of alternative ways (which is not claimed in any patent) through which the same effect can be created. If they find any such way, they try to include such features in their product.
This would help them to include all the required features while averting all the risks and alongside include some advanced features that can improve the overall future potential of the product.
Apart from the patents that could threaten the product our client was developing, we provided a patent filing trend graph. The graph shows how the patent filing has evolved over a particular timeline. It is plotted to help the client understand how their various competitors crafted their IP strategy.
To take an example, for the case above, the below chart depicts how various companies (Nestle in particular – as an example) developed their patents and what they were focusing on over a period of time.
We found that Nestle had two types of coffee machines – ‘OriginalLine’ and ‘VertuoLine.’ The latter one is a newer line of products from Nestec; it uses centrifusion technology, a word combination of centrifugal action and water infusion, to spin the capsule around the machine at up to 7,000 RPMs. So, we’re assuming advanced features like “centrifusion brewing” might open new probable directions in the invention of the coffee piercing.
What role does this information play in the FTO search? – You ask.
As you know, the FTO study may uncover some patents for which licenses have to be acquired to be able to commercialize the technology without facing any infringement issues. While some of these patents are owned by startups or/and individual inventors that can be licensed at reasonable terms, there can be some patents held by your direct competitors and may not be available for licensing.
These patents held by your competitor may become a roadblock in your endeavor to launch the product.
What to do in this situation –
This is where knowing your competitor’s patent activity or their products comes to the rescue. By knowing what kind of technology your competitors are currently working on or having patents on, an FTO study can be used to highlight patents that are of interest to you and your competitor but held by a party who may be ready to sell the patent. Acquiring such patents can enable you to come on a reasonable term with your competitors and engage in cross-licensing arrangements, thereby reducing the overall risk of patent infringement.
During the FTO search, we found a few features present in different claims which seemed obvious to any coffee-piercing machine. And some were advanced features that can be incorporated within the product, or the product can be designed around.
Finally, a detailed analysis of all the shortlisted patents and insights were presented as the final output.
The conventional FTO search only includes live patents as they pose legal threats. We, however, believe that the job of a patent counsel isn’t only of a risk manager but of a value creator as well.
And value addition could be done in an FTO-like project, which is generally done to contain risk, by adding insights that give more ammunition to the product development team.
That’s the reason why we plotted the technology timeline and divided scouted patents into multiple categories viz – future, past, free, and shared the competitor activities. It not only helps in finding patents that are threats to the product but also helps add features that are free to use, as the patents covering these features have expired. As we said earlier, our goal is to provide high ROI and maximum value to the clients in our work.
Do you like getting maximum value for your money? Of course, you do. But the important question is, do you have a project in mind where you could use getting such a high ROI and max value?
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Authored by: Nikhil Gupta, Manager, Prior Art.