Chris Baxter shares how to use IP to unlock startup valuation at the pre-traction stage in the first Part of the series Why Investors Always Ask About IP.
If you are looking to develop or release a new product, it is important to ascertain whether it would be open to a claim for infringement of intellectual property rights of a third party, for example, third-party patent rights. If the answer to this question is “no”, then you are said to have “freedom-to-operate”. A freedom-to-operate patent search is also known as a “patent clearance search” or a “patent infringement search”.
A freedom-to-operate patent search addresses the risk associated with being blocked from market by a third party in terms of:
Our clients who operate in crowded markets routinely have us carry out patent clearance searches. The first step in an Australian freedom-to-operate patent search is to identify granted Australian patents or patent applications (which would upon grant) that are live and that pose an infringement risk. Your product or proposed product is then analysed against the claims of the patents that have been identified by the patent clearance search.
When a third-party files a portfolio of patent applications, they generally will only file in a small selection of countries. For example, a patent applicant may only file a patent application in the United States and Europe – and not in Australia, in which case you can make and sell their patented invention in Australia and in every country other than the United States and Europe. The third-party patent application may have also been “knocked back” or limited during examination in some countries, and you may therefore still have freedom-to-operate in those countries.
If you had a freedom-to-operate patent search carried out and discovered that you would infringe an existing patent if you were to proceed with your product, it’s not the end of the road. There are at least 4 paths you can go down: