Introducing a new product is an exciting process, involving customer engagement, trade shows, advertising, and feedback analysis. However, it also carries the responsibility of avoiding infringement of third-party intellectual property (IP), including patents, trademarks, designs, and copyrights.

A common misconception is that addressing IP infringement can wait until a rightsholder raises concerns. German law, however, mandates that anyone offering a product or process on the market must proactively avoid infringing existing IP rights. This includes actively monitoring all valid patents, trademarks, designs, and copyrights. Even rights granted after the product or process is launched must be considered. This article focuses specifically on patents.

While achieving 100% certainty in avoiding patent infringement is practically impossible, a proactive approach and structured process can significantly mitigate the associated risks. This is known as “Freedom to Operate” (FTO), encompassing all activities undertaken to ensure a product can be sold or a process offered with minimal risk of patent-related issues.

FTO involves two main components: tactical, relating to a specific product, and strategic, concerning a company’s overall IP strategy.

Overview

Modern patent laws grant patent holders absolute protection. Once a patent is granted, everyone else must respect it, even if they independently developed the same invention. Therefore, independently designing a product does not guarantee freedom from infringing third-party patents.

Unlike some jurisdictions, Germany doesn’t require patent holders to actively publicize their patents on products. The onus is entirely on those offering products or services (B2B or B2C) to actively search for and comply with potentially relevant patents.

The consequences of patent infringement can be severe and costly. A patent holder can demand an immediate sales halt, product buyback from distribution channels, monetary damages for past infringement, and even access to internal documents and product sourcing information. These rights apply even if the infringement is discovered years after the product launch.

Such a late-stage infringement discovery can be devastating. Therefore, proactively minimizing this risk is crucial for anyone offering products on the market.

For clarity, the following discussion focuses on products for sale. However, similar principles apply to technical methods offered, such as a process for applying a protective coating.

Tactical Component

The tactical component addresses a specific product and the steps to minimize its infringement risk.

The first step is identifying potentially infringing parts. Consider a bicycle, for example. Its components can be categorized as:

  • Bought parts: Sourced from a supplier and used as-is (e.g., electric motor, tires).
  • Self-manufactured standard parts: Made in-house using common designs (e.g., frame).
  • Self-manufactured innovative parts: Made in-house, differentiating the product (e.g., a novel saddle design).

These categories require different approaches.

Bought parts: The supplier is generally responsible for ensuring their parts don’t infringe. German law stipulates that sellers must provide products free from third-party rights infringements. Thus, if a bicycle manufacturer is sued due to an infringing motor, the motor supplier is typically obligated to indemnify them. However, relying solely on this requires careful consideration of the supplier’s financial stability and the practicalities of pursuing legal action.

Self-manufactured standard parts: The risk of infringement with standard designs is generally low. However, individual components within these parts may still infringe.

Self-manufactured innovative parts: These pose the highest infringement risk. Even if developed internally, someone else may have patented the same idea earlier.

After identifying potential infringement areas, the next step is assessing the actual risk.

This usually begins with a patent search, focusing on relevant patent classes and keywords. AI tools can assist, but they cannot replace the expertise of a human familiar with the product and patent landscape. A thorough patent search remains a complex, labor-intensive task best performed by an IP expert.

Crucially, the search must cover not only granted patents but also pending patent applications, as these may later result in granted patents that the product infringes.

The next step is analyzing the identified documents to determine if the product infringes existing patents or potentially infringes pending applications. Many patents will likely be irrelevant due to clear distinctions in the independent claims. However, some documents will require further scrutiny due to possible or evident infringement.

The final step involves deciding how to address the remaining documents. Common options include:

  • Existing license coverage: The simplest solution.
  • Prior art search for patent invalidation: If prior art is found, opposition or nullity proceedings can be initiated, or the patent holder can be contacted with the prior art, potentially leading to a license agreement. Even without contacting the patent holder, the prior art should be documented in case of future infringement claims.
  • Accepting the risk: This might especially be considered if the patent holder is a competitor who also infringes patents, creating a stronger negotiating position. However, remember that patent infringement can also be a criminal offense, although it is rarely prosecuted by the state.
  • Inventing around the patent: This depends on the feasibility of modifying the product without compromising usability or increasing costs.
  • Seeking a license or cooperation: Contacting the patent holder to explore licensing or collaboration opportunities.

Strategic Component

A robust IP strategy is the best defense against IP-related problems like patent infringement. Ignoring IP is a dangerous mistake.

A suitable IP strategy depends on the company’s size, industry, culture, and other factors. However, some fundamental elements related to patents apply to most companies dealing with technical products or methods:

  • Personnel training: Management, technical staff, sales, and other employees must be educated about patent rights. This ensures inventors understand when to disclose inventions and that everyone is aware of potential patent-related chances and threats.
  • Filing patents: A patent portfolio can be a powerful tool in infringement situations, creating leverage in negotiations. This requires that all possible inventors have a basic understanding of patents, so that they write invention disclosures and give the company the possibility to protect their inventions.
  • Patent activity monitoring: One should not wait until product launch to identify third-party patents. Regularly monitoring published patents and applications (e.g., by competitor name, keywords, or technical classes) provides ongoing awareness of potential patent protection and portfolio weaknesses.

Conclusion

Every sale of technical products or offering of technical services carries a risk of patent infringement. This risk can be significantly reduced through a strategic IP approach and tactical measures to identify and address potentially relevant third-party patents.

Crucially, fostering a constant awareness of the importance of IP and dedicating resources to managing it are essential for success.

About the author

Dr. Martin Schlosser is a German and European Patent Attorney, European Trademark and Design Attorney, Servicing Patent Attorney in Austria and a Business Mediator.

He studied Physics at the Universities of Augsburg, Lund (Sweden) and Munich and received his diploma in physics with a thesis on femtosecond spectroscopy and molecular dynamics. He received his PhD in Electrical Engineering from the University of the German Federal Armed Forces in Neubiberg. He earned his diploma in General Management from the Private University of Applied Sciences (PFH) Göttingen and his qualification as a Business Mediator (CCI) from the Chamber of Commerce for Munich and Upper Bavaria.

Dr. Martin Schlosser works in private practice with prosecution and litigation of patents, trademarks, and designs for clients of all sizes, including SMEs, large corporations, universities, and research institutions.

Dr. Martin Schlosser will give a webinar with regard to Freedom-to-Operate in German language on March 25, 2025, 2 pm German Time, organized by the Chamber of Commerce of Swabia:

https://events.schwaben.ihk.de/b?p=ihkspezialwebinarfreedomtooperate

Registration is open to everyone interested.