Reasons for using Lucid Patent® FTO Charts
Whenever an organization introduces a new or updated product into the market there is a risk that some part of the product infringes a patent held by others. Depending on who holds the patent, the consequences of such infringement can be severe. In the best case, a license can be obtained for a low cost and all is well. Otherwise, a steep royalty requirement or a court judgment may become the result. The worst case occurs when the infringed patent is held by a fierce competitor who may use the alleged infringement as leverage to harm the product owner through litigation, injunction, and through media attacks. The alleged infringer has the option to buy a license, to settle under some agreement, to litigate to reach a judgment, and/or redesign the product so it does not infringe (often with significant time lost and cost added). The alleged infringer may have already chosen to carry insurance for this risk, in which case this insurance carries a significant premium. Insurance may defray direct costs related to an alleged infringement but rarely covers indirect and consequential costs such as cost of re-design, lost market entry momentum and good-will. Even when using insurance, all end user/customer concerns and negative perception in the market remain a detriment to the product owner. In all these cases significant costs are incurred for legal representation together with disruptions to product roadmap execution and challenges to customer loyalty.
One generally accepted way to handle this concern is to manage and control risk through product Freedom To Operate (FTO) review, also called product clearance review. This review ensures that the product design is ‘cleared’ from infringement already on the design stage, or at least before an infringement is asserted against the product. FTO review is done by screening those active patents within the product’s technology area(s) that need to be considered to achieve Freedom To Operate.
FTO screening has for many years been a costly process involving many attorney hours for each product, for searching, selecting, and reviewing patent claims to assess FTO status. These costs have limited most organizations’ ability to achieve and maintain true freedom to operate for all products.
Lucid Patent® FTO Charts are used to very quickly screen large numbers of patents for true claim coverage (we do not rely on ancillary information from patent abstracts or specifications, but rather deal with the coverage meaning of the claim text).
Lucid Patent® FTO charts provide a new and unique ability to screen large amounts of patents very quickly, in collaboration between IP counsel, science/engineering, and product management. This enables a policy of early and complete FTO analysis for all products, which removes the risks, costs, and severe disruptions experienced by companies who are found to be infringing active patents. Clearing products already on the design stage dovetails with the accepted truth that the cost of change to product design increases exponentially as that change has to be made later in the Product Development Life Cycle (PDLC).