Freedom to Operate (FTO)

What is freedom to operate?

Freedom to operate (FTO) is a designation that allows a company to develop, make, and market products without legal liabilities to third parties (e.g., other patent holders). An FTO designation implies it is commercially safe for a company to make or sell its product in a specific country.

An FTO search involves searching for issues or pending patents, industry-specific publications, and other relevant published materials that may reveal another’s patent. An IP attorney will often analyze these search results to provide legal opinions on whether any uncovered rights pose a potential risk of infringement.

If the attorney’s opinion suggests there is FTO, companies may choose to protect their innovation with patenting and pursue development plans. When an FTO opinion suggests a company may be blocked or restricted from manufacturing or selling their product, the company may consider licensing, patent purchases, or cross-licensing.

Why is FTO important for medical device, biotech, and healthcare companies? 

Without FTO, a patent-holding competitor may block a commercialization strategy, which can significantly damage the company’s resources and reputation, especially if commercialization is already underway. Completing an FTO search minimizes the risk of these problems appearing later in the commercialization process.