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It’s patented now, but can you commercialise it? – Baxter IP

It can be difficult to get your head around the concepts of “patentability” (the ability to patent your invention) and “freedom to operate” (the ability to commercialise your invention).  In this article, we explain it in layman’s terms with reference to a simple example as shown in the figures above.

As a background, it helps to explain the patent system is a contract between the government and the patentee, whereby the patentee discloses new and inventive technology to the public, and in return is rewarded by patent protection. Patents are published documents available to the public.

The intention is that researchers can review patent databases, get up to speed on what the latest cutting-edge technology is in their field, and start researching from that point.  In this way, the country’s resources are not wasted by reinventing what has already been invented, and the rate of innovation is increased.  Any new and inventive improvements made to the technology may then be patented in turn. With this background in mind, it is evident that the filing of a patent application for, and subsequent grant of a patent to an improved technology, is not an infringing act, and is in fact encouraged.

The only requirement for obtaining a patent (i.e. the “patentability” of an invention) is that the invention must be new and inventive. This means that the invention must not have been disclosed to the public before the earliest filing date of the patent, and that the invention must not have been obvious to a person skilled in the art in light of existing technology. As long as these requirements are met, a patent can typically be obtained for an invention.

However, the ability to subsequently commercialise the patented invention is another matter.

Just because you have improved on existing technology, and protected it, this does not give you the right to ignore previously existing patent rights of others.  In other words, it does not give you “freedom to operate”. Existing patents that are in force and granted in a particular country can be infringed by the commercialisation of the improved technology.

As an example, let’s say that your competitors were first to ever come up with the concept of a table. They obtain patent protection for it in New Zealand only (as illustrated by the ticks in the accompanying illustration), claiming:

1)      A table comprising

At this stage, it may be worthwhile pointing out that a patent claim can only be infringed by an infringer commercialising a product:

Now let’s say that you have a look at your competitors product, and decide that it would work better if it had a hole in the tabletop for supporting an umbrella.  Since this is also a new and inventive improvement on existing technology, you get patent protection for the improved table in Australia and New Zealand, laying claim to:

2)      A table comprising

Importantly, the fact that the improvement is patented (patentable) does not give you the right to make the improved product (freedom to operate). If you started producing the improved table in New Zealand (where your competitor has a patent) then you will be infringing their patent. This is because the improved table still has all of the claimed features (i.e. a tabletop and 3 or more legs) of your competitor’s earlier patent.  You are, however, free to commercialise the improved table (or even the original table) in Australia, where your competitors do not have a patent.

Alternatively, you could try designing your product to get around what your competitors have claimed, so that the product does not have all of the claimed features. You could do this, for example by designing a table that uses less than three legs, or doesn’t have a tabletop.

Your competitors will still be free to commercialise their original table (without the hole) in Australia or New Zealand, but if they try and sell an improved table in Australia or New Zealand, then their product will include all of the features claimed in claim 2) above, and will infringe your patent. Your competitors would be free to commercialise the improved table anywhere else that you don’t have patent protection.

If your competitors did want to manufacture the improved table, and you wanted to sell your improved table in Australia, then a “cross-licensing” deal might be negotiated. For example, under such a deal, they would allow you to commercialise tables in New Zealand (improved or not), while you would allow them to commercialise improved tables in Australia and/or New Zealand.

Of course, the example shown above assumes that no other pre-existing patents are held by third parties (that could, for example, claim two or more legs and a tabletop). The only way to establish whether you have freedom to operate in a particular country would be to search the patent database of that country for patents that are in force, and which your product would infringe.

Hopefully this simple example helps to differentiate the concepts of patentability and freedom to operate.  However, if you have any specific questions or scenarios, please feel free to give one of our patent attorneys a call.