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Freedom to Operate analysis is a type of patent search that empowers businesses to freely launch a new product, process, or technology without fear of patent infringement. Companies during the research and development stages invest in FTO because “Prevention is better than cure”. A patent analyst carefully examines existing patents and patent applications in the field of a new invention in a certain jurisdiction within a specific time frame to mitigate infringement risks.
Despite most corporations employing patent analysts and attorneys to prevent patent infringement, the rate of patent infringement continues to rise. This post will discuss patent infringement cases that ended up in million-dollar penalties.
In this case, the court found Eastman Kodak responsible for infringing on Polaroid’s seven patents on instant camera technology. The case highlights the importance of a thorough FTO analysis. Kodak paid Polaroid $909 million and withdrew all of the instant cameras and films it had already sold between 1976 to 1985. Further, a total of $873 million in damages was paid to Polaroid for the next 15 years.
In such patent infringement cases, the judge evaluates whether the infringer performed a risk analysis or an FTO search beforehand. Willful/deliberate infringement is a significant factor in deciding the amount of damages paid and may decrease the damages if a thorough FTO has been performed.
According to Polaroid, no experienced attorney would have advised Kodak that the patents were invalid or unlikely to be infringed by Kodak’s instant film and cameras. Following that, Kodak stated that as it worked on its integrated instant photography system, it obtained validity and infringement opinions from Francis T. Carr, a patent clearance specialist. Mr. Carr examined approximately 250 Polaroid and non-Polaroid patents (many claims) and provided innumerable oral and written judgments on the entire range of Kodak’s instant photography products.
In the end, the Court decided that Kodak’s patent infringement was not willful or deliberate.
Ranbaxy, an Indian pharmaceutical company, came across a patent number (5,847,118) owned by a Canadian pharmaceutical corporation called Apotex while planning to launch an antibiotic medicine called cefuroxime axetil in the USA. The manufacturing procedure was the same as Apotex claimed in the patent. Ranbaxy, on the other hand, was successful in finding one difference in the manufacturing process after conducting a complete FTO investigation. While Ranbaxy used acetic acid as a polar organic solvent, the patent defined the words sulfoxides, amides, and formic acids. On November 26, 2003, the United States Court of Appeal, Federal Circuit (CAFC) granted Ranbaxy a declaratory judgement and freedom-to-operate based on the conclusions of the detail.
Ranbaxy succeeded in protecting its commercial interests with the help of a rigorous FTO analysis and the follow-up exercise. Ranbaxy further continued to the tablet and suspension dosage forms of cefuroxime axetil in the market with the approval of US-FDA, the drug regulatory body of US.
The above case highlights the importance of FTO search and thorough analysis, which may assist other corporations or enterprises, such as Ranbaxy, in marketing their products in different countries without concern of infringing on any valid patent or patent application under prosecution.
An FTO search is a critical component of an impeccable business plan. One can execute plan with complete confidence based on the findings of the Freedom to Operate search (positive or negative). From the above discussion, we can confidently state that lack of Freedom to operate search can pose financial and business repercussions and has the potential to disrupt the very foundations of your company by diluting your brand beyond repair. Hence, organizations with a long-term perspective must see the expense of Freedom to Operate search as an investment.
The search can be performed in-house (with skilled resources) or outsourced to a reputable third party like Wissen Research Freedom to Operate Search is designed to provide cost-effective and exact analysis in a timely manner.