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Editor-in-Chief,   Anatole Krattiger

Editorial Board

Concept Foundation


Fiocruz, Brazil

bioDevelopments-   Institute

Freedom to Operate and Risk Management
Topic Guide for Senior Administrators

Why This Topic Is Important

Freedom to operate (FTO) is the absence of any third party IP claims against ones commercial operations. The more that public institutions use IP protection to transfer and develop new technology, the more likely it is that third parties will have competing IP. However, this section explains that the efforts to analyze and deal with competing IP should be commensurate with the amount of value put at risk. Therefore, the burden to analyze and manage FTO is usually on the licensee. However, there can be times when the public sector institution needs to be aware of its FTO or that of its partners.

Key Implications and Best Practices: Section 14

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.

  • As public sector and nonprofit institutions increasingly move in the direction of product development, whether they do so independently or in partnership with other organizations, freedom to operate (FTO) will contribute increasingly to sound IP management strategy. As such, an FTO analysis is a management tool for assessing and managing certain types of risks.
  • Some public sector institutions need not be concerned with FTO. For example, a typical university that mainly licenses patents or occasionally forms a spinout company can leave FTO concerns to others.
  • Public sector research institutions should not necessarily assume that they are exempt from IP infringement liability due to their nonprofit (or governmental or parastatal) status. Although government institutions per se may be shielded from liabilities, FTO rarely ends with these institutions. Eventually other institutions taking on the products may need to be able to deal with FTO (such as commodity exporters). Hence FTO analysis is just one tool for making the technology transfer process more effective, and FTO is particularly warranted as an institution expands its mission into product development and distribution.
  • FTO opinions do not eliminate risks related to third-party intellectual property. Instead, they allow for the development of sound risk-management strategies (which may be of a legal/licensing nature, involve business approaches, or be research based). Implementing the strategy requires clear pathways of communication and dialogue between science managers, product development, licensing personnel, and senior management.
  • Obtaining FTO includes the review of the patent landscape (FTO analysis) and may include a formal legal FTO opinion. But, in essence, obtaining FTO is a process to be “managed” as an interdisciplinary endeavor and considered within the context of the institution’s overall mission (as such it involves senior management), business development, research and technology transfer, and tolerance for risk.
  • Institutional policies that support capacity building in IP management should include the training of senior management in FTO strategies, including institutional boards. A dialogue between boards (responsible for policy) and senior management (more concerned with implementation) is essential, since FTO analysis is a risk-management tool.
  • Commitment to the principles of FTO will demonstrate that a given institution is committed to respecting, and of building upon, the intellectual property of others.
  • The more downstream a research-based institution operates, the more important FTO considerations become. A system should be in place to help decide whether, when, and how a public sector institution should conduct an in-house FTO analysis or commission a legal FTO opinion.

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