The Air Force Wants Your IP – Don’t Expect it Back

By Brian O’Shaughnessy
October 26, 2020

“As it proposes, the Air Force should take a flexible approach to weapons procurement. But taking an inflexible approach to IP rights is not the place to start.”

Air ForceThe U.S. Air Force last year announced revisions to its weapons procurement policy that will have the unintended effect of reducing its access to groundbreaking technology, thereby posing a threat to national security. Specifically, the Air Force said it would demand greater ownership of corresponding intellectual property (IP) rights. This ill-conceived policy will strip innovators of valuable property rights, and thereby diminish incentives for innovation and discourage collaboration with the military, especially the Air Force.

Threatening the Spirit of Innovation

The complexity and sophistication of modern weapons systems is self-evident. Even our most mundane appliances depend on artificial intelligence, GPS and the internet of things, and they simultaneously expose us to the risks of cybercrime, electronic monitoring, and an overall erosion of privacy. This dependence, and the associated risks, are especially acute in matters of national defense. The tools used in defense of our nation must deploy the most advanced technology, supported by extensive research and development. This demands a culture that preserves the American spirit of innovation.

The Air Force argues, however, that “Holding IP rights typically gives the producers of military systems near-exclusive control over technology upgrades during the several decades that many defense weapons remain in the inventory.” Purportedly, this conflicts with the interests of our military in that it allows those creating those systems to hold the IP rights, and thereby to make a low bid on the front end, but make more money on the back end due to “vendor lock.”

The Air Force says that by respecting the property rights of the innovators that make these advanced systems possible, it is frustrating its own ability to compete with the Russians and Chinese. Little need be said about the respect that the Russians and Chinese demonstrate for property rights, generally – much less the IP rights of those supplying military technology to those governments.

We are assured by the Air Force, however, that the “goal is not to bankrupt or do harm to the U.S. industrial base.” Instead, the Air Force speaks of finding “new kinds of flexibility,” and a business model that produces a win-win scenario.

The Air Force draws parallels to the great diversity of software apps made possible by the Apple business model. “Imagine a theoretical missile with open architecture and open IP rights.” The comment then urges that “any company can now compete to build a guidance system, software or a target seeker.” In this brave new world, a new procurement model would “reduce costs, expand the industrial base and in all likelihood make our weapons better.”

A Misguided Approach

It’s difficult to discern which is more ironic and ill-advised—the paean to flexibility in military procurement, or the notion that one can simultaneously reduce costs, increase competition, and improve quality by depriving innovators of property rights in the fruits of their labor. As H.L. Mencken famously advised, “For every complex problem there is an answer that is clear, simple, and wrong.”

Of course, the Air Force is right that this approach is routinely practiced in authoritarian regimes with no respect for property rights or the rule of law. And one might say it is characteristic of regimes that adhere to highly centralized, communist mores as opposed to the overwhelming commercial success, creativity, and technological dominance of free market, open economies that take the opposite approach to the rule of law. In that sense, if the U.S. military seeks to be more like that of Russia and China, and believes that model deserves emulation due to its ability to engender military and technological dominance, then perhaps this is a model to follow.

The smart money suggests otherwise. Today’s military weapons systems are complex technological wonders. The creation and development of those systems require the organized, sustained, and creative efforts of a highly skilled work force, laboring in collaborative, highly structured, complex business enterprises. All of this demands enormous investment, assumption of risk, planning, and patience. To suggest that we can sustain the development of successful, creative, dominating weapons technologies in a new “more flexible” model that affords only the ability to make a few more dollars on the front end is a remarkably naïve view of private enterprise, but perhaps one characteristic of military procurement.

Respect Property Rights, Bolster Security

As it proposes, the Air Force should take a flexible approach to weapons procurement. But taking an inflexible approach to IP rights is not the place to start. This is particularly so in an environment where the technology has diverse application, and the long-term value is indeterminate. A better approach would be to start with the proposition that there is great value in the intellectual capital that goes into creating these highly sophisticated systems, and that value must be respected in the form of IP rights. How those property rights are later commercially realized and exchanged in a procurement contract will be affected by myriad factors. It’s best to critically assess, and then negotiate, with those factors in mind.

The Air Force would do well to abide by the market-based incentives for innovation that have existed since our nation’s founding, and to respect the private property rights of those who bring useful inventions into existence. In doing so, the Air Force will ensure its access to the best, most advanced technologies the market has to offer, and better fulfill its mission to enhance national security.

Image Source: Deposit Photos
Photography ID:7986000
Copyright:snehitdesign 

The Author

Brian O’Shaughnessy

Brian O’Shaughnessy is a recognized authority in intellectual property law and technology licensing. He is a Partner, and head of the IP Licensing & Acquisitions Group of Dinsmore & Shohl LLP, Washington, DC. He is a Past President of the Licensing Executives Society, USA and Canada; and continues to serve LES USA & Canada as Sr. Vice President for Public Policy. He has also served the global society, LES International, as Co-chair of the LESI External Relations Committee, coordinating public policy positions among LESI’s 33 national and regional societies. He has been retained as an expert witness in IP and licensing matters by the U.S. Treasury Department, the U.S. Department of Justice, and by various private parties. He has appeared in IP-related briefings on Capitol Hill, and has testified before the U.S. Senate Committee on Small Business and Entrepreneurship on how the America Invents Act has affected small business and IP-related transactions.

For more information or to contact Mr. O'Shaughnessy please visit his firm profile page.

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Discuss this

There are currently 5 Comments comments. Join the discussion.

  1. TFCFM October 26, 2020 10:49 am

    I cannot help but wonder to what extent IP issues contribute to the regular “$10,000 hammer” outrage-articles that circulate in the popular media.

    Given the well-known wealth of defense contractors and the regularity with which the Department of Defense spends taxpayer dollars like water, I don’t much fear that poor, homeless, shirtless weapons developers will turn to producing coffee-makers to make ends meet.

    It is long past time that some sanity be applied to the fleecing of taxpayers by defense contractors. The Air Force’s policy appears to be merely a first step in that direction.

  2. Anon October 26, 2020 2:26 pm

    TFCFM,

    The do believe that you are conflating very different items.

    This may merely be an offshoot of your typical “populous” shoot-from-the-hip, litigator viewpoint (seeing as the $10,000 hammer example dates back decades now); and NOT recognizing that a premium based on having an item protected by patent is a built in GOOD thing (even if you by and large generally don’t like higher prices — as it is very much a part of the TWO-fold carrot and stick approach that drives a ‘necessity is the mother of invention’ ideology).

  3. TFCFM October 27, 2020 11:07 am

    NOT recognizing that a premium based on having an item protected by patent is a built in GOOD thing…

    No one — including me — is proposing that the Air Force simply seize IP without compensation. Instead, what is being discussed is licensing “lifetime” IP rights up-front, when relevant technology is first used, rather than as a surprise add-on (“$10,000 hammer”) after a technology has already been adopted.

    It makes absolute sense that DoD negotiators address lifetime costs for a contracted project, rather than leave future license rights dependent on the charity and self-restraint of business folks.

  4. Anon October 27, 2020 6:40 pm

    Your “surprise add-on” is NOT the $10,000 hammer issue.

    You are clearly – and simply – making things up.

  5. Pro Se November 10, 2020 10:07 am

    This type of approach was asked and answered decades ago by the enactment of, among others, 10 USC 2320.

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