Home > Topics > Freedom to Operate and Risk Management > Freedom to Operate: The Law Firm’s Approach and Role > Editor's Summary, Implications and Best Practices

This chapter provides a behind-the-scenes look at how the private sector thinks about freedom to operate (FTO). Offering a comprehensive overview of the FTO process, it discusses when to invest in FTO analysis and highlights the crucial role played by law firms in obtaining FTO. For the public sector, of course, the strategic relevance of FTO is quite different. Even when it aims to commercialize products, it pursues different goals than the private sector, which makes deciding when to pursue FTO a very different question. Nonetheless, given the growing number of public-private partnerships, it is very important for the public sector to understand how private companies approach FTO issues. This chapter therefore discusses both private- and public-sector considerations for deciding whether, when, and how FTO analysis should be conducted.

A thorough FTO investigation considers all types of property rights that could be used to build a portfolio or block a business goal. In the life sciences, these typically include tangible property rights asserted over biological materials through material transfer agreements (MTAs), as well as other kinds of IP rights. What an FTO investigation looks at depends upon the developmental stage of the technology and the nature of the technology. Generally, the more developed the technology, the more narrowly defined and detailed are the needs of the investigation.

Because FTO analysis is a big undertaking, it is costly. The benefits of better information should be weighed against the costs on a case-by-case basis. The main factors to be considered include the nature of the business goals, the litigation risk in relation to the institution’s risk tolerance, and the level of investment being considered. The public sector in particular should be very prudent in deciding when to conduct an FTO. While formal research and safe harbor exemptions are limited, if the business goal is to conduct basic research or research related to the approval of new drugs, there may be less risk of infringement litigation.

An FTO analysis provides options, that is, a map of the relevant IP landscape. Hence, an FTO analysis provides choices for the best way to achieve institutional goals. The chapter concludes with a case study of an FTO investigation initiated by PIPRA, which follows the process from defining the scope of the investigation to the delivery of the findings. It is worth noting that the findings themselves are quite valuable, not only for your own institution but also for potential competitors. It is therefore worth remembering that if the product of an FTO investigation is communicated to the client as an attorney’s legal opinion, it is under attorney-client privilege and is therefore the protected information of the client. Finally, always bear in mind that an FTO is a living entity that needs to be updated regularly as new information becomes available or as business goals change.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Freedom to operate (FTO) analyses should not be expensive. Much can be done by institutions internally through teams of scientists and technology transfer professionals. Nevertheless, the benefit of FTOs should be weighed against their costs. When pursuing an FTO within the context of product development projects, public-sector institutions should be provided with sufficient resources to ensure that products are delivered to those who need them without delay due to uncertainties about third party IP.
• IP held by public institutions can be identified more efficiently if information about issued patents is freely available on-line. Public access to accurate, up-to-date records should be provided to assure a transparent, efficient IP system and, in particular, to reduce the costs and uncertainties for private parties and public institutions investigating their FTO. Many national patent offices are making great progress in making their data available on-line, and this process should be encouraged and accelerated.

For Senior Management (university president, R&D manager, etc)

• The more downstream a research-based institution operates, the more important freedom to operate (FTO) considerations become. A system should be in place to help decide whether, when, and how a public sector institution should commission an FTO opinion.
• FTO opinions do not make risks related to third-party IP go away. Instead, they allow for the development of sound risk management strategies. This requires clear pathways of communication and dialogue between science managers, product development, licensing personnel, and others.

For Scientists

• Freedom to operate (FTO) investigations may usefully inform your choice of research tools or vector constructs, particularly if you are engaged in research with the direct goal of developing applications (whether commercially or for non-profit purposes). The information generated by an FTO analysis may allow you to make better use of technologies in the public domain. It may also alert you to scientific discoveries and inventions related to your work.
• The personnel conducting an FTO will rely heavily on your inputs, collaboration, and time. They will need to understand precisely what you did, how you did it, what materials you used, and what reports you prepared. Their intent is not to check on your work, but to ascertain that all relevant information has been considered in the FTO review. One of the best ways to manage that information is by rigorously using laboratory notebooks. That will simplify everyone’s life.

For Technology Transfer Officers

• There are a number of technology transfer activities that could benefit from a Level One freedom to operate (FTO; level one being a simple search for possible blocking patents). Such an FTO can help determine whether to patent, how to assess a potential market and identify potential licensees, and whether to approach venture capital firms to invest in a spinout.
• For an academic or public institution, detailed FTO investigations (called Level Two) are not likely to be needed for typical technology transfer functions. They would only be relevant if your institution is engaged in downstream product development or marketing.
• One way to cut costs is to conduct the background research for an FTO investigation in house (for example, by knowledgeable graduate student interns). The compiled file of relevant art can then be provided to patent counsel, who can then prepare ready analysis, do some additional searching to fill in suspected gaps, and render an FTO opinion. Universities with law schools might also be able to give law students valuable internships for this purpose.
• Through good licensing practices, much of the risk associated with IP infringement can be transferred to licensees who take over products from the public sector.